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Int'l Cooperation

Last updated: Thursday, December 14, 2017

 

Vietnam-Russia: Business Cooperation to Boost Trade and Investment

Posted: Friday, June 09, 2017

The 19th St. Petersburg International Economic Forum (SPIEF 2017) took place in Saint Petersburg City, the Russian Federation from June 1-3, 2017. This was an annual international trade and investment promotion event launched 20 years ago and chaired by the President of the Russian Federation. The Interregional Universal Wholesale and Retail Fair "Kursk Korensk Fair-2017” and the 6th Central Russia Economic Forum are also popular platforms.

This information is shared on the VCCI website to Vietnamese companies in a very specific, timely manner. The cooperation between enterprises of two countries to promote Vietnam-Russia trade turnover and investment attraction has never been as exciting and effective as now.

Vietnam always attaches great importance to strengthening comprehensive strategic partnership with the Russian Federation and highly appreciates positive bilateral cooperation results, especially in economy, trade and investment.

Rapid trade growth
In 2015, Vietnam and Russia celebrated the 65th anniversary of diplomatic relations establishment with prominent achievements in politics, foreign affairs, economics, commerce, security and national defence. Particularly, political ties have been uninterruptedly consolidated and highly trusted. Shuttle exchanges of delegations at all levels take place regularly, especially at high levels. Vietnam-Russia economic cooperation has been strengthened in four pillars: trade, investment, oil and gas, and electricity. The two-way trade has been on the rise and forms of cooperation and investment have also been increasingly diversified.

According to statistics, the two-way trade value reached US$2.7 billion in 2016, up 25 per cent over 2015. In the first four months of 2017, it climbed 30 per cent year on year to US$1.1 billion. Telephone and parts are the main exports to Russia during this period, totalling US$300.8 million, accounting for 49.1 per cent of Vietnam’s export value to this market and rising 43.2 per cent over the same period of 2016. The second biggest export is garment and textile, bringing US$51.9 million to Vietnam, up 146.47 per cent year on year, followed by coffee. However, coffee exports to Russia fell 18.14 per cent on year to US$37.8 million.

In addition, Vietnam also shipped electronic devices worth US$33.5 million (up 16.6 percent), footwear worth US$27.9 million (up 10.82 per cent) to Russia.

In the first four months of 2017, Vietnam’s exports to Russia saw a positive growth, accounting for 78.2 per cent. Rice exports surged by 2,354.48 per cent although the value was just US$4.1 million.

The effective enforcement of Vietnam-Eurasian Economic Union Free Trade Agreement is expected to create a groundbreaking opportunity to bring the bilateral trade value to US$10 billion in 2020.

Strong capital flow from Vietnam
In fact, more and more Vietnamese companies are investing in Russia, and seek to expand the market. To date, Vietnam has about 20 investment projects with a total registered capital of nearly US$3 billion in Russia. The biggest project is US$2.02-billion Rusvietpetro joint venture project in the Nhenhexky Autonomous Region, which explores and produces oil and gas. Other big projects include US$125 million project of Rusvietpetro Joint Venture Company in exploration and production of oil and gas at Nagumanov field, Orenburg or the US$190-million Hanoi-Moscow Trade Centre in Moscow.

Notably, the Dairy Cow Farming and Processing Complex Project in Moscow (Russian Federation) invested by TH Group is the first milk production and processing project of Vietnam in Russia and the biggest Vietnamese project by investment value in the country to date. TH Group will invest US$500 million in the first phase and expect to sell milk products in Russia in mid-2017. The 10-year investment, with three phases, will reach US$2.7 billion. When the third phase of investment is completed, the complex will raise 350,000 cows and process 5,900 tonnes of milk a day or 1.8 million tonnes a year. The material zone of the complex covers 140,000 ha. TH Group plans to set up a distribution system with 300 True Mart stores across the Russian Federation.

Russian companies have also invested US$2.08 billion in 114 projects in Vietnam.

Although the investment capital remains modest for both countries, more opportunities for bilateral cooperation are expected to appear in the coming time, especially when the two countries adopt bilateral payment in domestic currencies.

In particular, when Vietnam-Eurasian Economic Union FTA takes effect, Vietnamese and Russian investors will have new opportunities to enter each other's markets. Then, companies from both sides will have the opportunity to invest, develop and expand cooperation in every field that Vietnam is strong at like agriculture, energy, light industry, leather and footwear and infrastructure in addition to traditional cooperation fields like national defence, oil and gas, and electricity.

Quynh Anh

 








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