Seeking Convenient Payment Method for Exporters to Russia

Information on procedures and methods of exporting Vietnamese products to Russia; the most convenient payment method in doing business with Russian via payment services at Vietnam - Russia Joint Venture Bank, and new directions of exporting new Vietnamese products to Russia are the main contents of a seminar titled “Supporting export of Vietnamese goods to Russia” recently held by the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi.

Mr Nguyen Van Hai, Deputy Director of the International Relations Department under the Vietnam - Russia Business Council, said: Bilateral relations between Vietnam and Russian Federation have been strengthened and developed. Favourable factors for Vietnam - Russia relations are the two countries' leaders are determined to promote the strategic partnership in the light of reliable and comprehensive cooperation for mutual benefit on the foundation of traditional friendship. And, to realize the determinations of the two governments and execute the guidance of Prime Minister Nguyen Tan Dung, in October 2008, Vietnam - Russia Business Council, was officially launched, aiming to strengthen the development of trade and investment cooperation between Vietnam and Russia. The Vietnam - Russia Business Council is a bridge and a fellow for the development cooperation of the Vietnamese business community with the Russian market.

 

Currently, Russia is an important gateway to the East European market and one of the biggest import markets of Vietnamese seafood. In 2008, Vietnam’s seafood export turnover to Russia reached about US$200 million, accounting for 20 percent of Vietnamese seafood export sales. In 2009, Vietnam expects to earn US$450-500 million. With a strong foothold in Russia, Vietnamese enterprises will easily access to Eastern European markets, especially the Far East and Siberia.

Nonetheless, in recent years, the export of Vietnamese goods to Russia in general and seafood in particular have experiencing annoying inconveniences, especially payment. Due to business habits and limited mutual trust, common and safe international payment methods like L/C are not widely used. On the other hand, most businesses have not made Vietnam are not allowed to import and pay directly for Russian enterprises but through third-country partners. Hence, risks and costs rise.

 

In fact, in recent years, Russian enterprises importing goods from Vietnam do not usually open L/C but choosing direct payment method (i.e. the buyer deposits 20-30 percent and will pay 70 -- 80 percent at delivery). Obviously, this form of payment is highly risky for Vietnamese exporters. In reality, several Vietnamese seafood exporters suffered risks with this form of payment.

 

A representative from Vietnam - Russia Venture Bank (VRB), which was established under the agreement of the Vietnamese and Russian governments by the Bank for Investment and Development of Vietnam (BIDV) with 51 percent of stake and Russian Foreign Trade Bank (VTB) with 49 percent of stake, said, with payment difficulties, VRB is now applying specific policies to support Vietnamese exporters. Vietnamese firms can choose payment currencies, including RUB, USD or EUR, to reduce exchange rate risks. To match Russian traditions, Vietnamese companies can pay through the VRB system or seek advice from VRB which will guide customers to choose appropriate solution with least risks (such as L/C, transfer, D/A, D/P through the banking systems of VTB, BIDV and VRB.)

 

In the past three years, total assets of VRB climbed from US$33 million in 2006 to US$427 million in 2009 while its chartered capital reached US$62.5 million, or VND1,125 billion. VRB has close links with more than 50 banks and credit institutions in the world.

 

One of the most powerful progresses of VRB is the international presence. VRB has opened a representative office in Russia in October 2008, becoming the first Vietnamese bank licensed to invest abroad (founding a wholly owned bank in Russia). On December 14, 2009, VRB started the official operation of its wholly owned lender in Russia, VRB Moscow Bank, which was attended by Prime Minister Nguyen Tan Dung, who was on an official visit to Russia. Based on the activities of VRB Moscow Bank, VRB will continue to expand its presence to CIS countries in particular and Europe in general.