The Vietnam-Eurasia Economic Union free trade agreement, which took effect last October, will cut 90% of tariffs and improve competitiveness for the goods of both sides.
Last year two-way trade turnover between Vietnam and Russia reached US$2.7 billion, of which Vietnam earned US$1.7 billion from exports to Russia, up 12%.
In the first half of this year, the bilateral export turnover continued to grow, fetching nearly US$1.7 billion, up 26.5%. Vietnam’s exports to Russia were valued at US$1.2 billion, up 34%. Aquatic products, vegetables, coffee, cell phones, and accessories were among hard currency earners.
Duong Hoang Minh, Vietnamese Trade Councilor in Russia, says that in addition to the advantage of tax reductions, another factor is giving Vietnamese exports to Russia a boost.
He noted that “Both sides have exchanged many high-ranking delegations, most recently the delegation led by the Vietnamese State President to Russia at the end of June and early July. During these visits, many economic agreements and contracts have been signed, laying a foundation for future economic cooperation between Vietnam and Russia. In addition, trade promotion activities and trade fairs have been held at Hanoi Trade Center in Moscow.”
Since the beginning of this year, the Vietnamese Embassy in Russia has organized programs to link localities of Vietnam and Russia so their business communities can better understand each other’s market and increase cooperation.
Garment No 10 Corporation is one Vietnamese company that has established business relations in the Russian market.
Than Duc Viet, the company’s Deputy Director General said “We entered the Russian market via Henderson, a Russian fashion and apparel retailer who orders 100,000 T-shirts a year. That number is small compared to orders from the US and Europe. We cooperate not only with Russian enterprises, but also with Vietnamese companies in Russia through trade counselors or overseas Vietnamese who understand Russian tastes well enough to approach this market.”
Economic and trade relations between Vietnam and Russia and between Vietnam and members of the Eurasia Economic Union have improved, but the outcomes remain modest compared to the potential.
Dang Hoang Hai, Director of the Department for the European Market of the Ministry of Industry and Trade, says one of the biggest hurdles is quarantine and verification of product quality, particularly for agro-forestry-fishery items.
“Only 25 fishery exporters out of 200 have registered to export to Russia. That figure is very small compared to 500 who export to the EU. The small figure is an obstacle in sustainable exports to Russia. Quality Assurance Agencies of the two countries have not agreed on a working mechanism, but hope in the future we will sign an inter-governmental agreement with Russia on cooperation amongst quarantine and quality control agencies. If the technical barrier is removed, exports and imports will grow more rapidly,” said Hai.
In June and July, Vietnam and members of the Eurasia Economic Union met to review every aspect and address each difficulty.
The Eurasia Economic Union is a market with 183 million people and a yearly GDP of US$2 trillion, promising many opportunities for Vietnamese businesses.