Vietnam – Attractive Destination of Indian Investors

Vietnam, besides having a strategic geographic position in ASEAN region, the country also has a plentiful source of high-skilled labour. Vietnam currently is an attractive destination for Indian investors, affirmed Shantanu Srivastava, President of Indian Business Chamber in Vietnam (INCHAM) at a Vietnam -India trade and investment forum held in Hanoi on October 7.

 

The forum was co-organised by the Indian Embassy in Vietnam, Federation of Indian Chambers of Commerce and Industry (FICCI), the Hanoi Department of Industry and Trade and the Vietnam Chamber of Commerce and Industry (VCCI). As many as 50 representatives of Indian enterprises operating in textile, building materials, electronic equipment in telecommunication, food processing, pharmacy and health equipment, as well as over 100 Vietnamese enterprises took part in the forum.

 

According to the India Ambassador to Vietnam T.L.Muana, the Indian Government considers the economic cooperation with Vietnam as the focus of its look-east policy. Indian officials will try their utmost to help Indian enterprises carry out the policy. At first, the Indian government will provide fee pavilions at India International Trade Fair (IITF) that will take place next month for Vietnamese exporters, Muana affirmed.

Over recent years, the bilateral trade turnover between Vietnam and India has risen around 20 percent per year in average. Especially, the bilateral export-import turnover of the two countries was over US$2.4 billion in 2008, of which, Vietnam’s export value was nearly US$387 million, up 46 percent from a year earlier. However, in the first eight months of this year, the figure was only US$22 million, down 14 percent from last year, due to the global financial crisis. The two-way trade balance between the two countries is different when Vietnam still suffers a trade gap. The two countries are striving to reduce the trade gap and raise the bilateral trade turnover to the new level.

 

Although depending much on exports while key export markets have not yet recovered well due to the global economic recession, Vietnam’s economy still has satisfactory signals, Indian Ambassador to Vietnam Mauna said, adding that it is the time for Vietnam to boost trade and investment promotion activities.

 

The driving force for the bilateral trade and investment between the two Asian dynamic economies is the implementation of Fee Trade Agreement (FTAs) among India and ASEAN. Besides that, when India officially admitted Vietnam as a market economy, Vietnamese exporters will not be imposed anti-dumping taxes on their products. The two-way trade between Vietnam and India will be US$3 billion next year, Muana believed.

 

According to the Vietnam General Statistics Office (GSO), over the first months of this year, India topped the list of countries and territories exporting most pet food valued at US$158.46 million in total to Vietnam. India was the second pharmaceutical product exporter in Vietnam after France.

 

Currently, India has around 70 companies having representative offices in Vietnam, VCCI said, adding that most of these offices operating in pharmaceutics as well as machine, equipment, spare part, chemical and agricultural material manufacture.

 

According to Federation of Indian Chambers of Commerce and Industry (FICCI), India currently invests over US$200 million in 32 projects in Vietnam, accounting for 0.14 percent of foreign investment poured into Vietnam. Especially, Tata Steel Group of India is carrying out a US$4.5-billion plant to mine iron ores and produce steel in Ha Tinh province. Once the plant comes into operation, India will rank among four countries which have biggest investment in Vietnam.

 

In order to raise the bilateral trade turnover between the two countries, Vietnam and India should boost their information exchange on investment and trade policies, trade promotion activities, lists of exhibitions and fairs to take place in each nation, and lists of their export and import products, deputy Minister of Industry and Trade Nguyen Thanh Bien said.

 

The deputy minister encourages Indian enterprises to boost investment in Vietnam in oil and gas exploration and production, chemicals, information technology in an effort to exploit the Vietnamese market as well as manufacture products to export to India, helping to narrow the bilateral trade balance between the two countries.

 

India is in need and willing to buy raw materials of coal, oil and gas with large volume from Vietnam, according to VCCI. Vietnam is able to export rice, shoes, pottery, rubber, rubber products, vegetable oil, tea and pepper to India. Indian people currently like split stone, fine art products, traditional textile products and instant noodle imported from Vietnam very much. If maintaining the growth rate of exports as the average level over five recent years (about 30 percent), the bilateral export-import turnover between the two countries is able to reach between US$4 billion and US$5 billion within the next 7-10 years.