Vietnam - Russia Cooperation Door Opens Wide

Economic cooperation is expected to be accelerated in the coming time as a free trade agreement (FTA) push is one of major objectives of this visit.

 

Moreover, the two sides agreed to carry out 17 projects and draft a roadmap for every project, including very promising projects like the supply of Russian machinery and aircraft for Vietnam, automobile assembly, and locomotive manufacturing in Vietnam. It seems that the Russian - Vietnam cooperation door has never been opened wide as now.

 

At a recent press conference, newly appointed Russian Ambassador to Vietnam Konstantin Vasilievich Vnukov admitted that Vietnam - Russia cooperation is below existing huge potential due to many reasons.

 

Therefore, at their meetings, Vietnamese Prime Minister Nguyen Tan Dung and his Russian counterpart Medvedev urged authorities and businesses of both sides to quickly find appropriate measures to promote cooperation. The two sides agreed to speed up the conclusion of Vietnam - Eurasian Economic Union (EEU) FTA in the first half of 2015. Bilateral trade between Vietnam and Russia shrank on global economic slowdown. But, Prime Minister Medvedev said this was only a temporary phenomenon and the two sides discussed ways to end this decline and push trade value to US$10 billion in 2020.

 

According to analysts, the signing of this agreement will certainly open up great possibilities to boost economic and commercial relations, especially in oil and gas, electrical energy, machine manufacturing, communications and high-tech.

 

Energy, oil and gas cooperation is seen as a "trump card" in bilateral economic ties. This time, the two sides discussed measures to foster cooperation in oil and gas projects on the continental shelves of Vietnam and Russia. Particularly, in addition to oil and gas exploration and exploitation, the two countries will step cooperation in oil and petrochemical refining and promote the construction of the first nuclear power plant in Ninh Thuan province.

 

In general, economic and commercial cooperation between Russia and Vietnam is favourable except for payment stage. The two Prime Ministers asked banks to consider accepting payments in currencies of each other to facilitate trade deals.

 

This issue was reiterated by Prime Minister Medvedev in a press interview before he flew to Vietnam. He insisted that there were no legal obstacles for payment in Ruble and Dong. Local currency payments accounted for 1.5 percent of transactions while the rest was done with US dollars. This is not always mutually beneficial because US dollar is a foreign currency for both sides. Therefore, the cooperation will help enterprises from both sides cut payment expenses and step up trade exchanges.

 

"We agreed on the possibility of using local currencies for payment nearly 10 years ago and even established a specialised bank for this, Vietnam - Russia Bank. But, of course, the use of local currencies is beneficial only when the two-way trade turnover is big enough and there is a need to use Russian ruble or Vietnamese dong for reserves,” said PM Medvedev.

 

Obviously, the progress in payment solutions is very important to both business communities. Escorting PM Medvedev, the business delegation, joined by leading energy, oil and gas firms, seemed to send a clear message that they really want to expand investment in Vietnam and approach the broader ASEAN market via Vietnam. This move is consistent with Russia’s strategic shift to Asia - Pacific to seek new opportunities. For Vietnamese companies, this is a golden opportunity to boost exports to Russia, especially when Russia is being economically constrained by the EU and the US.