Retail, services sales hit $156b     

The country’s total retail sales and services revenue reached US$156 billion in the first 11 months of the year, rising 11.5 per cent over the same period last year, or 9.34 per cent with inflation excluded.

This marks the highest increase so far this year.

According to the General Statistics Office (GSO), retail sales of goods and services in November alone was estimated to reach VND385 trillion ($16.47 billion), a 1.1 per cent increase against October and representing a 12.2 per cent year-on-year rise.

Retail sales of services reached VND288.6 trillion in November, increasing 0.8 per cent from the previous month. Revenue from restaurant, accommodation and catering services was also up 2.3 per cent to VND47 trillion last month.

Restaurant and accommodation services, which accounted for 12.2 per cent of the total, posted an 8.6 per cent year-on-year rise.

Retail sales of goods in the first 11 months of the year were estimated at more than VND117 billion, accounting for 75.2 per cent of the total. Of which, the sales of food and foodstuff rose by 12.7 per cent, garments and textiles 12.3 per cent, and home appliances 12.1 per cent.

Localities with high purchasing power included Thanh Hoa at 13.5 per cent, HCM City at 13.2 per cent and Binh Dinh at 12.8 per cent.

The GSO said purchasing power had grown due to the peak shopping season that started in September with increasing consumption demand for the new school year, wedding season and higher construction demand.

VN's PMI rises at near-record pace in November     


{keywords}

Viet Nam’s Manufacturing Purchasing Managers’ Index (PMI) rose from 53.9 points in the previous month to reach 56.5 points in November, according to the latest survey from Nikkei’s IHS Markit, released on Monday.

Manufacturing business conditions during November improved to one of the greatest heights in the near eight-year history of the survey.

The consumer goods sector was the strongest performer of the three broad sectors covered in the latest survey period, witnessing the fastest rises in output, new orders and employment.

New orders increased sharply in November, with the rate of expansion quickening for a second month in a row. Strong growth of new orders encouraged manufacturers to increase production. Moreover, the rate of output growth quickened to the fastest since March 2011.

Output looks set to increase further over the coming year as strong demand has boosted manufacturer confidence. Sentiment jumped from October to the highest level since February 2016.

Firms responded to greater workloads by taking on extra staff at a rapid rate. In fact, the pace of job creation was the fastest in the survey’s history, surpassing the previous record seen in June.

Manufacturers increased their stocks of both inputs and finished goods at record rates as firms responded well to bigger orders and prepared for likely rises in sales in the coming months. The accumulation of pre-production inventories was helped by acceleration in the rate of purchasing activity growth.

Higher raw material prices resulted in a further increase in input costs in November, the most marked change in three months. Rising cost burdens led manufacturers to increase their selling prices for the first time in three months.

A number of panellists mentioned that material shortages had contributed to higher prices for inputs, with supply issues leading some firms to report longer delivery times for inputs. Other manufacturers reported their suppliers had been prepared and reduced waiting times. Overall, vendor delivery times were largely unchanged.

Andrew Harker, Associate Director of IHS Markit, said the Vietnamese manufacturing sector continued to defy recent signs of slowing demand elsewhere in the global economy during November, seeing a strong and accelerated increase in new orders and a near-record rise in output. Moreover, firms seem confident the good news will continue, prompting them to build inventories and take on staff at the sharpest rates seen in the near eight-year survey history so far. 

Japanese consumer goods producers explore Vietnamese market

“Good Goods Japan 2018”, a business networking event for Japanese high-quality household commodities and consumer goods, was held in Ho Chi Minh City on December 4, drawing the participation of nearly 50 Japanese firms who want to boost exports to Vietnam, and some 100 domestic businesses.

Organised by the Japan External Trade Organisation (JETRO), the event featured a wide range of top-quality and unique products, from child care, kitchenware to cosmetics and stationery.

The Japanese enterprises met with Vietnamese importers and distributors to introduce the convenience and quality of their products.

According to Chief Representative of JETRO Ho Chi Minh City Koji Takimoto, as this was the second edition of Good Goods Japan in Vietnam following the first in 2015, the event received special attention from Japanese suppliers and positive response from the Vietnamese business community.

Besides connecting Japanese and Vietnamese businesses, the event provided full information about how a product is produced, used and preserved as well as its origin, he said.

The quality is a competitive advantage of Japanese products, however, they are always sold at higher prices than the same kinds made in other countries, he said.

Japanese businesses prefer manufacturing products in Vietnam to reduce costs, he noted, saying that the firms hope to receive further support from the Vietnamese Government in terms of taxes and human resources.

For Japanese suppliers, they expected to get feedback on their products’ quality and designs from Vietnamese distributors. Market survey to grasp Vietnamese consumers’ taste was one of their goals to improve products before breaking into the Vietnamese market in the coming time.

Enterprises’ observance of import-export laws to be evaluated

A workshop took place in Hanoi on December 4 to collect feedback from enterprises on a draft circular to evaluate the level of law observance in imports and exports and transit of goods.

The event was held by the Vietnam Chamber of Commerce and Industry (VCCI) and the General Department of Vietnam Customs.

The circular is expected to have huge impacts on Vietnamese exporters and importers as it outlines a set of criteria for the classification of importers and exporters based on the level of law observance and on that basis, these businesses would be subject to different customs inspections and clearance regimes. 

Vietnam’s increasingly open economy has facilitated foreign trade, with turnover doubling the country’s gross domestic products (GDP), said VCCI Vice President Hoang Quang Phong. 

The expansion of import-export industries is posing plenty of challenges to customs authorities and the greatest among these are the rapid increases in the volume and diversity of imported and exported goods, meanwhile the number of qualified customs staff has not been able to keep up, Phong said.

The risk management method based on assessment of businesses’ law observance will be an appropriate approach to deal with the issue, he noted. It would improve the effectiveness of state management and raise awareness of the importance of law compliance among enterprises.

Once the goods are classified based on various degrees of risks associated with them in terms of smuggling, trade fraud or tax evasion, it would enable faster customs clearance for low-risk items, while law-abiding firms would benefit from saved costs and priority placement at customs, the VCCI official added.

Hoang Viet Cuong, deputy head of the General Department of Vietnam Customs, said the customs authority is adopting risk management measures which are widely used in developed countries to reduce burdens for its staff and optimise customs control. 

The law observance-based risk management enables customs authorities to shift from pre- to post-customs clearance inspection with only a minimum quantity of goods checked.

Currently, goods are divided into green, yellow, and red flows for customs clearance, Cuong noted. The green flow applies to commodities entitled to exemption of customs declaration and actual inspection, with 60 percent of shipments going through this flow. The yellow flow applies to goods with low tax rates, common taxes, or goods imported for export processing (35 percent of shipments). Meanwhile, the red flow is applicable to commodities requiring permits and subject to higher tax rates (5 percent of shipments).

Under the draft circular, importers and exporters will be subject to a new system of classification which labels them according to four levels of law observation; Level 1 (High), Level 2 (Medium), Level 3 (Low), and Level 4 (Failure to observe laws).

Based on the classification, the customs authority will decide whether they are entitled to customs incentives, take proper actions to control import-export activities, and prevent smuggling and trade frauds.

A representative from C&A Tax Consultancy Co., Ltd. said the new classification would motivate firms to abide customs regulations more strictly, but noted that there should not be so many criteria that it would be difficult for firms to identify which criteria they violate and that the criteria should be simple and easy to comprehend. 

PPPs urged to develop coffee sector sustainably

A workshop was held in Ho Chi Minh City on December 4 to seek measures for boosting public-private partnerships (PPP) towards sustainably developing Vietnam’s coffee sector – one of the world’s leading coffee exporters.

Do Nguyen Anh Tuan – deputy head of the Vietnam Coffee Coordination Board and Director of the Institute of Policy and Strategy for Agriculture and Rural Development – said Vietnamese coffee businesses are facing challenges such as climate change, water supply shortage, diseases, unstable prices, and a lack of market information.

What the sector needs to do now is to improve its farming process to reduce costs and maximise profits to make up for the output decline as a result of coffee tree re-cultivation.

Coffee productivity is at about 2.5 tonnes per ha at present. Coffee beans will not be able to be harvested for three years after trees are re-cultivated to replace old ones. The coffee output will fall by 300,000 tonnes due to re-cultivation each year, according to the Ministry of Agriculture and Rural Development.

Tuan said the country will need to re-cultivate 120,000ha of coffee while still maintaining a stable output so that the export value does not decrease. One solution to this issue is applying the PPP model between businesses, the State, and farmers.

The demand for production expansion and stable consumption will be the driving force for this PPP model, said agricultural expert Dang Kim Son.

He noted that farmers still face difficulties in cultivation, harvesting, preservation, and processing, leading to the limited volume of quality coffee. While most enterprises are small and weak, support policies for them remain ineffective, and economic integration and climate change have also affected their production, processing, and trading capacity.

Participants in the workshop said cooperatives should join together in purchasing production materials and selling coffee beans, while ensuring that product quality meets the requirements of businesses.

Meanwhile, businesses need to specify production requirements, purchase coffee via cooperatives or other farmers’ organisations in line with contracts, and support farmers’ organisations.

At the event, the Daklak Import-Export Co., Ltd., said the connectivity between businesses and farmers’ organisations will help firms cut expenses and farmers buy cheaper production materials with ensured quality.

An official of the agricultural ministry’s Department of Crop Production said that PPPs in the coffee sector remain modest, with only Nestle Vietnam having joined in this model so far.

The Nestle Vietnam project, carried out in the Central Highlands since 2011, has provided training for 200,000 farmers and supported them with 20 million coffee saplings to re-cultivate 20,000ha of old trees. It has helped raise productivity by 17 percent and farmers’ income by 14 percent.

However, this project has only covered 17 percent of the total area in need of re-cultivation. Hence, workshop participants concluded that in order to help the coffee sector develop sustainably, more PPP projects are necessary.

Vietnam spends 1.57 billion USD on fruit, vegetables in 11 months

Vietnam spent 1.57 billion USD on importing fruit and vegetables in the first 11 months of this year, up 11.5 percent from the same period in 2017, according to statistics of the Ministry of Agriculture and Rural Development (MARD).

Thailand is the top exporter of fruit and vegetable to Vietnam, accounting for 41 percent of Vietnam’s total import of the products. China followed with 24 percent of market share.

According to head of the MARD’s Plant Protection Department Hoang Trung, a large volume of fruits imported from Thailand are re-exported to China, mostly durian, mangosteen and longan.

Shipments from several markets showed strong surges, such as Chile with a 98 percent increase, the US (90 percent) and the Republic of Korea (83 percent).

Meanwhile, the export of fruit and vegetables in the 11-month period also went up 11.6 percent on a yearly basis to 3.5 billion USD, with 73.8 percent of export volume going to China.

At present, 80 percent of Vietnam’s fruit outputs are consumed in the domestic market, mainly in the form of fresh fruits. Few enterprises have invested in fruit processing, due to the lack of concentrated growing areas that can ensure stable supply of big amounts of raw materials.

Vietnam-South Africa trade to hit 2 billion USD in 2019

Trade between Vietnam and South Africa is expected to reach 2 billion USD at the end of 2019, heard a recent workshop in the central city of Hue.

The event was held by the Vietnam Chamber of Commerce and Industry’s branch in Da Nang city and the Embassy of South Africa on December 4, aiming to promote trade, investment and tourism between the two countries.

Statistics raised at the workshop indicated that two-way trade increased to 1.5 billion USD in 2017 from 700 million USD in 2012.

South Africa supplies wood and timber products, chemicals, plastic materials, cotton and fertiliser to Vietnam.

Meanwhile, Vietnam’s exports to South Africa include footwear, garment-textile, coffee, rice, gemstone and metals.

Singapore venture capital firm eyes Vietnamese startups

Singapore-based venture capital firm Cocoon Capital has launched a new 20 million USD fund targeting seed-stage startups in emerging economies such as Vietnam, Myanmar, the Philippines and Indonesia.

The fund aims to invest in 25-30 trade deals in these Southeast Asian markets, with the biggest amounting to 727,000 USD.

By limiting the number of investments each year, the firm can ensure it supports multiple young companies.

The fund, which follows the firm’s first 7-million-USD fund launched in 2016, will focus on deep tech, fintech and medtech.

Since 1996, Singapore has always been one of the biggest trade partners of Vietnam. At present, it is the second largest trade partner of Vietnam in ASEAN and eighth in the world. Two-way trade hit 8.3 billion USD in 2017, a year-on-year rise of 8.9 percent.

Singapore’s direct investment in Vietnam has continuously increased in recent years. It is now the biggest investor of Vietnam in ASEAN, and third globally.

Vietnam’s labour commitments to CPTPP, EVFTA discussed

Joining the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) offers Vietnam an opportunity to modernise its labour laws and improve labour quality and productivity, heard a workshop in Ho Chi Minh City on December 4. 

According to the Ministry of Labour, Invalids and Social Affairs (MoLISA), Vietnam’s commitments in the CPTPP and EVFTA have contributed to maintaining and increasing foreign investment in Vietnam and helped Vietnamese businesses raise their competitiveness, boost exports and further integrate into the global supply chain.

Speaking at the workshop, themed “Labour commitments of Vietnam in CPTPP and EVFTA,” MoLISA Deputy Minister Doan Mau Diep said the discussions aimed to serve the amendment of Vietnam’s Labour Law. 

The ministry is considering ratifying the International Labour Organisation (ILO)’s conventions No. 98, 105 and 87 to display Vietnam’s commitments in new-generation agreements, the official said. 

Besides, the ministry has popularised labour commitments in CPTPP and EVFTA, revised the Labour Law and issued guidance documents, he added. 

Dao Quang Vinh, Director of the MoLISA’s Institute of Labour Science and Social Affairs, said the deals are expected to create a larger global free trade area and generate more jobs, especially in areas of Vietnam’s strength like garment-textile, leather and footwear, wooden furniture production, food processing and coffee, while improving wages. 

Delegates at the workshop also discussed Vietnam’s preparations for labour commitments in CPTPP and EVFTA in terms of institutions and human resources, along with the implementation of international labour standards at enterprises.

The CPTPP was signed in Santiago, Chile, on March 8, 2018 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Of the 11, seven countries have ratified the pact, with Vietnam finishing its procedures on November 12. Earlier, New Zealand, Canada, Japan, Mexico, Singapore and Australia ratified the deal.

The deal, to take effect at the end of this year, is expected to bolster economic growth, create more jobs, alleviate poverty and improve living quality in the member states. 

It will create one of the world’s largest free trade blocs with a market of about 500 million people and a GDP of 10.1 trillion USD, accounting for 13.5 percent of global GDP. 

The accord is expected to increase Vietnam’s GDP by 2.01 percent by 2035, according to the Ministry of Planning and Investment.

The EVFTA is a new-generation trade agreement between Vietnam and the 28 EU member countries. Negotiations for the deal concluded on December 1, 2015. The official text of the agreement was published on February 1, 2016.

The European Commission (EC) on October 17 agreed to submit the EVFTA to the European Council to seek its approval for the official signing of the deal.

Vietnam not increase pepper growing areas: MARD

Vietnam will work to reform its peppercorn sector towards high quality production and food safety, instead of expanding cultivation areas, Minister of Agriculture and Rural Development (MARD) Nguyen Xuan Cuong has said.

The minister made the statement during the Vietnam Pepper Outlook 2018 conference, which was held in Ho Chi Minh City on December 4 by the MARD, the Ministry of Industry and Trade, and the Vietnam Pepper Association.

He explained that Vietnam aims to make clean agro products with a view to further engaging the country’s farm produce in the global distribution chain.

Cuong noted that while the global pepper area has increased three times in the past seven years, total production value has dropped by four times, with dried peppercorn prices falling from 250,000 VND (10.8 USD) to 58,000 VND (2.5 USD) per kg, causing great risks to farmers, as well as to stakeholders and distributors.

At the event, participants shared the current challenges facing Vietnam’s pepper sector – including the strict regulations of export markets, the usage of pesticides, and expanding business connections – and put forward suggestions for the sector’s sustainable development.

Gerhard Weber, representative of the European Spice Association (ESA), said Vietnamese farmers lack information on the requirements of pepper consumption markets. However, the country’s pepper quality has been improved recently and the export volume to Europe rose by 6 percent this year. 

The ESA is willing to help Vietnam further improve its pepper quality and expand exports to European and American markets, he said.

Vietnamese pepper has been shipped to more than 100 countries and territories, making up 60 percent of the world’s exports. To meet the demand of consumption markets, 20 major pepper firms have invested in high technology processing plants, with processing capacity totalling about 70,000 tonnes a year.

The nation’s pepper cultivating fields spanned 152,000ha in 2017, accounting for one third of the total global area under pepper, yielding 240,000 tonnes of peppercorn or 48 percent of total world output. The country shipped more than 215,000 tonnes of pepper abroad last year, raking in about 1.2 billion USD.

Asia is Vietnam’s largest pepper consumption market, making up 51 percent of Vietnam’s total export. 

Vietnam firms urged to prioritize domestic market as CPTPP comes into force

{keywords}

Vietnamese enterprises should grasp opportunities brought in by the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) to expand their markets, but at the same time should not forgo the domestic one.

Local enterprises must give priority to the domestic market with population of more than 90 million, which is being targeted by foreign firms once the CPTPP coming into force, according to Ngo Chung Khanh, deputy director of the Multilateral Trade Policy Department under th Ministry of Industry and Trade (MoIT). 

Currently, Japanese mango or Taiwanese dragon fruit are sold in the Vietnamese market despite its skyhigh price tag, while the high quality local fruits are only for exported, Khanh said at a conference on November 28. 

Referring to the CPTPP as a “big playground”, Khanh said it is vital for Vietnamese enterprises to grasp opportunities arising from the deal in terms of tax incentives and institutional reform for market 

expansion, but at the same time they should not forgo their advantages in the domestic market. 

Nguyen Van Nam, president of the Institute for Brand and Competitiveness Strategy (BCSI), said enterprises play a key role in economic development and integration. Nam said the CPTPP could only benefit Vietnam if Vietnamese enterprises understands clearly regulations set by the deal.

Economist Vo Tri Thanh reminded of the “yellow card” issued by the European Union (EU) for Vietnam’s irregular unregulated fishing, saying that it is a big lesson for the business community. 

Thanh said enterprises must know the rules and regulations concerning the field they are operating in, in turn fulfilling these requirements, especially the rule of origin in trade activities.

Economist Nguyen Minh Phong added that the country’s participation in CPTPP, including its commitment in the banking and finance sector, would upgrade the legal basis on competition in Vietnam. 

This is key to encourage all economic sectors, including foreign companies, to commit to long-term business in Vietnam, especially when the Vietnamese government ensure a fair and transparent business environment, Phong continued. 

Moreover, the CPTPP is expected to change the mindset of government agencies. For example, the process of drafting a new law must now take into account its compatibility with the CPTPP, he stressed.

On November 12, Vietnam’s National Assembly gave passage to the CPTPP with the endorsement of 100% deputies present, which is considered the third largest free trade agreement to date. 

As such, Vietnam has become the seventh member country to official ratify the 11-nation deal after the US withdrew in January 2017.

The CPTPP will enter into force on December 30 after six signatory countries of the agreement including Mexico, Japan, Singapore, New Zealand, Canada and Australia, have already approved the deal. 

The CPTPP economies make up around 13% of global economic output and 500 million people. It includes tariff cuts and removal of non-tariff barriers among its members and is designed around high standards on human rights, labor practices, and environmental standards.

Samsung intends to bring in more Vietnamese suppliers

Samsung has been in close contact with the Ministry of Industry and Trade (MoIT), government agencies and associations to identify qualified local enterprises that could potentially become its suppliers.

Samsung Vietnam has been searching for potential local companies to joint its consulting programs, which would enhance their capacities and probability to joint the Korean giant’s global supply chain, according to Shim Won Hwan, Samsung Vietnam’s CEO. 

Starting in 2015, companies participating in the consulting programs have witnessed an average increase in productivity of over 30%, said Shim, adding that this is the main reason for Samsung to expand the scale of this program. 

Previously, Samsung has been in close contact with the Ministry of Industry and Trade (MoIT), government agencies and associations to identify qualified local enterprises, which would later join the program. 

Since April 2018, Samsung in collaboration with the MoIT has been providing training courses for 200 Vietnamese consultants. Once completed, those consultants would support local companies to enhance productivity, in turn developing Vietnam’s support industry. 

In comparison with the localization rate of 25% in 2014, Samsung’s current rate has increased to 58%. The number of local enterprises being Samsung’s Vietnamese tier-1 vendors have increased from 4 in 2014 to 35 as of present. By 2020, the number is projected to reach 50. 

Over the past ten years, Samsung has invested a total of over US$17 billion in Vietnam and employed 160,000. In 2017, Vietnam's export turnover reached US$214 billion, of which Samsung alone contributed over US$54 billion.

Samsung's four subsidiaries in Vietnam posted revenue of a combined VND405 trillion (US$20.5 billion) and a profit of VND41.1 trillion (US$2.08 billion) in the first quarter this year, both increasing 50% year-on-year, according to the company's quarterly financial statements.

According to Samsung's statistics, around 50% of Samsung's smartphones and tablets are produced in Vietnam and exported to 128 countries and territories, including the US, Europe, Russia and Southeast Asia. 

Vietnam’s incentives should only be applied to high added value projects: CIEM


{keywords}

In the new context, Vietnam should consider a proactive strategy towards attracting high-quality foreign direct investment (FDI) projects.

Preferential policies are necessary to attract investments, but should only be applied to high added value projects in order to avoid its adverse impact, according to Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM).

In the new context, Vietnam should consider a proactive strategy towards attracting high quality foreign direct investment (FDI) projects, as the country’s current comparative advantage of cheap labor cost and land resources for FDI attraction are diminishing, Cung said at a conference on November 30. 

To clarify the matter, Dinh Trong Thang, director of CIEM’s Investment Policy Department, said the incentive should take into account strengths and weaknesses of each province, while ensuring the compatibility among the objective, method of attracting investment, and the investment portfolio.

More importantly, preferential policies have to be result-based, in turn ensuring foreign companies to commit long-term business in Vietnam. 

Thang added that the coverage of the incentives in Vietnam is lengthy and scattered. Vietnam’s tax holidays are longer and broader in scope than in other countries in the region, but have not been based on the characteristics of each province. Additionally, tax holidays, which account for the highest proportion of revenue forgone, need to be applied moderately.

Thang suggested that the government should review existing tax incentives to avoid overlapping and waste. 

Le Thuy Trung, deputy director of the Ministry of Planning and Investment’s Department of Industrial Economy, said that current investment policies have failed to produce expected results. For example, the local automobile industry has been mainly built on assembly of parts with dearth of technology transfer. 

Similar trend is seen in the electronics, garment-textile and footwear sectors. In electronics, the localization rate only accounts for 10 – 20% of the products while in the garment-textile and footwear sectors, which are Vietnam’s key export staples, most of input materials are imported, leading to low added value.

Trung suggested that the country should exert more efforts to encourage the use of advanced and clean technologies and technology transfer, and these need to be incorporated into laws.

In a previous interview with Hanoitimes, Nguyen Thu Huong, senior program manager – governance of Oxfam in Vietnam, said that experiences from developed countries show that tax incentives do not influence capital inflows into the economy. 

“Credible investors will decide to invest regardless of receiving preferential policies or not. Preferential policies, thus, are seen as "additional bonus" for investors and an amount of revenue forgone,” she said.  

In recent years, several countries have gradually phased out tax incentives as the focus of the tax policy and shifted to the achievement of tax equity and neutrality. In 2008, China has abolished most of the tax incentives for foreign invested companies, such as tax holidays of 3-10 years and reduced corporate tax of 24, 15, and 10%, Huong concluded. 

VN considered gateway for RoK to enter ASEAN: forum     

Viet Nam is seen as a gateway for businesses from the Republic of Korea (RoK) to enter the ASEAN market, said experts at a forum in Ha Noi on December 3.

The forum on the RoK’s New Southern Policy and the importance of RoK-Viet Nam relations was co-organised by the National Centre for Socio-economic Information and Forecasting (NCIF) and the Korean Institute for International Economic Policy (KIEP).

In his opening speech, NCIF Director Tran Hong Quang said over the past three decades, Viet Nam-RoK relations have seen fine developments in all fields. At present, the RoK is one of the two largest foreign investors in Viet Nam with accumulated capital of US$57.6 billion by the end of 2017. Viet Nam is also the fourth largest investment destination and the biggest aid recipient of the RoK.

The RoK is the second largest trade partner of Viet Nam, with two way trade increasing 117 times since 1992, when the two nations set up their diplomatic ties, hitting $61.5 billion last year.

The two countries have also seen positive collaboration in labour, culture and tourism.

By the end of 2017, the Vietnamese community in the RoK numbered 162,000, most of them are guest workers, those getting married to Koreans, and students. Meanwhile, around 150,000 Koreans, mostly businesspeople, are living in the Southeast Asian nation.

“Viet Nam always attaches importance to and wishes to deepen the strategic cooperative partnership with the RoK, which gives high priority to collaboration with ASEAN, including Viet Nam,” said Quang.

KIEP President Lee Jae-young said the New Southern Policy aims to raise the RoK’s cooperation and diplomatic relations with ASEAN countries and India on par with those with the US, China, Japan and Russia.

Notably, in its economic relations with ASEAN – a focus of the policy, Viet Nam plays a crucial role, accounting for more than half of cooperation in almost all fields such as trade, investment, official development assistance (ODA) and people-to-people exchange.

According to Prof Park Bun-soon from Korea University, there were many areas in which the RoK and Viet Nam could further co-operation, including developing high-tech industries, Viet Nam’s restructuring of State-owned enterprises, trade and investment.

“Korean investment would continue to flow into Viet Nam in the future,” he said.

The RoK’s investment played a key role in the co-operation between the two countries but linkage between foreign direct investment and the domestic sector remained relatively weak.

He said the capital flow from the RoK should be encouraged to develop Vietnamese small- and medium-sized enterprises and the part-supply industry. At the same time, Viet Nam should develop its capacity to absorb technologies by enhancing co-operation in research and development (R&D).

“Viet Nam also needs to provide opportunities for Korean investors to participate in mergers and acquisitions.”

Stressing the role of Viet Nam in ASEAN, Prof Park said that the RoK might seek a ‘Viet Nam +1’ strategy, adding that businesses from both sides could make joint efforts to enter neighbouring markets.

Tran Toan Thang from NCIF said that as part of the New Southern Policy it was important to link the RoK to ASEAN through Viet Nam.

Thang pointed out the large and increasing trade deficit with Korea and poor linkage between Viet Nam’s domestic firms and Korean firms remained issues to be addressed in boosting co-operation between the two countries.

Another problem was the low percentage of Vietnamese enterprises (only 33 per cent in the first six months of 2018) taking advantages of the Viet Nam-Korea free trade agreement (VKFTA) due to unawareness of Vietnamese firms and the unavailability of a proper certificate of origin system for Vietnamese firms.

“It is critical to strengthen linkages between Vietnamese and Korean firms and improve awareness of Vietnamese firms on rules of origin under the VKFTA,” Thang said.

In addition, focus should be placed on promoting the consumption of Vietnamese goods in the Korean market and establishing a network connecting businesses from both sides, he said.

At the conference, KIEP and NCIP signed a renewed memorandum of understanding. 

VN proactively integrates into global economy: Deputy PM

The Government of Viet Nam persistently pursues the policy of comprehensive integration, with a focus on international economic integration in a proactive, pragmatic and politic manner, Deputy Prime Minister Vuong Dinh Hue said at a forum held in Ha Noi on Tuesday.

Hue said "Trade protectionism is now on the rise and seriously threatening the process of liberalisation and global economic integration.

"The wider and deeper integration into the global economy means Viet Nam will face more impact from regional and global economic development trends, and that is why the country needs a proactive and flexible approach to cope with this issue," he added.

Sudhir Shetty, Chief Economist for the East Asia and Pacific Region of the World Bank shared the ideas, saying that as a highly open economy and major trading partner of both the US and China, Viet Nam would be affected but these impacts should be manageable.

“Trade diversion could lead to Vietnamese exports replacing some Chinese exports to the US, and to a lesser extent, US exports to China,” he said.

He said Viet Nam should enhance its macroeconomic response to international financial and trade turbulences while strengthening national competitiveness with trade facilitation policies, improving the business environment, and strengthening the connectivity between foreign investment and domestic suppliers.

Furthermore, Viet Nam also needs extensive reform of trade and investment, including the simplification of non-tariff measures that distort trade as well as promote trade in services, deepen regional and global integration, and increase commitments to supporting the reform of the global trading system.

Deputy Minister of Industry and Trade Do Thang Hai said trade war between the US and China could make the world’s GDP growth decrease.

“Facing this situation, if the policy response is not flexible, Viet Nam may fall into decline economic growth,” Hai added.

He also said that because of the trade war, the challenges to sustaining reforms would be greater. It would be more difficult to tackle this challenge as cross-border e-commerce is more common and the risk of cyber-attack is higher.

“Viet Nam’s economic model and growth engine are heavily dependent on trade. Therefore, re-emerging protectionism would offer both opportunities and challenges for Viet Nam,” said Vu Minh Khuong, National University of Singapore.

He said Viet Nam would gain significant competitive edge against China in exporting goods to the US. The country is also capturing more strategic attention and interest from multinational companies and investors.

He suggested Viet Nam should be a leading player in embracing and promoting free and fair trade while avoid falling into the protectionism trap (especially in regulations related to infant industries and digital transformation). In addition, it should closely monitor the changing dynamics of the economy and its outlook.

In the past, Viet Nam has made progress in preparing for the new-generation free trade agreements (FTAs), including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which was signed in March and ratified by the National Assembly in November to come into force early next year.

Viet Nam and the European Union announced the conclusion of the legal revision of the EU-Viet Nam Free Trade Agreement (EVFTA) and agreed to keep the Investment Protection Agreement (IPA) separate from the FTA in June in preparation for the signing of the deal.

Viet Nam has achieved certain outcomes in international economic integration, contributing to the national socio-economic development.

The total import-export turnover in 2018 is estimated at US$475 billion, of which exports are expected to reach $239 billion, a year-on-year rise of 11.2 per cent.

The country also sought to increase goods exports to traditional markets and find new ones. Exports to countries having FTAs with Viet Nam in 2018 have seen high growth compared to 2017 with preferential rates reaching about 40 per cent, a surge from 35 per cent in previous years, indicating that Vietnamese firms are increasingly focusing on optimising opportunities from the implementation of free trade deals.

Trade between Viet Nam, Poland to pick up after EU-VN FTA: experts     

The expected free trade agreement next year between Viet Nam and the EU will go a long way toward fully tapping the trade potential that exists with Poland, experts said during a conference held in HCM City on Tuesday.

Cao Thi Phi Van, deputy director of the Investment and Trade Promotion Centre, said that Viet Nam and Poland had a long business history but the latter had not invested much in Viet Nam.

Poland is the sixth largest country in the EU, with a GDP per capita of around US$13,800 in 2017.

With a large, skilled labour force, the country ranked 24th on the World Bank Group’s Doing Business list last year, according to Piotr Harasimowicz, chief representative officer of the Polish Investment and Trade Agency in HCM City (PAIH).

According to Krzysztof Hajlasz, business development manager of PAIH, Viet Nam mainly exports electronics and equipment, footwear, textiles and agricultural goods such as coffee, pepper, coconut and cashew to Poland.

Meanwhile, Poland mainly exports animal products, pharmaceuticals and cosmetics to Viet Nam.

According to Hajlasz, Poland imports a great deal of rice, fruit and oil products from other European countries but very little from Viet Nam, which is highly capable of supplying these products.

For instance, many of the rice products that Poland imports every year from European countries are also imported from Viet Nam to such countries, then packaged in smaller bags and sold to Poland.

Viet Nam also imports a great deal of meat, wood and hard liquor from many countries, but very little from Poland directly, despite their high quality.

The lack of a free trade agreement has limited direct trading, but the EU-Viet Nam FTA is expected to change the situation next year.

"In addition, Vietnamese and Polish companies do not understand each other well," Hajlasz said. As such, PAIH wants to help both sides learn more about one another and facilitate direct trade, removing intermediaries.

Viet Nam and Poland’s bilateral trade totalled around $1.05 billion last year.

The conference was held by the Investment and Trade Promotion Centre of HCM City and PAIH.