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Mar 03, 2022 / 14:10

Vietnam, Russia agree to bolster economic cooperation in new situation

Vietnam and Russia aim for strengthening trade-economic relations despite the ongoing Russia-Ukraine conflict.

Representatives of Russia and Vietnam have agreed to bolster trade-economic cooperation on the foundation of strong bilateral political relations.

The move was revealed during a meeting between Vietnam’s Ambassador to Russia Dang Minh Khoi and the First Deputy Speaker of the Russian Federation Council Andrei Yatskin and Deputy Speaker of the Federation Council of the Federal Assembly of Russia Konstantin Kosachev in early March.

 Vietnam’s Ambassador to Russia Dang Minh Khoi and the First Deputy Speaker of the Russian Federation Council Andrei Yatskin. Photo: VNA

At the meeting, both sides shared the view that Vietnam and Russia remain credible partners with each other and look forward to celebrating the 10th anniversary of the comprehensive strategic partnership this year.

The signing of a free trade agreement between Vietnam and the Eurasian Economic Union or EAEU (including Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan) five years ago nearly doubled bilateral trade to $5 billion in 2020, with Vietnam gaining a surplus of $1 billion.

The relations received a major boost from the visit of State President Nguyen Xuan Phuc to Russia last December at the invitation of his Russian counterpart Vladimir Putin, in which both agreed for further exchanges of high-ranking officials in the coming time.

Ambassador Khoi called for the Russian Federation Council to promote cooperation among localities of Vietnam and Russia, along with the support for the construction of the Ho Chi Minh statue in St Petersburg, scheduled to complete in 2023 on the occasion of the 100th anniversary of President Ho Chi Minh’s visit to Russia.

Khoi thanked the support of Russian authorities for the Vietnamese community in Russia, and also investment activities of major Vietnamese firms in Russia, such as TH Group or Rusvietpetro.

 Oil exploration has been one of the key economic aspects in Vietnam-Russia relations. Photo: VNA

Conflict to overshadow trade potentials

Referring to the ongoing conflict of Russia-Ukraine, Khoi called for both sides to refrain from escalating tensions and comply with international laws to seek peaceful solutions.

“The Vietnamese Government pays special attention to the absolute safety of the lives, assets and lawful rights of Vietnamese and businesses in the current situation,” Khoi said.

Vietnam’s Ministry of Industry and Trade (MoIT) called for local traders to take into consideration possible sanctions from the West during the negotiation of payment methods with their Russian partners to avoid potential losses.

In the meantime, Vietnamese businesses in Russia and Ukraine are advised to contact trade missions under the embassies of Vietnam in these countries for support, and looking to diversify markets with similarities to Russia and Ukraine, such as Kazakhstan, Uzbekistan, or Azerbaijan.

As both Russia and Ukraine are major exporters of both industrial goods and commodities in the world, such as oil, gas, wheat, nickel, corn, the conflict would cause many countries, including Vietnam, to face a shortage of input materials in the next years.

The ministry suggested trade relations between Vietnam and Ukraine are unlikely to grow in one or two years.

In the case of Russia, sanctions from the EU to Russia would negatively impact the trade cooperation, as the means of payments are mainly Euro.

As for both markets, the conflict has clearly undermined the trade potentials that Vietnam has with both countries. 

Statistics from the MoIT revealed bilateral trade turnover between Vietnam and Ukraine in 2021 surged by 50.6% to $720.5 million, of which Vietnam exports were estimated at $344.6 million, up 21%, and imports at $375.8 million, up 94.2%.

Vietnam’s key export products to Ukraine included smartphones and parts, farm produce, footwear, machinery, computers, and electronics products. In return, the country imported wheat, steel, machinery, and parts from Ukraine.

In the first month of 2022, the import-export turnover sharply rose by 14.7% to $38 million.

Despite the impressive growth in trade, the results remained modest and account for only 0.1% of Vietnam’s total foreign trade.

Meanwhile, Vietnam’s trade relations with Russia in 2021 also rose by 13.8% to $5.5 billion amid the pandemic, of which exports amounted to $3.2 billion, up 13.2%, and imports of $2.3 billion, or an increase of 15%.

The Vietnam News Agency quoted Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Vladimir Efimov as saying Vietnam is one of the key trading partners of Russia in Asia-Pacific, referring to trade turnover of Moscow to Vietnam’s localities rose by 36% year-on-year to $3.9 billion in 2021, with machinery, electronics products, and telecommunications equipment, among others, being key products.

An assessment from the Mosprom center under the Moscow Department of Investment and Industrial Policy suggested Vietnam would be among the most dynamic economies in the Asia-Pacific in the next five years.

Mosprom’s experts noted the EAEU has created the foundation for further trade relations between Vietnam and Russia, especially in e-commerce, public procurement, intellectual property protection, and anti-trust policy.