Middle East - Africa: Potential Markets

Mr Do Thang Hai, Deputy Minister of Industry and Trade, said, the Ministry of Industry and Trade always attaches great importance to promoting economic cooperation, especially cooperation in trade, energy and investment with countries in the Middle East - Africa. Many agreements were signed to create a favourable legal framework for specialised cooperation. Joint Committees/Intergovernmental Committees were established to create a permanent mechanism for cooperation between Vietnam and the Middle East - Africa.

 

Mr Ta Hoang Linh, Deputy Director of the Vietnam Trade Promotion Agency (Vietrade), said, Vietnam and Middle East and African countries can boast early cooperative ties and they attach much importance to cementing and enhancing the friendships. To date, Vietnam has established relations with 70 countries in the Middle East and Africa, with two-way trade having increased by eight times from US$2 billion over the past decade.

 

Covering over 36 million square kilometres with a total population of nearly 1.5 billion, the market has strong potential for Vietnamese businesses thanks to high demand for various products from Vietnam already. Therefore, this is considered a potential and diverse market for Vietnamese businesses.

 

The two-way trade between Vietnam and the Middle East - Africa reached US$17.3 billion in 2015, of which Vietnam’s export were worth US$12 billion and imports valued at US$5.4 billion. For the time being, Vietnam’s exports to Africa are limited and lack diversity. The country’s key exports to this region include agricultural products, footwear, garment and textile, and seafood. Garment and textile is the second most important export of Vietnam to Africa after rice. The commodity contributed 14 per cent to the country’s export value to this continent. Its garments and textiles are mainly shipped to South Africa, Angola, Nigeria, Ethiopia, Benin and Madagascar.

 

The third largest export is seafood. Currently, Vietnam’s seafood export structure to Africa is increasingly diverse because market demands are growing while quality and design requirements are not too strict. Pangasius is a favourite item in the continent and major importers are Egypt, Nigeria, Algeria and Tunisia.

 

Vietnam’s imports are mainly inputs for its industrial production, such as raw cashew nuts, cotton, timber and scrap metal. Its key import markets are South Africa, Ivory Coast, Tanzania, Nigeria and Ghana.

 

Mr Le Thai Hoa, Deputy Director of the West Asia - South Asia Market Department under the Ministry of Industry and Trade, said, to boost trade with the Middle East - Africa, businesses should carefully learn about the culture of the Middle East and African countries to design suitable products for these markets. Besides, they should review their development strategies to improve competitiveness and develop distribution channels while actively carrying out trade promotion activities such as surveying the market, joining trade fairs and exhibitions, and optimising opportunities from the free trade agreements.

 

Vietnamese companies need to actively cope with risks when they do business in Africa and the Middle East. Regarding payment risk, African businesses are restricted in financial services and they often suggest a deferred payment method and cost, insurance and freight (CIF) method. The second is political and security risk which may cause their business operations to a halt. Another risk is growing commercial fraud in West Africa and Central Africa in recent years and this distresses some companies. Administrative procedures in many African countries are cumbersome and bureaucratic, while air transportation is not developed.