Vietnam, Africa and Middle East Promoting Trade, Investment Cooperation

On June 11 in Hanoi, the Export Support Centre of the Vietnam Trade Promotion Agency (Vietrade) held the Seminar "Promoting trade and investment cooperation among Vietnam - Africa - Middle East". The event has contributed to further developing economic and trade relations between Vietnam and countries in Africa and the Middle East. It is also a great opportunity for Vietnamese enterprises to enter those markets.

Speaking at the seminar, Ms Le Hoang Oanh, Deputy Director of the Vietrade (Ministry of Industry and Trade) affirmed that Africa and the Middle East, with their large population, great demand for food as well as other essential goods are both potential developed markets for Vietnam enterprises. When businesses are facing several difficulties, some traditional export markets of Vietnam have become saturated, these two markets are considered potential and creating great opportunities to further develop exports of Vietnam. Ms Oanh also emphasized that Vietnam has signed trade agreements and framework agreements with many countries in Africa and the Middle East, which has opened certain advantages in trade between the two sides.

Assessing trade cooperation among Vietnam-Africa- the Middle East,  Mr Le Thai Hoa,Deputy Director of the African, West Asian and South Asian Markets Department, under the Ministry of Industry and Trade, said that the import-export turnover among Vietnam, Africa and the Middle East continued to increase in recent years. Trade statistics show that in 2012, export turnover of Vietnam to the African market experienced strong growth averaging over 20 percent a year. Import and export turnover between Vietnam and the Middle East in 2011 was US$5.17 billion; in 2012 it reached US$6.674 billion. In only the first three months of 2013, the total import and export turnover between Vietnam and the Middle East is US$2.09 billion, in which Vietnam exported US$1.4 billion and imported US$679.7 million from this market.

Generally, the structure of import and export goods of all parties is complementary to each other. Vietnamese goods have initially established a foothold and reputation to consumers in these areas. The exported products of Vietnam to Africa and the Middle East include rice, electronic products and components, textiles, rubber products, footwear, coffee, seafood, processed foods, and consumer goods, accounting for about 80 percent of total export turnover. Meanwhile, Vietnam imports from the Middle East and Africa raw plastic materials, petroleum, fertilizer, chemicals, liquefied petroleum gas (LPG), iron and steel.

Regarding investment cooperation, by 2012, Vietnam had 18 projects in 11 African countries with total capital of US$1.1 billion. There are a number of large projects such as Viettel Group’s investment in Mozambique (US$345.6 million) and Cameroon (US$ 400 million) in the telecommunication area; Petrol Vietnam Group’s investment of more than US$300 million on the exploration and exploitation of oil and gas in Algeria, Tunisia and Cameroon. African countries investing in Vietnam include the Seychelles, Morocco, Egypt and Kenya, in areas such as industrial processing, manufacturing, retail and service.

According to many experts, the advantages when entering these markets are thanks to the fact that Vietnam has diplomatic relations with most countries in the Africa and the Middle East. The Vietnamese government has many policies to promote cooperation and trade development with these markets and a network of representative offices as a bridge. Besides, with the average GDP of 5 percent a year, along with the strength of oil and gas, biotechnology, chemical technology, Africa and the Middle East are indeed potential markets for Vietnamese enterprises. In addition, the fact that Vietnam, Africa and the Middle East are all members of the WTO has created favourable conditions to promote basic commodity exports from Vietnam to some African countries since commodities enjoy preferential Most Favoured Nation tariffs.

Besides these advantages, Mr Hoa also pointed out many challenges when Vietnamese businesses enter these markets such as unstable political situation in the region, Islamic extremist, terrorism, trade fraud, lack of information on the market and other trade barriers. Consequently, Vietnamese businesses’ operation in these markets is still quite sporadic, lacking cohesion and support for one another. Besides the development of a number of large enterprises such as Viettel and Petrol Vietnam, other firms investing in these markets are still small and sporadic. Many enterprises lacking information on the markets often "blindly" operate on their own way thus are likely to face many hidden risks. This leads to strong enterprises continuing to grow larger while small companies are still likely to face difficulties.

To remedy this situation, experts said that Vietnamese enterprises should implement measures to boost exports to these markets as strengthening trade promotion activities, promoting product information to local customers and enterprises, participating in fairs and exhibitions, organizing business conferences or online contact between the two sides. In particular, there should be close connection and cooperation between governments, associations, agencies and business representatives. The Embassy of Vietnam in Africa also recommended that Vietnam enterprises be cautious with purchase offers with large value contracts and simple transactions terms.