Vietnam - Africa Cooperation: Barriers Need to Be Removed

Vietnam has pledged to strengthen its economic ties with African nations and ASEAN nations of the Francophone community and facilitate links between their businesses and banks, said Deputy Prime Minister Vu Van Ninh at a forum on promoting banking cooperation between Africa and ASEAN nations of Francophone community” hosted by the Vietnam Chamber of Commerce and Industry (VCCI) - HCM City Branch. The objectives of the forum are to further boost two-way trade between Vietnam and African countries as well as the South-South Cooperation in the economic space of Francophone member countries. Deputy Prime Minister Ninh said, despite global economic difficulty in 2013, Vietnam's GDP still grew 5.4 percent and was expected at 5.8 percent in 2014. Vietnam is making every effort to restructure its economy and change its growth paradigm towards sustainability with three major focuses: Public investment restructuring, financial - banking restructuring, and State enterprise restructuring. In parallel with domestic reform, Vietnam is actively deepening comprehensive international in the world economy to expand its development space. Expected to conclude 14 free trade agreements (FTAs) from 2015 to 2020, Vietnam will become an important link in the vast Asia-Pacific economic network and an important bridge to the ASEAN Economic Community expected to be formed in 2015. As an active, responsible and constructive Francophone member, Vietnam supports an economic development strategy within the dynamic Francophone space, develops stronger ties with Francophone member states in general and African nations and other ASEAN nations in particular. Although the gap between rich and poor countries remains relatively wide, they share the same characteristics of earning money from exporting rare and precious natural resources like oil and minerals and having big populations. Hence, Africa is still a fertile market for Vietnam in the long term. In recent years, trade between Vietnam and 55 African countries have steadily grown but the value remains very modest. At present, Vietnam’s trade value with this region is the least in comparison with other regions in the world. VCCI President Vu Tien Loc said barriers to trade between Vietnam and African countries are geographical distance, language barriers, poor communication infrastructure, high transport costs, and reliance on intermediaries resulting to high costs. Besides, payment obstacles and payment risks are high because African banking systems have not yet applied modern payment methods while paying through international banks is usually subject to high fees. Although State agencies and trade promotion organisations in Vietnam and Africa have held talks with credit institutions and banks to strengthen payment connectivity, the results are below expectations. So far, the Government of Vietnam and African countries have not reached joint agreements on business support. Loc stressed that “This reality requires continued perfection of cooperation framework and expanded purview of intergovernmental committees.” He said Vietnamese and African banks need to strengthen cooperation to provide credit support for businesses. This is also an opportunity for Vietnam to expand new potential markets and reduce dependence on traditional markets which are also prone to hidden uncertainties. The Government of Vietnam is committed to creating the best conditions for Vietnamese businesses and banks to boost cooperation and expand investment in Africa in the coming time." Sylvere Bankimbaga, Vice President of the Club of Africa Banks and Financial Institutions, said the South - South trade promotion initiative was launched three years ago. Then, at the Francophone meeting in Yaounde (Cameroon) where the ultimate goal of promoting South - South trade was defined, a right cooperation movement has been announced. And, the certification of Viettel Group’s mobile telecommunications service project in the Republic of Burundi is a typical success that the club has achieved when it exchanged information with the Vietnamese side. He noted that "The Club of Africa Banks and Financial Institutions is always ready to serve as a catalyst to promote mutual exchanges. The top priority is to create the environment for financial flow movements and minimise intermediate channels which hinder trade activity because of high costs. Particularly, the two sides also need to strengthen cultural exchange and mutual trust of bankers to facilitate payment process.