Large demand
Amid economic recession taking place at the EU, Russian Federation’s economy has developed strongly, so Russia’s large demand is opening export chances for Vietnamese businesses.
Kardo-Sysoev Alexander, a representative of the Russian Trade Office in Vietnam, said in 2012 Russia has reached an encouraging economic growth with the GDP increase of 4.4% (US$795bil), industrial production increase of 4.7% and low inflation level of 3.5%... “All of the figures show that Russia is now a large market with a sustainable development. As such, opportunities and advantages have been opened to develop investment tie between Russia and Vietnam…”, said Kardo-Sysoev Alexander.
In reality, in 2012 trade turnover between Russia and Vietnam is expected to reach US$3.7bil, a fifteen fold increase from the past 10 years. The two-way trade turnover by 2015 will reach US$7bil.
Russia has exported products of black metallurgery, chemical industry, equipment, fertilizer… to Vietnam while Vietnam has exported to Russia products such as rubber, seafood, footwear, electronics, instant noodle, veggies, coffee… With a strong industrial production of Binh Duong province, staples such as garment and textile, footwear, electronics… will be main import items for Russia. As such, while exports to the EU and US are in difficulty, the provincial businesses have a large chance to shift to Russian market.
Potentials of investment and trade
According to the Ministry of Planning and Investment, Russia’s investment in Vietnam remains modest with only about US$1bil. The Russian Trade Office in Vietnam said that this is a direct investment figure while indirect figure is up to US$4bil. Russia’s large oil and gas companies operating in Vietnam including Gazprom, Zarubezhneft, Lykoil, TNK-BP… have exploited up to 50% of total volume of oil and gas of Vietnam. Ninh Thuan I Nuclear Power plant, the latest project between the two countries is underway with the capacity of 2,400MW…
Meanwhile, investment environment in Russia has lured nearly 20 projects invested by Vietnamese enterprises with the total capital of over US$1.7bil. Kardo-Sysoev Alexander from the Russian Trade Office in Vietnam, said Russia is facilitating Vietnamese businesses’ investment. “Russia has focused on developing industrial parks, hi-tech areas, entertainment areas, ports. Investors will enjoy a decrease of 30% of expense and asset tax exemption up to 10 years and decline of business income tax within 10 years, simplification of immigration procedures for individuals and families of investors…”, Kardo-Sysoev Alexander shared.
Notably, after Russia became a WTO member in August, 2012, in the next 3 to 4 years, this country will have to lower import duties on agricultural products from Vietnam to 30 to 50 percent. The average tax rate for these items will be reduced to about 10 percent. For some commodities, the import duty will be reduced to a few times according to the schedule, for example, electrical appliances and equipment down seven times, clothes down two times, tea down two times, etc.
At the same time, Vietnam will focus on opening negotiations with the Customs Union (including Russia, Kazakhstan and Belarus) on establishing a free trade area (FTA) in the first quarter of 2013 and strive to complete negotiations within two years.
According to the calculations of Russian experts, by 2018, trade turnover between Russia and Vietnam may increase to US$12 billion.
In addition, Vietnam-Russia Joint Venture Bank has been established and under good operation. The bank can solve issues of payment and offer supports to Vietnamese businesses.
Reported by T.Son – Translated by A.C
