Vietnam and India have become strategic partners of each other in a long time; trade cooperation between the two countries has been constantly evolving in recent years but still not commensurate with the potential of two countries. Vietnam Business Forum had an interview with H.E Parvathaneni Harish, Indian Ambassador to Vietnam with regard to cooperation relations between the two countries. Luong Tuan reports
Vietnam and India have established Strategic Partnership, what developments in economy has it brought about?
India and Vietnam have a versatile relationship which has weathered the tests of time. Full diplomatic relations were established in 1972 and ever since the ties between the two countries have been marked by mutual trust and convergence of views on major international issues. The Strategic Partnership between the two nations was established in 2007. Our Strategic Partnership is today comprehensive and covers cooperation and collaboration in defence and security, economic engagement, cultural outreach and fostering people-to-people linkages.
Both the leaderships have identified economic cooperation as a strategic thrust in our Strategic Partnership. They have set a bilateral trade target of US$15 billion by 2020 and both countries are working towards achieving the same by identifying new sectors for the trade basket and expanding the existing ones. The impact of the strategic partnership is not limited to simply development of economic engagement but also has a strong political, cultural, security, defense and human capacity building component to it. Under the Strategic Partnership, India has so far extended 18 LOCs to Vietnam.
India not only stood by Vietnam during its freedom struggle but also during its phase of national reunification. The late 1970s and 80s were a difficult period for Vietnam, and India was one of the few countries that stood by Vietnam in its time of need. Since 1976, India has extended over 18 Lines of Credit.
One of the most remarkable symbols of our cooperation was the establishment of Cuu Long Delta Rice Research Institute (CLRRI), which is one of the leading research institutes of Vietnam and has contributed substantially for ensuring food safety. From a net importer of rice in the 1970s, Vietnam is one of the leading exporters of rice today. Many of the scientists in this Institute have received training in India under Indian Technical and Economic Cooperation Programme. The Buffalo and Forage Research Centre was also set up under one of our Lines of Credit. We have also assisted Goats and Rabbit Research Centre near Hanoi. India has helped finance and execute numerous railway, hydropower and agricultural projects across Vietnam as part of its assistance programme.
India has also helped establish numerous projects in science and technology such as the Advanced Resource Centre in Information and Communications Technology (ARC-ICT) in Hanoi, a High Performance Computer facility at the Hanoi University of Science and Technology (HUST), the Vietnam-India Entrepreneurship Development Centre, and numerous English language and Information Technology training centres.
India and Vietnam are in advanced stages of discussions over establishment of Centre for Excellence in Software Development and Training in Ho Chi Minh City and Satellite Tracking and Telemetry Centre (TTC) and Image Processing Facility.
Under the cultural cooperation and human resource development, India is offering more than 200 scholarships annually. The Archeological Survey of India is also collaborating actively with the Vietnamese authorities in the conservation and restoration of the Hindu Champa monuments of My Son. Our approach towards Vietnam as a partner and a friend is holistic with a long term vision of deepening and intensifying the level of our engagement.
Potentials for economic cooperation between the two sides are huge, but the outcome has been limited. What are the main reasons?
India is one of Vietnam’s top ten trading partners, whereas Vietnam is India’s 5th largest trading partner in ASEAN. It is a very important market for India’s exports. In the financial year 2015-16 the bilateral trade stood at US$7.83 billion. Our economic engagement covers trade, mutual investments and cooperation in regional and multilateral fora. Though the statistics are impressive, there is a huge potential to do more. Both sides have set a target of bilateral trade at US$15 billion by 2020 and are working to achieve this goal.
Tariff and Non-Tariff barriers are impediments to development of bilateral trade and they are being addressed by us. Both India and Vietnam have agreed to facilitate trade flows between the two countries by minimizing the application of trade barriers and implementing facilitation measures, and step by step removal/abolishment of trade barriers in accordance with the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and India.
Vietnam’s entry into the TPP and its FTAs with other countries/regions is of significance to India, and both the sides are actively engaged to leverage these for enhanced trade and investments. We are also taking measures to make to make the business visa regime between the countries simpler and more flexible to enable hassle free travel for businessmen.
We are undertaking numerous trade promotion activities, and exchange of business delegations participating in trade fairs of both countries. We are also actively engaging the Chamber of Commerce and Industry and trade bodies of both the countries with an objective to bolster trade.
Vietnam-India bilateral cooperation has been continuously promoted annually. As the Ambassador of India to Vietnam, according to you, what are the promising sectors for the two countries to further boost economic cooperation?
Our economic engagement covers trade, mutual investments and cooperation in regional and multilateral fora. India is one of Vietnam’s top ten trading partners, whereas Vietnam is India’s 5th largest trading partner in ASEAN. It is a very important market for India’s exports. In the financial year 2015-16 the bilateral trade stood at US$7.83 billion. Both sides have set a target of bilateral trade at US$15 billion by 2020 and are working to achieve this goal.
During the visit of Prime Minister Nguyen Tan Dung to India in October 2014, both our Prime Ministers decided to focus on economic engagement as a strategic objective. Five key sectors, identified as the thrust areas, include Garment and Textile, Pharmaceuticals, Agro-Commodities, Leather & Footwear and Engineering. In recent years, trade in services and project exports have also emerged as a focus area in the bilateral relationship.
Indian companies are evincing keen interest in the renewable energy sector in Vietnam, especially solar and wind energy. Prime Minister Modi has unveiled an ambitious plan for deployment of 175GW renewable power capacities by 2022, including 100GW of solar and 60GW of wind. We believe that both India and Vietnam would immensely benefit from enhancing the share of renewable energy in the overall power generation.
As far as investments are concerned, India’s investments in Vietnam are around US$1.07 billion in 132 projects. Major sectors of investment are oil and gas, renewable energy, mineral exploration, agro-processing, sugar manufacturing, agro-chemicals, Information Technology and auto components. Tata Power is working to set up 1320 MW thermal power plant at Long Phu II involving investment of US$ 2.2 billion, and we believe that facilitation and successful implementation of this project will go a long way in encouraging further Indian investments in Vietnam.
Vietnam has five investment projects in India with total investment of over US$23 million in the field of pharmaceuticals, import-export activities, building materials, cosmetics, chemicals and Information Technology. There is tremendous scope for Vietnam to increase its investments in India. One of the leading flagship programs of Prime Minister Modi is ‘Make in India’, part of a wider set of nation-building initiatives devised to transform India into a global design and manufacturing hub, in which 25 sectors have been identified in which India has global competence. We welcome entrepreneurs from Vietnam to consider investments in our agro sector and in North East India which we consider as our gateway to ASEAN.
Tourism and Culture is another sector with great potential. Both India and Vietnam are great countries with abundance of natural beauty and history. Many Vietnamese citizens visit India to Bodh Gaya and other places of Buddhist pilgrimage. Numerous Indian tourists from India and those with residence in third countries visit Vietnam. We would be working on ways and means to harness this potential so that we can contribute not only to increased bilateral trade but also to develop sustainable tourism.
Vietnam is an attractive investment destination for Indian
Vietnam is still a developing country, our economy has not been really stable, and policies to attract foreign investment are being completed. According to you, what are the key points to be improved, in order to create favorable investment environment for domestic and foreign investors?
The transition of Vietnam in the last two decades from a country with around 60% poverty rate to a middle income country with less than 10% of its citizens who are below the poverty line is a glowing testament to the wisdom of Vietnam’s leadership and the hard work of the Vietnamese people.
The economic progress shown by Vietnam in recent years is extraordinary.
We believe that Vietnam is an attractive investment destination for Indian companies in both manufacturing and service sectors and the success of existing large investment projects such as Tata Power’s Long Phu-II 1320MW thermal power project with an estimated cost of over US$2 billion could be a trendsetter and give encouragement and assurance to a large number of Indian companies and businessmen to invest in Vietnam.
It is also important for strengthening the dispute settlement mechanisms. We also believe that conclusion of ongoing negotiations on the Regional Comprehensive Economic Partnership (RCEP) would give a significant boost to investment environment as far as Indian businesses and industry are concerned.
What would you say, if you could announce a commitment to boost bilateral economic exchanges and cooperation?
High level political visits have established a comprehensive agenda for our Strategic Partnership and for expanding cooperation in numerous fields of economy, science and technology, defence and security and people-to-people exchanges. Our Prime Minister Mr. Narendra Modi would be visiting Hanoi next month on the first bilateral visit of an Indian Prime Minister in 15 years and both sides are working on an ambitious agenda to further enhance the depth and scope of our engagement in numerous sectors including health, industry and commerce, space, science and technology, agriculture, defence and security. We expect conclusion of many agreements and MoUs in important strategic and economic sectors. As we celebrate next year important milestones in our relationship, the visit will provide an important opportunity for a close interaction between our Prime Minister and the new leadership of Vietnam.
My commitment is to ensure that the vision of our leaderships to strengthen our bilateral economic engagement is translated into reality and fully implemented. We have an important task ahead of us of realizing the target set by our leaders for bilateral trade of US$15 billion by 2020. We would be encouraging Indian industry and business associations to lead delegations of CEOs and other decision makers to visit Vietnam and likewise encourage Vietnamese business delegations to visit India. We are in constant touch with the Ministries of Industry and Trade of both the countries and other economic ministries actively seeking business facilitation. We see great potential for trade in services for our two economies especially in the fields of information technology, educational services, human resource development and project and consultancy services. For all of this, I look forward to the active collaboration and cooperation of the Vietnamese government, trade bodies such as Vietnam Chamber of Commerce and Industries and Vietnamese businessmen. Together we prosper, create a better life for our citizens and propel our age-old friendship much farther.
Vietnamese
