Second day of EEF 2022. Will Vietnam become the second hub for the Russian Federation after China?
The second day of the Eastern Economic Forum in Vladivostok was marked by several events, one of which was the Russia-Vietnam business dialogue, which brought together government officials, business circles and experts from the two countries on one platform.
The subject of discussion was issues of bilateral cooperation, opportunities for investment, scientific and humanitarian interaction between countries in the context of the main theme of the EEF 2022 - “Towards a multipolar world”. The Asia-Pacific region is one of the main centers for the formation of such a new world order.
Among the participants and guests of the business dialogue are First Deputy Chairman of the Federation Council Andrei Yatskin, Head of the Trade Mission of the Russian Federation in Vietnam Vyacheslav Kharinov, Minister of Investment Policy of the Sakhalin Region Vasily Grudev, Minister of External Relations and Peoples' Affairs of the Republic of Sakha (Yakutia) Gavril Kirillin and others.
Speaking immediately after the recorded welcoming speech from Vietnamese Ambassador to Russia Dang Minh Khoi, the head of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, drew attention to the serious increase in mutual trade turnover between the Russian Federation and Vietnam, which reached $7 billion. Moreover, the representative of the business community pointedly refused to speak “dollar”, calling it a “toxic currency” and using “conventional units” (cu) instead
This clause seems random only at first glance, as does the stereotype that payments between countries in national currencies are difficult or even impossible. Meanwhile, a number of larger Asian economies than Vietnam—we are talking about China and India—have already agreed to trade with Russia in national currencies. Literally on the day of the Russian-Vietnamese business dialogue, the Bloomberg agency, citing the head of the company Alexey Miller, disseminated the sensational news that Gazprom will completely dedollarize payments for gas supplies to China.
According to the additional agreement, which comes into force immediately, payments will now be made exclusively in yuan and rubles on a 50/50 basis. This is a serious step and a serious signal for other Asian countries, including Vietnam, and a reason for intensifying negotiations on The Vietnamese dong took the turn in settlements with the ruble after the Chinese yuan.
The head of the RSPP, Shokhin, mentioned in his speech the seven-year practice of functioning of a free trade zone between Vietnam and the Eurasian Economic Union, which is positive for both countries. This agreement, according to the leader of the RSPP, involves reducing Vietnam’s import tariff with the EAEU countries to 1% by 2025, which will help actively develop trade between the parties and significantly increase trade turnover, raising it to 10 billion USD. At the same time, according to the head of the Russian Union of Industrialists and Entrepreneurs, over the past seven years this task has not yet been accomplished, but there are still two years ahead.
However, during the validity of the agreement, supplies of Vietnamese products to the EAEU markets increased. Russian business is interested in increasing Russian exports to Vietnam and increasing its products with high added value:
“According to the latest survey by the Russian Union of Industrialists and Entrepreneurs on the presence of barriers to the activities of business entities on the territory of the member states of the Eurasian Economic Union and access to the markets of third countries, not a single one has been identified in trade with Vietnam,” Shokhin noted.
The President of the RSPP also expressed gratitude to the Hanoi authorities for their position on the sanctions issue:
“Vietnam has not joined the anti-Russian sanctions,” proposing to look for forms of cooperation that would minimize the risks of Vietnamese businessmen doing business with Russia being subject to Western sanctions.
Among the industries in which there is every opportunity to increase trade turnover, the leader of the Russian business community named light and textile industries, marine resources, modernization of railways, joint shipbuilding, production of electronics and digital technologies, construction of smart cities, cooperation in the field of agriculture and food technology.
At the same time, according to the head of the Russian Union of Industrialists and Entrepreneurs, countries should not only increase the volume of trade in finished products and raw materials, but also exchange competencies to increase competitiveness in the global technological race. It is worth developing the mechanism of free trade zones in the FTA+ format, which means adding to the main provisions of the FTA the issues of technical regulation and standardization, mutual recognition of certification and standardization conclusions.
Deputy Minister of Agriculture of the Russian Federation Sergei Levin presented interesting figures and facts in his speech at the business dialogue. In particular, according to him, trade turnover between countries in this industry at the end of 2021 increased by 6%, to more than $900 million. Today, Vietnam is the largest foreign buyer of Russian pork, almost 50% of which is exported to this Southeast Asian country. In second place are the supplies of grains - wheat, corn, as well as baby food.
According to Levin, Russia is interested in expanding grain supplies to Vietnam, as well as increasing the share of exported meat products and sunflower oil in the local market.
“We are interested in significantly increasing supplies and see great potential, first of all, in increasing our grain supplies, because this is the largest item - wheat - in Vietnam's imports, but we do not supply enough there yet,” Levin noted.
In addition, Russian sunflower oil has very good export potential, which in Vietnam is perceived as a “premium product”:
“We, as one of the two leaders in the production and supply of sunflower oil, will, of course, try to take a worthy place in the Vietnamese market,” Levin said.
The timber industry holding Segezha Group, part of AFK Sistema, is considering the possibility of launching its packaging production project in Vietnam.
“If we talk about another option for developing relations with Vietnam, we are quite specifically considering the option of localizing the production of our paper packaging. We have similar experience in other countries. The investment project is not very large, but it will allow us to develop our relations,” Nikolai Ivanov, vice president for implementation of state programs, sustainable development and forest policy of the company, told the participants of the business meeting.
According to him, the opportunities for Russian timber and paper products in the ASEAN markets amount to about 2,5 billion dollars, of which Vietnam itself is 250-400 million. Vietnam is interested in supplies of paper, packaging, and building materials from Russia.
“We estimate the Vietnamese lumber market at 400-500 thousand cubic meters, which is quite significant for enterprises in Siberia and the Far East,” added Ivanov.
At the same time, the businessman complained, the existing potential is still minimally used by Russian business. For example, although Segezha Group itself exported $25 million to ASEAN countries last year, and plans to almost double supplies in 2022, this is still not enough, given the potential is orders of magnitude higher.
We also touched upon problematic issues at the business panel. As Vietnamese Ambassador to Moscow Dang Minh Khoi said, this year the volume of trade between the two countries decreased by 26% and amounted to $2,2 billion. At the same time, Vietnam's exports amounted to $962 million, having decreased by almost 50%, while imports from Russia, on the contrary, increased by 14%, reaching $1,3 billion.
Insufficiently developed transport logistics was named as one of the reasons for the decline in trade turnover. Therefore, it is quite symbolic that the first container train with Vietnamese cargo using smart contracts departed from Vladivostok on the very day of the Russia-Vietnam business meeting within the framework of the EEF 2022. The ceremony was attended by the Chairman of the Board of JSC Russian Railways Oleg Belozerov and the Consul General of Vietnam in Vladivostok Nguyen Dang Hien.
According to the Ambassador of Vietnam to the Russian Federation, Dang Minh Khoi, recently the Vietnamese Embassy, together with the relevant ministries and departments of Russia, has been actively promoting the elimination of difficulties in sea and rail transport between Russia and Vietnam.
“We are pleased to note that the logistics company Fesco recently launched a regular transport route Vladivostok-Haiphong-Ho Chi Minh City with a travel time of 9-12 days, and then by rail to Moscow. It takes 25-30 days in total,” he added.
Smart contracts involve the conclusion of electronic contracts using digital security mechanisms. All operations with containers are carried out automatically and are included in the Distributed Register of Freight Transportation Data of Russian Railways, thanks to which users can track all stages of transportation, the status of applications, submission and inspection of wagons, departure and location of containers.
Industry experts unanimously assure that the use of the smart contract service on routes from the countries of the Asia-Pacific region through Vladivostok will make the transportation of goods by rail as transparent as possible through detailed online control of the transportation process and the formation of a digital footprint for all operations at departure stations , arrival and en route.
Senator Yatzkin spoke about the actively promoted relations between various regions of the Russian Federation and Vietnam: St. Petersburg and Ho Chi Minh, the Rostov region and the province of Ba Ria-Vung Tau. The latest interregional agreement in the fields of textile industry and agriculture is already 22 years old. And today, according to the senator, the Rostov region is already sending a business mission to Vietnam:
“We expect that we will conclude a new agreement between the Rostov region and this province. This does not mean that other regions of the Russian Federation will be left without this agreement,” said Yatskin.
Vietnam expects that Russia will create favorable conditions for Vietnamese business to invest in the Far East.
“We hope that the Russian government will continue to create favorable conditions for Vietnamese business to invest in the Far East,” said Vietnamese Ambassador to Moscow Dang Minh Khoi, addressing the participants in the business dialogue.
To summarize, it is worth saying that if at least half of what was said at the meeting does not remain on paper, but becomes flesh and blood, Vietnam has every chance of becoming another major hub for the penetration of Russian business into Southeast Asia.
If you find an error, please select a piece of text and press Ctrl + Enter.
Thank you!
Now the editors are aware.