Vietnam, India Foster Trade and Investment Cooperation for SMEs

1:57:11 PM | 8/3/2021

Fostering opportunities for trade and investment cooperation between Vietnamese and Indian small and medium-size enterprises (SMEs) is the primary content of discussions at the recent Online Conference on “Fostering Trade - Investment Cooperation between Vietnamese and Indian SMEs”.

Emphasizing the importance of boosting Vietnam - India SME cooperation, Vietnamese Ambassador to India Pham Sanh Chau said that the two sides have all favorable conditions for developing more extensive cooperation. Vietnam is one of the few countries in the world to have a positive growth of nearly 3% in 2020. It ranks fourth in Southeast Asia by GDP and is expected to surpass the Philippines soon to become the third-largest economy in the region (after Indonesia and Thailand). The 13th National Party Congress of Vietnam, successfully wrapped up recently, outlined the development path of Vietnam not only for five years but also for many years to come with the goal of making Vietnam a developed country by 2045. Vietnam is a politically stable country, so foreign investors in general and those from India, in particular, are completely assured when doing business here. The private economy in Vietnam is increasingly developing and becoming an important driving force of the national economy.

“India and Vietnam have long-standing friendship, with many common strategic points. India is one of three comprehensive strategic partners of Vietnam and Vietnam is one of the pillars of India's Look East Policy. In economic and investment relations, the two sides have potential cooperation in automobile and parts, construction, textile and garment, steel and agricultural processing, especially after they opened direct flight routes in 2019,” he added.

Sharing the same view, Mr. Pankaj Kumar Gupta, President of India Industries Association (IIA), said that IIA is the representative body of micro, small and medium enterprises (MSMEs) established in 1985 with 10,000 members and now has 57 divisions across Uttar Pradesh, Delhi, Uttarakhand and neighboring states. MSMEs are the backbone and engine of growth of the Indian economy where 633.4 million MSMEs account for about 30% of its gross domestic product (GDP) and 48% of export value and create 110 million jobs. He hoped the cooperation with Vietnam will benefit MSMEs of both countries and believed that Vietnam is cooperating comprehensively with India to resolve trade barriers.

“Vietnam's increasingly important role in global supply chains has the potential to further strengthen India-Vietnam relations. Some large Indian firms such as Reliance Industries Ltd, Adani, Mahindra, Shapoorji Pallonji and Hinduja Group expressed their interest in doing business in Vietnam. And, Indian industrial companies are also seeking business opportunities in Vietnam in energy, mining, agrochemical, sugar, tea, coffee, and automobile industries. There are many reasons for them to invest in Vietnam such as high market access, open investment policy, free trade agreements, economic growth, political stability and low labor costs, while the workforce is young. Indian partners want to establish more effective investment and trade cooperation with Vietnam,” he said.

Mr. Nguyen Hoang, Deputy General Secretary of the Hanoi SME Association, said that India is currently one of the 10 most important partner countries of Vietnam in terms of trade and investment. SMEs account for 98.3% of all corporate entities in Vietnam, with 600,000 companies, contribute 40% of GDP and employ 50% of workers. The Hanoi SME Association was established in 1995 with 3,000 members active in many industries. We hope that bilateral ties will facilitate investment and business cooperation between Vietnamese and Indian SMEs.

According to Vietnamese Trade Counselor in India Bui Trung Thuong, in 2020, despite being heavily affected by the Covid-19 pandemic, Vietnam - India trade value reached over US$10 billion (based on data provided by the Ministry of Industry and Trade of India). India imported US$5.55 billion worth of goods from Vietnam and India exported US$4.49 billion of goods to Vietnam. Vietnam is India's 17th largest trading partner and 4th in ASEAN, after Singapore, Indonesia and Malaysia, while India is one of the 10 most important trading partners of Vietnam. The two countries have strong potential to strengthen investment and business cooperation, especially in supporting industries, auto parts, motorbike, textile, footwear and consumer goods.

An official from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI) said, as of December 2020, India had 294 valid investment projects in Vietnam with a total investment capital of US$898.65 million. India currently ranks 26th among countries and territories investing in Vietnam.

By Giang Tu, Vietnam Business Forum