Opportunity for Vietnam Enterprises to Penetrate Kazakhstan Market

Kazakhstan is the second largest country in the Commonwealth of Independent States (CIS) and the country with the highest economic growth in the CIS. Kazakhstan economic development is high and sustainable with average GDP growth being 8.4 percent during the period 2004-2008. This is also a country rich in natural resources namely minerals, oil and gas. It has great potential for agricultural development, vast fertile land suitable for crop growth and livestock. Mining, resource processing, machine building, agricultural machinery, vehicles and military equipment are the strongest fields of Kazakhstan.

 

The Free Trade Agreement (FTA) between Vietnam and the Eurasia Economic Union (EAEU), to which Kazakhstan is signatory, will open new doors for comprehensive cooperation between Vietnam and Kazakhstan in all fields, especially for agricultural commodities, food, textiles, consumer goods and electronics of all kinds. Objective trade turnover with Kazakhstan is expected to be US$12-15 billion by 2020-2050.

 

Besides, the structure of export items of Vietnam and Kazakhstan complement each other. The main export items of Vietnam to Kazakhstan include phones and components, computers and parts, agricultural products, marine products, machinery parts and iron and steel. Vietnam imports from Kazakhstan metals, ores and minerals.

 

Kazakhstan is implementing mandatory creative industry development programmes, with the main sectors: development of the metallurgical, oil mining, chemical industry and pharmaceutical industry, machine building, a combination of agriculture, light industry, tourism, information technology, communication technology and space technology and energy sectors.

 

Recently, on October 6, in the meeting between Vietnamese enterprises and Kazakhstan Embassy held by VCCI, Mr Beketzhan Zhumakhanov, Ambassador of Kazakhstan to Vietnam, introduced the opportunity for investment in Kazakhstan market. According to Mr Beketzhan Zhumakhanov, Kazakhstan is implementing completely open borders mechanism with Russia and Belarus. It is also the gateway for Vietnamese enterprises to penetrate the Eastern European countries.

 

Besides, Kazakhstan has been building and developing infrastructure, creating clear mechanisms to attract foreign investment and business cooperation with foreign partners that Vietnam is one of the important economic partners. In the coming time, the two countries should boost cooperation in oil and gas extraction, coal, mineral, and consider these focused areas in long-term cooperation between the two sides in order to meet energy and mineral raw materials demand for Vietnam to become an industrial country after 2020.

 

Earlier, in July 2015, during the visit of Deputy Minister of Foreign Affairs of Kazakhstan Rapil Zhoshybayev to Vietnam, VCCI in collaboration with the Embassy of Kazakhstan in Vietnam, JSC National Company Astana EXPO 2017 organised the forum "Business with Kazakhstan market." At the forum, Mr Rapil Zhoshybayev urged Vietnamese enterprises to invest in Kazakhstan market. This country has been building, developing infrastructure, creating clear mechanisms to attract foreign investment. Kazakhstan Government also pledged to create favourable conditions for foreign businesses to invest, including Vietnam.

 

Although Kazakhstan has great potential, it is still a new market, so it is necessary to conduct research on the market before embarking on investment cooperation.

Geographic distance is a major obstacle to the two countries' enterprises. Vietnam enterprises should study and learn the market to minimize the transportation costs. Vietnam and Kazakhstan signed air transport agreement started in 2013, to explore direct flights between the two countries. This is an important transport link to promote long-term cooperation and stability between the two countries.

 

With the disadvantage of bilateral payments, non-tariff barriers, the companies need to have a reasonable business plan, to invest in infrastructure for quality and service to meet international standards. Besides, to ensure food safety is an absolute must in cooperation on food. So businesses need to invest in improving product quality and competitiveness in the market.

 

A small note but extremely important is the language barrier. In the coming time, businesses also need additional personnel capable of using good Russian language, knowledge of the market to enhance the opportunities for cooperation with Kazakhstan enterprises in particular and enterprises in the Union in general.

 

About benefits that the free trade agreements bring about, businesses need to carefully study the provisions and commitments of the Agreement in order to effectively benefit incentives that both sides have for each other, while preparing plans to enhance competitiveness to meet with the schedule of tariff reductions for exports of both parties.

 

In addition, enterprises should actively and strengthen the business delegation to participate in business forums, fairs and exhibitions to enhance the understanding of markets, customers in Kazakhstan, thereby, set and strengthen cooperative relations business. Currently, the Ministry of Industry and Trade is actively coordinating with ministries and VCCI in implementing common propagation of the Agreement to all businesses across the country.