Vietnam is knocking at the Russian door

20.02.2012 — Analysis

Vietnam is ready to expand cooperation with Russia and its regions on a mutually beneficial basis. Neither Moscow nor Hanoi is satisfied with the present trade volume - 2.4 billion US dollars a year. Vietnamese exporters evince keen interest in the Ural market and are ready to supply a wide range of products - from seafood products to flowers. In return they need equipment and technology to upgrade their production. Nguyen Quang Vinh, Consul General of Vietnam in Ekaterinburg, told RusBusinessNews about the development of the bilateral dialogue.

- Mr. Nguyen, what is the progress status of cooperation between Vietnam and Ural regions, what are the prospects for this cooperation?

- The cooperation between Russian and Vietnam has entered the path of comprehensive development. By the end of 2011, the trade turnover between the two countries reached USD 2.445 billion. The Russian government anticipates that it can increase to 3 billion US dollars in 2012, though this is not by far its limit.

Last April, the delegation from the Sverdlovsk Region visited Vietnam where it signed a number of agreements. For example, PVC CO Ltd (Ho Chi Minh City) reached an agreement with the OKPUR Research and Production Company for purchasing of filtering materials for drinking water treatment for USD 2 million. Another agreement was signed with OKPUR Aqua for purchasing of absorbent materials for USD 1 million. These agreements are among the largest transactions consummated in the Ural and Vietnamese trading history.

The delegation also discussed prospective supplies of Vietnamese seafood products and their processing in the Middle Urals. The Vietnamese company, Vissan, is ready to act as a supplier, and the products will be processed at the Khoroshy Vkus food factory. I think that this project has good chances for success - Vietnam exports large quantities of such seafood products as mackerel, shrimp, tuna, and pangasius fillet to European countries and the USA. Vietnamese experts expect that the pangasius fillet annual exports alone can reach USD 2 billion. Unfortunately, I have seen very rarely Vietnamese products in Ural stores. I can often hear from the Russian people who visited Vietnam that they cannot find the Vietnamese products they liked so much during their visit. The seafood products coming to the Ural market are supplied from other countries at higher prices; it is frustrating, as the Vietnamese can offer more attractive terms and conditions. We are trying to understand what prevents our exporters from entering the Ural market.

- Apart from seafood products, what else are your manufacturers ready to offer?

- Ural companies can buy different agricultural products from Vietnam - tea, nuts, and rice. By the way, our republic is one of the world's largest exporters of rice, black pepper and cashew nuts. Vietnam is the country where flowers bloom almost throughout the year, and Vietnamese flowers are supplied to Japan, Australia, Singapore and Western Europe. We are also ready to supply all this variety to the Urals.

In its turn, Vietnam is interested in purchasing of Ural industrial products, mining equipment and building materials. We import these products from Europe, from Italy, in particular; however, we are ready to look into offers from companies of the Sverdlovsk Region.

- The possibility of mining titanium in Vietnam by Sverdlovsk companies was discussed during the visit you mentioned earlier. For example, VSMPO-AVISMA was interested in this project. The preliminary agreement was also reached for joint exploration of natural resources...

- It is still at the negotiation stage; we are exchanging information. There are rich reserves of titanium along the Vietnamese coastline. I know that manufacturers from many foreign countries evinced interest in mining of this metal. In the titanium-related cooperation, the Vietnamese party would like to adopt foreign methods of mining and processing of raw materials.

Besides titanium, the republic has vast reserves of oil and gas. Gazprom already has a number of projects for cooperation with Vietnam in this area.

- During the Soviet period, Vietnam imported a lot of equipment and machinery. Do the Vietnamese and Russia parties have any plans about upgrading that equipment?

- Vietnam has always been a major customer of the Soviet Union and Russian Federation. We would like to use the capacity of the equipment that we have at maximum, but technology is progressing very fast. To keep pace with the times the equipment should be upgraded.

When I met with Yevgeny Kuivashev, plenipotentiary representative of the RF President in the Ural Federal District, I described in detail the possibilities of participation of Ural manufacturers in upgrading equipment for Vietnam. We need a wide range of services - from modification of trucks to upgrading of equipment at hydropower plants. For example, Vietnam's largest HPP, which was built with the participation of engineers from the USSR, is located in Hoa Binh City.

- At the moment, Vietnam and Russia are launching a joint project of construction of the first nuclear power station in Vietnam. The construction of the 2000 MW plant is scheduled for 2014. Did the Vietnamese party invite any Ural companies to participate in this project?

- As far as I know, it is a turnkey project that will be implemented by Russia. After the construction is completed, the Russian side is going to take responsibility for training if Vietnamese specialists. We do not know yet what Russian companies will participate in implementation of the project. I know that specialists of the Ural Federal University informed about their willingness to take part in the project. The Sverdlovsk Region also manufactures equipment for nuclear power plants. All this can be useful for implementation of such a large-scale project.

- Can you say how many Vietnamese citizens live in the Urals at present and what sectors of economy do they work in?

- The consular district of the Consulate General of Vietnam in Ekaterinburg includes 16 regions of the Ural, Siberian and Volga Regions. There are about 10 thousand Vietnamese citizens living in this district; about 1,000 Vietnamese people live in Ekaterinburg. 700 of them work at Vietnamese factories, the other work in the retail sector. In total, there are 12 Vietnamese enterprises operating in the Middle Urals. These are mainly furniture and clothing factories selling their products both within and outside the region.

Most of our business people use Vietnamese labor. There are several reasons for this: First of all, the Vietnamese are not as expensive as local population in terms of salary; they are hardworking and patient; secondly, there is no language barrier between the employer and employees.
For my pat, I would point out that the Russian side should evince greater interest in foreign, including Vietnamese, enterprises to be opened in Russia; each of them brings additional revenues to local budgets. For example, in Vietnam, enterprises with participation of foreign capital account for 34% of the GDP. Special attention is given to small-sized enterprises in our country; we offer them tax incentives for 3-4 years to create favorable conditions for their business; then they start paying taxes to the budget.

Another obstacle for operation of Vietnamese companies in Russia is the system of quotas for foreign labor force. Within one year, the company is not able to use all its labor resources, and the next year it cannot get the quota. As a result, not to violate Russian laws the Vietnamese entrepreneur has to send the already trained specialists back to Vietnam and bring new employees. This means additional expenses for business.

- What is the situation with cooperation in the tourism sector? Your predecessor said that the main competitor of Vietnam is Thailand, which has experienced flood-related disasters in recent years. Taking into account this factor, have Russian tourists switched over from Thailand to Vietnam?

- The first Russian tourists started visiting Vietnam in the 1970s; mainly, these were residents of the Far East. They preferred to come to Na Chang, a southern resort town. At present, tourists come to Vietnam from all Russian regions, and they visit not only the south, but also the north of our republic. However, many Russian people are still not aware of the tourist opportunities in Vietnam, and here we yield to better promoted Thailand. Of course, after the Thailand flood many Russian tourists went to Vietnam, and we hope they will keep on coming to us.

The bankruptcy of Russian tour operators is also the factor that impedes the tourist flow. For example, the closing down of Lanta-Tour affected thousands of Russian tourists, including those who were having their rest in Vietnam.

Direct flights could bring more Ural tourists to Vietnam. At present, there is only the Ekaterinburg-Ho Chi Minh charter flight offered by Vladivostok Avia one time every two weeks, but it is not enough.

- The proposal to summon the Vietnam-Russia Intergovernmental Commission in the Sverdlovsk Region was forwarded to the RF Ministry of Foreign Affairs. What is the situation with this issue?

- The final decision has not been made yet. Ekaterinburg has experience of holding meetings at the intergovernmental level, including the summit of member states of the Shanghai Cooperation Organization and BRIC member countries (Brazil, Russia, India and China). If the Vietnam-Russia Intergovernmental Commission is held in the Sverdlovsk Region, it will be an additional impetus for development of the bilateral cooperation.

The interview was prepared by Valentina Mazharova