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(VEN) - Last year saw satisfactory results in terms of trade between Vietnam and African, West Asian and South Asian countries. Vietnam's trade with the regions reached about US$14.5 billion, including US$3.5 billion worth of exports to Africa, up nearly 200 percent compared with 2010, US$1.4 billion worth of imports from Africa, up 80 percent, US$2.4 billion worth of exports to the Middle East, up 45.4 percent, about US$2.6 billion worth of imports from the Middle East, down 10 percent, US$2.1 billion worth of exports to South Asia, up more than 46 percent, and US$2.44 billion worth of imports from South Asia, up 27 percent.
Many challenges remain
The first and biggest challenge for exports to Africa, West Asia and South Asia is the instability of the political regime in some countries such as Egypt, Libya and Syria. The tightened embargo against Iran, Israel's disagreement with some nations in the region and insecurity in Iraq and Afghanistan have hindered Vietnamese businesses' efforts to penetrate those potential markets. Due to such hindrances, domestic companies have been hesitant in promoting exports to those markets.
The European public debt crisis, unsustainable economic recovery of the US and Japan have had considerable impacts on the regional markets. Due to difficulties they have met in exporting to large markets, companies of many other countries are promoting exports to Africa and the Middle East. Therefore domestic companies will have to cope with fiercer competition. The lack of experience, limited financial capacity and superficial market knowledge are the challenges that face each Vietnamese company.
The Vietnamese Government does not yet have any specific policy to assist businesses. No regulation has been put in place to offer interest rate support and export credit insurance to companies which have signed export contracts. The budget for trade promotion is very limited. Therefore, domestic companies will have to cope with numerous difficulties in exporting to Africa, West Asia and South Asia in not only 2012 but also the ensuing years.
Another problem is that domestic companies still lack cooperation. Many of them do not yet have any strategy to penetrate the potential African, West Asian and South Asian markets. Unhealthy competition between domestic companies has adversely affected the reputation of Vietnamese products in the world market.
Trade frauds committed via the Internet by some swindlers from Nigeria, Benin and Pakistan, trade disputes, bureaucracy and complicated administrative procedures in many regional countries are also challenges that Vietnamese companies must know and overcome.
Bright prospects
Despite the above challenges, there are bright prospects for Vietnam to boost exports to Africa, West Asia and South Asia. Although the world economy still shows many signs of instability, the economies of countries in those regions are forecasted to continue to grow in 2012 (Africa: 4.7 percent; the Middle East: 4.6 percent and South Asia: 7.2 percent). Economic growth will help improve the living standard of people, maintain the demand for import of goods to serve production and nearly three billion consumers in regional countries. Spending on products such as agricultural products, seafood, textiles, garments and footwear, which are key export products of Vietnam, account for a large percentage of personal consumption expenditure of people in Africa, West Asia and South Asia. Moreover, due to the big gap in the per-capita income between different countries (US$400-500 in underdeveloped countries and more than US$20,000 in developed countries which are rich in natural resources), the demands for quality of imported goods are diverse. This is a favorable condition for products of many countries, including Vietnam, to penetrate regional markets.
Many export products of Vietnam such as seafood, coffee, pepper, textiles and garments have won the trust of consumers in regional countries. The export value of those products to regional markets has increased year after year. The structure of Vietnam's exports to regional markets has been changed to increase the percentage of industrial and manufactured products. Many kinds of Vietnamese products of high value have been present in regional markets, for example mobile phones, computers and electronic products. This is an important precondition for Vietnam to boost exports in 2012 and the years to come.
In the recent period, many domestic companies have shown their interest in regional markets. The number of companies exporting to regional countries has increased. In 2010, the number was 2,000, an increase of five percent compared with 2009. Along with exporting products such as rice, wood products, textiles and garments, leather and footwear, and importing raw materials, domestic companies are seeking opportunities to invest in regional countries. Examples include a US$30 million wood processing project in South Africa of the Truong Thanh Wood Technology Group, a US$29 million mobile phone network project in Mozambique of the Viettel Group. The Corporation for Financing and Promoting Technology (FPT) recently signed a memorandum of understanding on cooperation with the 21st Century Technologies Corporation of Nigeria in the fields of telecommunications, education and equipment manufacturing. Those businesses will contribute to increasing the presence of Vietnamese products in regional markets.
The Vietnamese Government and relevant ministries, including the Ministry of Industry and Trade, have created favorable conditions for domestic companies to boost exports to Africa, West Asia and South Asia. Recently, the Government promulgated Decision 2471/2011/QD-TTg dated December 28, 2011 approving the National Import, Export Strategy for Vietnam in the 2011-2020 period with an orientation towards 2030. This strategy proposes some major groups of export promotion solutions. Those include solutions to boost production, accelerate economic restructuring, promote market development and investment in the construction of storage and forwarding facilities, diversify the sources of investment in logistics services, promote human resource training and development, control imports, enhance the competitiveness of businesses and increase the role of business associations. Together with business support policies proposed by the Ministry of Industry and Trade to boost exports to Africa and the Middle East, the mentioned above strategy is believed to create a new breakthrough in Vietnam's exports to Africa, West Asia and South Asia in the coming period./.
By Ly Quoc Hung, Director of Africa-West Asia-South Asia Markets Department
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