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VIETNAM AS A TRADE AND INVESTMENT PARTNER

VIETNAM AS A TRADE AND INVESTMENT PARTNER. Mr. Le Xuan Duong Director – Export Promotion Center Vietnam Trade Promotion Agency Email: lxduong@vietrade.gov.vn. 1. Economic overview.

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VIETNAM AS A TRADE AND INVESTMENT PARTNER

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  1. VIETNAM AS A TRADE AND INVESTMENT PARTNER Mr. Le Xuan Duong Director – Export Promotion Center Vietnam Trade Promotion Agency Email: lxduong@vietrade.gov.vn

  2. 1. Economic overview • At present, Vietnam is undergoing a market oriented economy with growing agricultural, industrial and service sectors. The trade, infrastructure, telecom, construction, transportation, banking, finance, tourism, … increasingly contribute to the growth of Vietnam’s economy. • In recent years, despite the world and domestic difficulties, Vietnam is still one of fast growing economies in Asia. The main drivers: export, investment & private consumption. • Vietnam’s Mekong river delta (MRD) including 13 provinces and cities in southernmost of Vietnam, is the center for rice production, aquaculture and aquatic products processing that contribute considerably to Vietnam’s export turnover. The area is also one of nation’s biggest energy and tourist centers.

  3. 2. Economic indexes Population (2012): 92 mill. Labor force (18–60 years old): 52 mill. Total GDP (2012 at real value) $138 bill. *GDP’s growth: +5.03% *GDP per capita income: $1500 *GDP Structure (% of real value): *Agriculture, forest, fishery 21.7% *Industry and construction 40.6% *Services 37.7%

  4. 3. International economic relation Under policy of "multi-lateralization and diversification" of international relations, Vietnam has integrated more deeply into the world and regional economy: • Signed BTA with many countries (incl. US, EU, Japan); • Accession to WTO from Jan. 2007 • Member of ASEAN, ASEM, APEC. • Participating in FTA and Partnership Agreements that ASEAN signed with China, Japan, India, Korea, Australia and New Zealand. Signed FTA with Chile. • Negotiating FTA with EU, Korea, Russia-Belarus-Kazakstan Customs Union, TPP with 10 other countries, incl. USA.

  5. 4. 1. VIETNAM’S TRADE 2012 Despite of global economic downturn during 2010-2012: • Export of commodity: US$ 114.6 billion, up 18,3% from 2011 -Domestic companies 37% (US$42,3 B), up 1.3% -FDI companies 63% (US$72,3 B) up 31% (incl. crude oil) • Export surplus US$285 mill. (highexportby FDI companies) • Export value = 81% of GDP (2011: 80%). Vietnam - Top World Exporter for: • 1st place: pepper; cashewnut • 2nd place: rice; coffee • 4th place: footwear; natural rubber • 5th place: textile & apparel; tea

  6. 4.2. MAIN TRADE PARTNERS

  7. 4.3. INDUSTRIES Textile & Garments • Largest industry: more than 2500 enterprises /over 2 million workers • Key export sector increase 21% a year in recent years ($15.3B. in 2012) • More than 60% export orders are processing for international brands • Largest importers: USA (40%), Japan (10.3%), EU, Korea, South America Footwear & Leather • About 400 enterprises /over 0.5 million workers • 80% export orders are processing for international brands • Largest importers: USA (32%), EU, Japan, Korea • Key export sector $7.26B for footwear and $1.5B for handbags

  8. Electronics, computers & components • Almost by FDI manufacturers: Samsung, Sony, Panasonics, Canon,… • Export in 2012 at $7.9B, up 69% • Main markets: China (24%), EU, US (11%), Malaysia Telephone, cellphone of all kinds • Almost by FDI manufacturers: Samsung, Nokia • Export in 2012 at $12.64, up 98% • Main markets: EU (44%), Saudi Arab, Russia, Hong Kong Wooden Furniture • Both industrial factories and craft villages – high competitiveness • Export in 2012 at $4.6B • Main markets: US (38%), China (16.2%), Japan (15%), EU

  9. Plastic and plastic products • Fast growing industry of 35% / year in last decade • There are 200 enterprises (80 in the South) • Export $1.5B up 17% (shopping bags, plastic ware) • Main export markets: Japan, US, EU, China, Cambodia, Thailand,… Arts and craft • Traditinally in the villages by SME and family businesses • Products of variety: from Bamboo & rattan wares (33%), portery & porcelain ceramics (30%), art objects, embroideries, lacques, craft textile and other craft products • Main export markets: : Japan, US, EU, Taiwan, Cambodia, Thailand

  10. 4.4. MINERAL & STEELS • CRUDE OIL: Export: 9.51 mill. MT / $8.4 B • COAL: Export: 15.57 mill. MT / $1.26 B (New policy for crude oil & coal: less for export, more for domestic use) • PETRO GAS, DIESEL OIL: Export 1.92 mill. MT/ $1.85B • STEELS OF ALL KINDS: Export 1.94 mill.MT / $1.62 B • MACHINERY: Export $5.54 B • AUTO & MOTORCYLES: Export $4.5 B

  11. 5. AGRICULTURE & SEAFOOD • Traditional agriculture production country in South-East Asia • + Warm tropical climate: high humidity & rain falls; • + 65% of total population (92 mill.) working in agriculture and • aquaculture; • + Contribution 22% to total GDP; • + Secured domestic food supply and spared for exports. • *Total export: • - Main agriculture and forest products: US$ 17.7 billion • - Aquatic and seafood products: US$ 6.2 billion,

  12. 5.1. MAIN AGRI-PRODUCTS: *RICE: Export 8 mill. MT / $3.7B - Production: 42.3 mill. MT (3 crops: WS-SF-FW)   - Export markets: Indonesia, Philippine, Africa, Mid-East, China,.. *CASSAVA (starch, dried chips): Export. 4.2 mill. MT / $1.33B - Production: 10 million MT (roots) - Export markets: China (95%) *CORN: Domestic use only - Production: 4.65 mill. MT *NATURAL RUBBER: - Export 1.01 mill. MT / $2.83B - Production: 811,600 MT; - Export market: China (70%), USA, Japan, Korea, Russia.

  13. COFFEE (Robusta): Export 1.73 mill. MT / $3.69 B *Production: 1.17 mill. MT *Export markets: USA, Germany, Japan, Netherland, CASHEW: Export 0.22 mill. MT / $1.48 B *Production: 318,000 MT; *Export markets: USA (33%), Japan, India, Netherland PEPPER: Export 119,000 MT / $808 M *Production: 120,400 MT; *Export markets: USA, India, Pakistan, Mid-East,.. TEA: Export 148,000 MT / $226 M *Production: 888,600 MT *Export markets: Indonesia, Russia, Germany, Arab Saudi COCO production: 1.19 million MT;

  14. b. FRUITS FOR EXPORT: Export $800 M • - ORANGE, MANDARINE: 700,000 MT • - PINEAPPLE: 533,000 MT • - BANANAS: 1,670,000 MT • - MANGO: 595,800 MT • - GRAPE FRUITS: 417,600 ha • - LONGAN: 616,400 MT • LITCHI, RAMBUTAN (chom chom): 700,000 MT

  15. 5.2. Aquatic and seafood processing: About 250 processing plants (80% in South and Central of Vietnam). *Main export products - Frozen Shrimp & prawn: - Frozen Catfish (Basa & Tra - pangasius) - Frozen Tuna fish, - Frozen Cephalopods & Bivalve mollusks (cuttlefish, squid, octopus, clamps, scallop,… - Ready-to-cook seafood meals - Canned seafood *Largest markets: JAPAN (31%), USA (25%), EU (10%), ASEAN (7%), KOREA (6%), China (5%), others (16%).

  16. 6. Main Import Products

  17. 7. VIETNAM’S DOMESTIC MARKET Potential market for domestic sales: • 60% of population are under 35 year old; • Rising per capital income; • High rate of FDI in the local market- oriented industries (consumer products, chemicals, mechanicals, real estates, building materials…).

  18. 8. New policy for FDI • - More attention to quality, not to number of registered projects; • Promote FDI projects by industries/ areas to exploit maximum potential of country’s variously geographic areas. • Better licensing approval process • Better inspection of FDI performances • Better assessment regarding efficiency, especially for large projects, in large area of land use, use of minerals and natural resources and projects with high risks of water/soil/air pollutions; • - Cancelation of FDI licenses for non-performance projects

  19. 9. Priority sectors for FDI • - High-tech production: high technology and modern equipment, Bio-tech products, telecom, electronics, clean & green industries; • - Infrastructure (roads, bridges, ports, airports, subways…) under ODA, BT, BOT; • - Education & training, vocational training: universities, schools • - Health care: hospitals, pharmaceutical productions • - Environment: - industrial water treatment, waste and rubbish treatment, other environment measures,… • - Supporting/Auxiliary industry: materials, supplies and spare parts for textile & garment, footwear, auto,… • - Manufacturing industry: to produce competitive products for export and domestic consumption

  20. 10. What to invest in Vietnam • 4 consumption trends : • Good Growth: Food & beverage, pharmaceutical, education. • Stable Growth: Telecommunications, household goods, finance-banking and health care. • Weak Growth: Computer - visual equipment, electronic appliances and equipment, furniture, travel services. • Flat Group: Automotive, personal care products, entertainments

  21. 11. Opportunities Vietnam’ FDI attraction! - Location at the center of rapid development of South East Asia. - Political stability and Vietnam’s position in the international arena is more and more enhanced. - Abundance of natural resources and competitive labor costs - Very competitive in export of agriculture, aquatic products, manufacturing products, especially textile, footwear, furniture). -Investment environment and market economy are improving and in conformity with international practices.

  22. 12. Incentives for FDI >Preferential tax break: 10%, 15%, 20% depends on industrial sectors and geographical areas. >Reduction and exemption of enterprise income tax: - Exemption: maximum first 4 years - Reduction: 50% discount in the next 9 years. >Import duty exemption: For equipment, machinery, means of transport, construction materials,… related to production, which are not available domestically. >Reduction for rent of land: Subject to local authorities and geographical areas.

  23. 13. VIETNAM’S TRADE WITH MEKONG MARKETS • Annual joint trade fairs in Cambodia, Laos, Myanmar • Annual Vietnam Expo in Hanoi with free booths for CLM • Thai trade fairs in Vietnam • Seminars on various subjects in Mekong countries

  24. 14.1.Vietnam – Korea trade relation • Vietnam-Korea trade relations have steadily grown since the two countries set up diplomatic relations in 1992. • Vietnam-Korea signed the Treaty on Investment Protection and Encouragement and the Treaty on double-tax avoidance; • Korea signed the agreement on ASEAN-Korea; • Korea’s FDI is ranking number 2 in Vietnam with 2600 projects registered at US$25 billion. • Korea’s investment focuses in sectors: industrial production, industrial park infrastructure, real estate, manufacturing industries (textile & garment, footwear, mechanicals…)

  25. 14.2. Vietnam – Korea trade relation • Developing a strong and in-depth friendship in politic, economic, diplomatic, cultural, tourism and labor cooperation. • The Government of Vietnam is willing to share and solve the problems and to encourage Korean enterprises to expand investment and business in Vietnam, especially in infrastructures, ports, energy, urban development, high-tech industrial production, auxiliary industries, agriculture. • VIETRADE – The Vietnam Trade Promotion Agency (Ministry of Industry and Trade) is in collaboration with Korean trade promotion organizations such as ASEAN-Korean center (AKC), KOTRA, KITA, KOIMA, for organizing many business matching programs and seminars for Vietnamese and Korean companies.

  26. THANK YOU

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