Vietnam – United Kingdom potential opportunities for co-operation” was the topic of the seminar held by Vietnam Chamber of Commerce and Industry in association with the Vietnam embassy in the U.K in Hanoi on 16 Nov 2015.
The U.K is a big market in European and the world. For several years, the U.K has always considered Vietnam a prioritized market for imports – exports and investment co-operation. At the seminar, a number of domestic enterprises expected their British counterparts to share their success experiences and support Vietnamese start-ups.
Significant achievements in trade and investment relations
Since the establishment of diplomatic relation with the U.K on 11 Sept 1973, trade and investment relations between Vietnam and the U.K have achieved remarkable results.
Exports from Vietnam to the U.K increased nearly 20% on average annually with continuous trade surplus for Vietnam. In the first 8 months of 2015, export revenue of Vietnam to the U.K market reached 2.99 billion USD, increased by 24.7% in comparison to the same period in 2014.
Vietnamese exports to the U.K market are rather diversified with several varieties, of which product groups with great revenue including mobile phones of all types and accessories, footwear, garment and textile, woods and its products, cashew, coffee and seafood etc.
Currently, there exist hundreds of resident trade representative offices and business branches from Vietnam. British Business Group Vietnam (BBGV) is also one of the first trade promotion organizations working in Vietnam and organizes practical activities for economic promotion between two parties on regular basis.
In investment, the U.K has expanded to several new sectors such as banking, finance, manufacturing industry, services and garment … Giant British companies operating in Vietnam comprise of BP Petroleum, BHP Billiton Aluminum, Rolls-Royce Airplane engines, Vodafone Communications, P&O Transportation, GlaxoSmithKline pharmaceutical chemists, HSBC, Standard Chartered Banks, Prudential Insurances. HSBC and Standard Chartered Banks were the first two 100% foreign invested banks in Vietnam.
According to the statistics of Foreign Investment department (Ministry of Planning and Investment of Vietnam), in the first 8 months of this year, Foreign Direct Investment (FDI) of British investors to Vietnam reached over 1.25 billion USD, of which nearly 1.25 billion USD investment capital were from 13 new projects and 5 billion from two turns of capital increasing projects.
As a result of the above figures, the U.K became the second among countries and territories investing in Vietnam in the first 8 months of this year.
Even though the U.K is not among 10 biggest investors if accumulating since the beginning (they currently ranks the 16th with 3,195 billion USD total capital), they are a successful player in Vietnam. They are on top of the list in majority of industries that they invested in. For example, BP Petroleum ranks the first in investment in petroleum in Vietnam; Prudential in the insurance sector and HSBC in the banking… General speaking, investment projects by the U.K are small and medium size, focusing on mining, processing and manufacturing industries with 55 property, banking, finance and insurance projects.
Co-operation promotion with the U.K market
The U.K is a big market in European and the world. For several years, the U.K has always considered Vietnam a prioritized market for imports – exports and investment co-operation. However, the trade and investment relations between Vietnam and the U.K remain moderate in comparison to existing potentials and both parties’ demands.
The U.K imports over 1,000 billion USD valued goods annually and Vietnam only exports an estimation of 5 billion USD in 2015, accounting for less than 0.5% of exports to the country. Therefore, potentials for Vietnamese products are huge.
The U.K excels in services, high-technology and heavy industries, while Vietnam has advantages in seafood, agriculture and forestry, wooden products, garment and textile, and leather … All of them are potential sectors for Vietnam.
Vietnam and the European Union (EU) have declared to complete their Free Trade Agreement negotiations. Once the agreement is signed, trading would be promoted; foreign enterprises would be provided with favorable conditions for business and investment in Vietnam; and motivation for Vietnam to pursue institutional and system reforms; open and transparent investment and business environment meeting integration requirements as well as international practices.
After the effect of the Agreement, the elimination of tariff and non-tariff barriers as well as favorable measures for investment and trading will bring about opportunities for Vietnamese exports in general, and agriculture and husbandry exports to EU including the U.K in particular.
In addition, Vietnam is evaluated as one of the key markets of the U.K; therefore, Vietnamese goods and services are getting more attention from British consumers, big enterprises as well as senior officials.
Until now, British enterprises are fully aware of tax reduction schedule and are expecting to enter Vietnam market. Vietnamese businesses, however, pay little attention and investment to this market.
According to the Vietnam Ambassador in the U.K Nguyen Van Thao, Vietnamese enterprises first have to study tax and tariff preferences when integration, advantages of Vietnamese goods and the U.K market’s requirement compliance in order to promote exports.
“Enterprises in each sector need to unite to perform in large scale. What we need the most are the linkages between businesses and groups of enterprises with common interests in the U.K market; professional, transparent and committed business co-operation,” said the Ambassador Nguyen Van Thao.
According to Mr. Vu Tien Loc, Chairman of Vietnam Chamber of Commerce and Industry, to further strengthen the co-operation relation between Vietnam and the U.K, better coordination between two countries is needed. The Government should focus on information provision to British enterprises to raise their awareness about Vietnam and its market, and information channel establishment to record and address their regular difficulties in investment to Vietnam and vice versa.
In terms of legal and administration procedures, there exists a need for complete reform to reduce time for enterprises, create a transparent and favorable business environment to attract potential investors.
Enterprises are required to be more initiative and creative to gain a head start from big changes in the coming period. Once a series of trade agreements and new co-operation mechanisms come into effect, Vietnamese enterprises will have a great deal of opportunities but need to prepare for competition challenges and pressures, labour and production cost transfer …
At the seminar, the Duke of York, Prince Andrew highly appreciated efforts of the Government of Vietnam in supporting businesses; however, he thought that Vietnam needs to keep minimizing barriers and enhancing support to start-ups.
According to Mr. Andrew, beside technology transfer to Vietnam, it is better for British companies to share and co-operate with their knowledge and experiences. One of the experiences in start-ups development of the U.K is constructing centers, buildings specialized for industries to minimize property and market costs for enterprises.