Afro Asian Business Chronicle

Vietnam seeks direct flights to Trade high

The war-ravaged Vietnam once politically isolated is fast emerging as a sun-shine economy.  Through economic and political reforms in the nineties, it turned around diplomatically and economically.  It has achieved a phenomenal economic growth, highest among the world in the past decade and its high-trajectory growth is expected to continue for four more decades. Vietnam is a Member of World Trade Organization  and ASEAN. Vietnam's chief trading partners include China, Japan, and Australia. In a exclusive interview with Renu Malhotra, Ediitor-in-Chief of AFRO ASIAN BUSINESS CHRONICLE,
Ambassador of Vietnam to India provides a detailed insight on salient issues. Edited Excerpts:

According to reports, bilateral trade between Vietnam and India has increased manifold but a lot needs to be achieved - Please comment.

The bilateral trade between the two countries is steadily growing. In 2005, it was merely $697 million which has risen to more than $2 billion in 2010. We are expecting a two fold increase in the current year.

What is the status of Indian investment in Vietnam and is any new Indian investment being initiated?

Indian investments are very small. India has 50 projects, with capital of $ 212 million. 23 projects are in food, food processing and machines valued at $ 7.9 million three projects on oil & gas and mineral involving an investment of $86 million,  Iron-ore  $50 million and Sugar mills $22 billion, We are contemplating to borrow a soft loan from India for Hydro-electrics power -  Indian government is considering two Hydro projects in Vietnam  worth $19.5 million. A $4.8 billion project by Tata to produce steel is under approval and if that happens the bilateral trade will get a quantamjump.

As chair of ASEAN, what was the contribution of Vietnam?

We assured high level interaction among the member countries. Many delegations and meetings among member-country ministers of Defence, foreign Affairs, Trade etc. were facilitated. We brought out exhaustive reports on the meetings and findings as roadmap for further development.

ASEAN-India, FTA on services is still awaited? Do you expect it to be concluded early?

Vietnam has already ratified the FTA. When it comes into force, we expect to kick-start the bilateral trade in a dynamic business environment.

Tourism is one of the major revenue and employment generating sectors. What steps are being taken to enhance bilateral tourism  opportunities?

Tourism is a week area. We are trying to get direct flights between India and Vietnam. One million Indians visit  Malaysia and Singapore, 8,00,000  visit Thailand and we expect about 500,000 to visit  Vietnam  if there are direct flights. We now attract only 40,000 Indian tourists.  Advertisement and public awareness is necessary. We need to go public and conduct a vigorous campaign.

There has been public upheaval in some of the Arab League countries (which are oil producing countries too) resulting in spurt in crude prices? Do you think this scenario will hurt growth in ASEAN countries, particularly Vietnam?

The impact is felt not only in ASEAN countries like Vietnam but also all countries. Apart from oil, there is the problem of Vietnamese labour force (10,000 from Libya, and another 20,000 from other Gulf countries) coming back to homeland due to loss of employment on account of civil strife in countries of their work. We are encouraging them take up small entrepreneurship and improving government job opportunities.

World has not fully recovered from the aftershock of economic slowdown. Do you foresee another cycle of slow down in the near future with most of the economies facing high inflation?

Economic slowdown is of great concern - Vietnam is also facing inflation. Our currency has lost value The government of Vietnam is trying to apply measures to contain inflation. It is applying strict monetary policies. Small businessmen and others are prohibited to purchase dollars and other foreign currencies. We expect the Vietnam currency will stabilise step by step.

Both the counties enjoy strategic partnership. In the  ASEAN Summit  last year the leaders of both  countries have established  good  contact  and shared    views on the various situations. Vietnam has already sent a number of high-level delegations to India- on  (1) Trade Affairs (2) Foreign Affairs  (3) Economic cooperation (4) Parliamentary affairs and (5) Education. In the first quarter of this year the strategic partnership has deepened and the international trade is expected to rise to double amounting to more than $4 billion.

Cooperation in education is also growing. Exchange of students, e-governance, eco-management and social affairs are some of the key areas of interest for Vietnam.

Money-laundering, terrorism, drug and human trafficking are some of the major concerns in Asia. What initiatives Vietnam has taken in this regard?

We have a policy to fight against all these menaces. We are cooperating with the regional and other countries to contain the problem of drugs and human trafficking. We arrest such criminals. We take strict legal action against those indulging in any such activities. We have also setup security commissions and cooperate with neighbouring countries to fight against these problems.

What is your message to our readers?

As an Ambassador it is my utmost wish to establish robust friendship in the coming years for the benefit of people of both the countries and people at large.

INDIA-VIETNAM: FACT SHEET

>> India and Vietnam have traditionally close and cordial relations. India strongly supported and assisted Vietnam in its early days of post-war reconstruction and in its reform and economic development later.

>> In 1954, India opened its consulate general in Hanoi.

>> In 1956,Vietnam opened its consulate general in New Delhi.

>> Full diplomatic relations were established on January 7, 1972.

>> India-Vietnam Joint Commission for Economic, Scientific & Technical Cooperation was established on December 18, 1982. (This is a very important mechanism for the two sides to review and promote cooperation in all fields, including the working out of an Action Plan for every three years. So far 13 meetings of the Joint Commission have taken place.)

>> Bilateral trade was $72 million in 1995; rose to $1billion in 2006; reached $2.5 billion in 2008.

>> The main items of India's export to Vietnam are feed ingredients, mobiles, machinery and equipment, pharmaceuticals, plastic material, ordinary metals and steel of all kinds, medical ingredients, leather and textile material, cotton of all kinds, pesticides etc.

>> The major items of Vietnam's export to India are coal, pepper, electronic goods, cinnamon, rubber, machinery and equipment, fabric, etc

>> India has registered FDI of $201.1 million in Vietnam till September 2009, the 32nd out of total 88 countries and territories having investment in Vietnam.

>> Indian Credit Lines: Since 1976, India has extended a variety of Lines of Credit to Vietnam. In 2007, India announced a credit line of $45 million for Nam Chien Hydropower project and the

agreement was finally signed in January 2008. India announced a new credit line of $19.5 million for Vietnam.

>> An agreement on bilateral cooperation in Science & Technology was first concluded in 1976, and renewed in 1996. A Joint Committee on Science & Technology was constituted in 1997. India-Vietnam Protocol on Information Technology was signed in 1999.

>> So far, two countries signed various important bilateral treaties and agreements, such as: Trade Agreement, Bilateral Investment Promotion and Protection, Avoidance of Double Taxation Agreement, Consular Agreement, Culture Agreement, Tourism, Air Service, Agreement on Cooperation in Science & Technology. In addition, two sides have also signed many other MOU in specialised sectors.

Source: MFA, Vietnam