Vietnam Boosts Economic, Trade Ties with South Africa

In its import-export development strategy and market seeking and expansion in the 2001-2010 period, Vietnam always considers South Africa an economic “locomotive” and a potential market in Africa.

In recent years, South Africa is always the Vietnam’s largest trade partner in Africa. The two-way trade between the two countries increased considerable in the 1990s. The Vietnam’s export revenues to South Africa jumped from US$1.2 million in 1992 to US$55.5 million in 2004. From 1998 to 2001, Vietnam’s export revenues to South Africa were always significantly higher than those it spent on imports. However, in 2002 and 2003, Vietnam’s export turnover to South Africa fell considerably because its rice volume exported to the latter shrank. In 2001, the rice export generated US$15 million for Vietnam, nearly half of its export revenues to South Africa in the year of US$30.4 million. In 2002 and 2003, Vietnam’s rice export revenues to South Africa were only US$1.1 million and US$4.8 million, respectively. In the meantime, Vietnam’s spending on imports from South Africa soared in 2002, 2003 and 2004. Steel import from South Africa accounted for over 90 per cent of the total spending.

Traded commodities between Vietnam and South Africa are various. Vietnam’s exports are mainly rice, footwear, coal, plastics, garments and textiles. Rice export to South Africa normally accounts for 50-60 per cent of its export turnover. However, most rice exported to South Africa is then re-exported to the Southern African Development Community (SADC) and some Western African countries. In recent years, Vietnam has exported electric, electronic, mechanical parts, household appliances, fine arts products and woodwork. Meanwhile, Vietnam mainly imports chemicals, steel, machinery, equipment, artificial fibres and resin. Chemicals and steels are major imports.

 

In the service and investment field, the two countries have not reached the expectations and potentials. Vietnam has set up agent relations with some banks of South Africa. In tourism, South Africa is the African country with the largest number of tourists to visit Vietnam. In 2002, 2,741 African tourists visited Vietnam, including 1,405 people from South Africa. Currently, Vietnam and South Africa are carrying out programmes to boost tourism and trade. South Africa has no investment project in Vietnam and Vietnam also has no projects in South Africa. The two nations have not established the bilateral cooperation in intellectual property although both are members of the World Intellectual Property Organization (WIPO) and signed the Paris Convention on Intellectual Property Protection and Patent Cooperation Agreement.

 

In recent years, enterprises of the two nations have actively surveyed mutual markets to seek business opportunities. Trade fairs in South Africa, especially the International Saitex Trade Fair, have initially attracted the participation of Vietnamese enterprises. As a matter of fact, many business contracts have been reached.

 

Presently, several Vietnamese enterprises are planning to open branches in South Africa. Viet Trang Import-Export Joint Stock Company (Viettranimex) has opened a branch in Porth Elizabeth and Hanoi General Production and Import-Export Company (Haprosimex) has also set up a branch in Pretoria. These branches have brought in initial successes. Saigon General Import-Export Company (Incomex), New Technology Application and Tourism Corporation (Newtatco), Southern Ship Industry Investment and Development Company (Sidc) and Thai Son Company of the Ministry of National Defence have completed branch establishment procedures while many others are processing procedures to open branches in South Africa.

 

Bilateral cooperation fostered

South Africa has a modern economy, developed infrastructure and clear-cut commercial policies and is the largest economy in Africa. South Africa is also speeding up market expansions and actively taking part in regional and international integration. Import tariffs of South Africa are being reduced as provided by the WTO. These are favorable conditions for Vietnamese enterprises to penetrate South African market. Furthermore, South African can be a bridge for Vietnamese goods to enter other African countries.

 

Recently, relations between Vietnam and South Africa have been brought to a new high. The two nations have send shuttle high-ranking diplomatic corps and business delegations, organised conferences and trade fairs for products of the twos. The Vietnamese capital of Hanoi possibly becomes the sister city of Pretoria. These activities are believed to pave the way for future trading cooperation. The Vietnam-South Africa Trade Agreement, signed in 2000 and provided mutual most favoured nation status, has created a favourable legal foundation for business of the twos.

 

Vietnam sees good advantages in exporting to South Africa because South Africa’s imports are mainly major exports of Vietnam such as rice, coal, seafood, footwear, fine arts products, electronic products. Meanwhile, Vietnam can also import some key items from South Africa like steels, machinery and chemicals.

 

To boost economic and trade ties in the coming time, Vietnam has intensified exchanges between its senior officials, ministries, branches, associations, chambers of commerce and industry with South Africa. Besides, Vietnam has also promoted market researches and information provision about African market, products, trade barriers and solutions for enterprises of the two countries. Vietnam has also accelerated trade promotion activities in South Africa, enlisting it as a focal market, sending Vietnamese enterprises to take part in trade fairs and exhibitions there, organising conferences and meetings for enterprises of the two countries. Vietnam also supports its enterprises to do business in South Africa where Vietnamese Embassy and Commercial Chamber in South Africa will actively help enterprises to approach South African market in the forms of representative and branch establishment. They will conduct enterprises to process procedures, seek suitable locations and map out business lines.