Untapped potential

According to Pham Binh An, deputy director of the Ho Chi Minh City Institute for Development Studies, the US’ new tariff policies are adding pressure on countries like Vietnam, prompting many firms to seek markets that are less exposed, such as the Middle East.

Vietnamese steel exporters alone faced 32 trade defence investigations from 12 markets in 2024, nearly double the figure in 2023. Additionally, the EU’s Carbon Border Adjustment Mechanism (CBAM), which came in force in October 2023, demands strict carbon reporting from exporters.

Against this backdrop, businesses like Secoin, a leading manufacturer of premium decorative products, are diversifying away from traditional markets.

The US once accounted for over 50% of the company’s export revenue, but it is no longer a top priority, said Secoin CEO Vo Thi Lien Huong, adding that Secoin is restructuring to spread risks and avoid putting all eggs in one basket.

Secoin now sees the Middle East as a key growth market, given its strong demand for artistic, highly personalised products - an area where the company excels.

According to Huong, Secoin is investing in R&D to develop exclusive high-end lines for the region.

The recently signed Comprehensive Economic Partnership Agreement (CEPA) between Vietnam and the United Arab Emirates (UAE) in October 2024 is expected to further boost trade and investment opportunities in the region.

Other Vietnamese businesses are also gaining presence in the Middle East. Dony Garment Company, for example, has maintained an annual export growth rate of 15–20% to the region, even without formal trade incentives.

Director of the Dony Garment Company Pham Quang Anh noted that in the current volatile climate, diversifying export markets has become essential for business resilience. He added that his company has been actively engaging with partners in the Middle East to develop tailored product designs and offer more competitive prices.

Patience and good preparations needed

Access to the Middle Eastern market yet remains challenging, especially due to Halal requirements, which cover everything from raw materials to packaging and logistics.

Nguyen Ngoc Luan, director of Global Trading Link, a coffee exporter, highlighted challenges in meeting Halal standards, noting that Halal certification standards vary by country. Meeting one country’s requirements does not guarantee compliance in another.

Luan said his firm has faced high costs, up to 20–30% higher, to upgrade facilities and retrain staff since beginning preparations in 2021. Despite the investment, he estimates the company has only achieved 50% of its market potential in the region.

Likewise, director of the Dony Garment Company Pham Quang Anh underlined the impact of geopolitical factors, elaborating that during the Red Sea crisis, shipments to the Middle East were delayed by up to four months, with costs surging four to five times.

He urged more proactive market promotion and government support to help Vietnamese exporters gain a firm foothold in the market.

While not overly demanding, the Middle East market has specific requirements rooted in culture and religion. Success requires a deep understanding of local customs and full compliance with Halal standards throughout the production process.

With the right preparations, strategic investment, and government backing, the Middle East holds strong potential as a long-term destination for Vietnamese exports.

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