Vietnam- Kazakhstan: Toward a "New Silk Road"

According to the economic experts, the free trade agreement (FTA) between Kazakhstan- Vietnam- Eurasian Economic Union is promised to contribute to promoting economic cooperation of Vietnam- Kazakhstan.

 

Specifically, according to the Ministry of Industry and Trade, till 2014, the bilateral trade and economic cooperation led to many positive results. The import-export turnover between Vietnam and Kazakhstan reached US$159 million in 2013, up 185 per cent compared to 2012. By 2014, the total trade turnover between the two countries reached US$229 million, up 44 per cent compared to 2013 and increased by 5.2 times compared to 2010. However, in 2015, two-way trade between Vietnam and Kazakhstan showed signs of decline, only reaching US$162.1 million, down nearly 30 per cent compared to 2014. The exports from Vietnam totaled US$153 million (down 30 per cent) and imports reached US$9.1 million (down 13 per cent).

 

Deputy Minister of Industry and Trade Mr Hoang Quoc Vuong said, in the first 3 months of 2016, the export turnover between the two countries reached US$41.7 million. Vietnam exported nearly US$37 million and imported US$4.7 million. The growth of trade between the two countries is unstable and the bilateral trade still accounts for a small proportion of the total export turnover of Vietnam (up only 0.07 per cent of the total export turnover of US$300 billion) and Kazakhstan (by 0.2 per cent of US$120 billion). The goods traded between the two countries are also narrowed. The result of the economic cooperation is still modest. Currently, the main export items of Vietnam to Kazakhstan are phones and components, computers and parts, agricultural products (rice, cashew nuts, pepper), marine products, machinery parts and steel types. Vietnam imported metal products, ores and minerals from Kazakhstan.

 

The bilateral economic cooperation is still modest and has not met the expectation of both Vietnam and Kazakhstan. Especially, the results are placed in the context of good long-standing relationships and favourable legal foundation that have been set up in recent years. Therefore, according to Mr Vuong, promoting economic and trade relations between the two countries needs ideas and innovative solutions and economic cooperation breakthroughs in the near future.

 

According to analysis by Deputy Minister Hoang Quoc Vuong, to promote cooperation between Vietnam and Kazakhstan, both countries need to take advantage of the FTA that was signed between Vietnam and the Eurasian Economic Union including Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia last year. It is expected that once the formal Agreement takes effect in the 2nd quarter of this year, the cooperation between Vietnam and Kazakhstan in the field of trade, goods and services will significantly improve. Accordingly, due to a reduction and an elimination of tariff barriers, the export turnover between Vietnam and the Eurasian Economic Union is estimated to increase by 10-15 per cent. Due to the complementary list of goods in the import and export of both parties, the agreement will help improve the structure of export commodities and diversification of export markets in order to avoid excessive dependence on a few countries for some types of materials, equipment and machinery. Moreover, many sensitive products are allowed based on the schedule of 5-10 years to help local firms to prepare and participate effectively.

 

According to the Ambassador of the Republic of Kazakhstan in Vietnam Beketzhan Zhumakhanov, the cooperation on transport is one of the important areas for the development of economic cooperation in trade between Eurasian Economic Union and Vietnam. Currently, Vietnam and Kazakhstan are making efforts to create a legal basis and favourable infrastructure to serve and to support effectively the cooperation of the two countries' businesses to establish a transportation route connecting markets of the ASEAN region to the markets of Eurasian Economic Union to take advantage of every opportunity to do business.

 

According to Kanat Alpysbayev – Vice President of Logistics of Kazakhstan Railways, the country has built rail system to lower the freight rates. During the years of independence, we have built more than 2,000 kilometres of railway and infrastructure improvements in the area adjacent to China. We ensure transport into neighbouring markets. Accordingly, goods from Vietnam will be transported via a new railway through China, Kazakhstan in the Eurasian Union countries such as Russia and Belarus. This is considered a new effective transport solution for Vietnam goods exported to the Eurasian Union and to Europe and vice versa. According to calculations, the current transit time from Vietnam to Kazakhstan is 40 days. "However, when this logistic system is complete, the time of transit will be shortened by half. This creates very good conditions for goods from Vietnam to Kazakhstan and other third countries, as well as from Kazakhstan to Vietnam," said Mr Kanat Alpysbayev.

 

Mr Phan Quoc Anh, Deputy General Director of Vietnam Railway Corporation, confirmed that participation in the Eurasian Economic Union is a great opportunity for the development of the field of cargo rail transportation, leading vast opportunities to develop transport cooperation among the countries of the Eurasian Economic Union. In addition, Phan Quoc Anh also suggested an action direction in promoting development of the railway sector by promoting more freight by containers via road system between Vietnam and Kazakhstan and from Kazakhstan to the countries in Central Asia and Europe; accelerating the expansion of cooperation between the companies provide transportation services from Vietnam to Kazakhstan; and promoting the exploitation of international container transportation. The exchange of experience and coordination in attracting private investors to develop the railway; exchanging the technology; and training human resources should be strengthened. "This is also one of the international cooperation sectors in the future," said Phan Quoc Anh.