Vietnam invites Indian investment into petrochem, oil, minerals, textiles, IT and food processing sectors
Vietnam wants more Indian investment for manufacturing finished products in that country, particularly in sectors such as oil exploration, exploitation and processing, petrochemicals, minerals, information technology, foodstuff processing, and textiles.
The finished products manufactured by them can be exported to meet the demand of Indian market and thereby help narrow the existing trade imbalance between the two countries, says Mr. Nguyen Son Ha, Commercial Counsellor and Head of Vietnam Trade Office in India, addressing an interactive meeting organized by Indo-Vietnamese Chamber of Commerce & Industry at IMC. He was welcomed and felicitated by the IVCCI President Mr. Kamal Seth.
Mr. Nguyen Son Ha suggested that enterprises of both countries should actively participate in fairs and exhibitions, business seminars held in each other's country for exploring the market and identifying the investment avenues, and proceed with opening representative offices and branches to have a closer access to the market.
On the other hand, Vietnamese companies should harness the potential for exporting its agricultural and marine products, fine art and handicraft products, footwear, textiles and garments and electronic goods. Indian pharma companies, which had cutting edge technologies for pharmaceutical products and medical equipments, should export their products to Vietnam and should also consider manufacturing those pharma products there for catering to the local market as well as for exports.
Already many Indian industrial groups, such as the Tata, Essar, ONGC and Reliance Industries, had set up joint ventures in the fields of oil & gas, energy and steel. Some other Indian business houses were showing interest in collaboration in other sectors like mineral exploitation, textiles, chemicals and automobiles.
Mr. Nguyen Son Ha said that Vietnam-India trade turnover was continuously rising in recent years. In 2009, two-way trade turnover reached $ 2,054 million, of which exports from Vietnam to India were $ 419 million, and exports from India to Vietnam were $1,635 million. The overall balance of trade was in India's favour.
Exports of Vietnam to India included computers, electronic equipments and components, spare parts, minerals, coffee, pepper, wooden products, chemical products, steel, footwear, garments, tea, rubber, plastic materials, etc.
In contrast, Vietnam’s imports from India were food materials for livestock, machinery, mobile phone, pharmaceuticals, steel and iron, cotton, material for garment, leather, auto spare parts, medical material, tobacco, copper, chemical products, pesticides, urea, paper products, etc.
Both Vietnam and India had decided to reduce the trade imbalance by actively promoting export of Vietnamese products to India on a priority basis. For the purpose, they had also undertaken comprehensive research and studies of the Indian market, for aligning their trade promotion programmes with the findings.
"The signing of a Free Trade Agreement (FTA) between ASEAN and India and recognition of Vietnam as an open market economy by India will provide a broader legal framework to businessmen to more aggressively penetrate each other's markets, enabling Vietnam to increase export of its goods and commodities to India in a big way", he said.
Mr. Ha said that in the last two decades Vietnam successfully implemented the "Doi Moi" (economic renewal) process and emerged as a market economy. In the 20 years between 1986 and 2006, Vietnam’s GDP grew by 7.6% per annum. In 2007, its GDP growth was 8.4%, but declined to 6.2% in 2008 and further to 5.3% in 2009 due to the impact of the global economic crisis and natural calamities like floods and typhoons.
Vietnam was a full member of the ASEAN, Asia-Pacific Economic Cooperation Forum (APEC), Asia- Europe Meeting (ASEM), and of the WTO. Vietnam also participated in the FTAs between ASEAN and China, ASEAN and Korea, ASEAN and Australia - New Zealand; ASEAN and India. Vietnam has signed Comprehensive Economic Partnership Agreement with Japan (CEPA).
He said that Vietnam’s export earnings consistently rose over the past years; reaching $63 billion in 2008, recording an increase of 31% over 2007. 11 main items of exports were : crude oil ($10.3 billion), textiles ($9.1 billion), footwear ($4.8 billion), seafood ($4.5 billion), rice ($2.9 billion), wood products ($2.8 billion), electronic and computer components ($2.6 billion), coffee ($ 2.1 billion), natural rubber ($1.6 billion), coal ($1.4 billion) and wire and cable ($1 billion).
"Today Vietnam is the world's largest exporter of pepper and cashew nut; the second largest exporter of rice and coffee, the fourth largest exporter of natural rubber. The turnover of its commodity exports in 2009 totalled $ 56.6 billion , which was 9.7% lower than that in 2008.
Vietnam's imports in 2008 reached $80.7 billion, which was 33% higher than in 2007. Its major imports included: petroleum, equipment and spare parts, steel, fertilizer, plastic materials, fibre, cotton, chemical materials, electronic components, textile fabrics and leather. Its commodity imports in 2009 totalled $68.8 billion, showing 14.7% decline over imports in 2008.
Mr. Ha said that Vietnam had about 11,000 projects (with a total registered capital of $177 billion), involving foreign direct investment (FDI) of about $21.5 billion from 89 countries. Vietnam had checked inflation, with only 6.9% rise in consumer prices, which was lower than the ceiling of 7% set by the National Assembly, and the lowest in last six years.
"We also succeeded in bringing down the poverty rate to 12.3% in 2009 from 13.4 % of total population in 2008, and in achieving encouraging results in the fields of healthcare, culture and education," he said.
Referring to a close bilateral relationship, he recalled that Vietnamese Prime Minister, Mr. Nguyen Tan Dung visited India in July 2007 and the Indian President, Mrs. Pratibha Devisigh Patil, visited Vietnam in November 2008.
"Even as recently as in February 2010, the Chairman of Vietnam National Assembly, Mr Nguyen Phu Trong, visited India, raising our bilateral strategic partnership to a higher level , and hugely contributing to the diversified interests of both the countries," the Commercial Counsellor said.
Mr. Kamal Seth said that the IVCCI was 19 years young. It was set up in 1990 consequent to an MOU signed between Indian Merchants’ Chamber, Mumbai and Vietco Chamber of Commerce and Industry, Hanoi, "when the US still did not encourage trade with Vietnam and not many countries were looking at Vietnam favourably. But, we in India, particularly at IMC, felt that there was a great potential for Vietnam to play a major role in the global trade. The IVCCI has now blossomed into a full fledged organization, playing a key role in promoting trade and investment between our two countries," he said.
Vietnam was a land of vast opportunities for Indian businessmen. There were many similarities and complementarities between both the economies. " Vietnam is making a strong pitch to invite India to invest in its burgeoning economy. The banking & financial services, education, tourism, nuclear energy, information technology, the small-scale sector, power generation, petroleum and such other sectors are the potential areas of cooperation between India and Vietnam," he said.
During January 2010, India’s exports to Vietnam increased by 86 per cent to $171 million from $92 million in the corresponding month last year. India’s imports from Vietnam recorded a faster growth of 148 per cent to $52 million from $21 million during the same period. "If this trend continues, bilateral trade between India and Vietnam may cross $3 billion during 2010. Our Both countries are looking to double the bilateral trade to $ 5 billion in the next three years", he said.
Vietnam signed the India-ASEAN FTA, following India's recognition of Vietnam as a market economy in October 2009. The Agreement was expected to take effect from April 2010. Implementation of the India-ASEAN FTA would change the complexion of bilateral relations between India and Vietnam, as the FTA deal would give a big boost to the intra-regional trade through reduction in tariffs