Trade with Viet Nam

The recent State visit by the President of Viet Nam also saw the establishment of the Viet Nam-Sri Lanka Business Forum. The establishment of such a forum is opportune as Viet Nam is recognised as an emerging economy.

Viet Nam is reported to be one of the fastest growing economies in the world. From 2004 to 2007 annual GDP growth was over 8% which slowed down slightly in 2008 and 2009 and recovered to 6.78% in 2010. Over a period of time there has been significant improvement both in foreign trade and foreign direct investment. A net exporter of agricultural products, Viet Nam is the second largest exporter of rice with other major exports being coffee, pepper, cashew, tea, rubber, wood products and fisheries products.

Integration with the global economy has been a major policy decision taken by Viet Nam, resulting in her joining the World Trade Organization in 2010. Viet Nam is also a member of the Association of South East Nations (ASEAN) Free Trade Area (AFTA) and has a Bilateral Trade Agreement (BTA) with the USA and has officially joined the Trans Pacific Partnership (TPP) since November 2010.

In 1998 she joined the Asia Pacific Economic Cooperation Forum (APEC) while expanding trade with her East Asian neighbours; she also has close trading ties with Western Europe and North America. Sri Lanka’s trade with Viet Nam has been growing gradually but is still not at desirable levels with not much diversification. This is where the newly-created Viet Nam-Sri Lanka Business Forum can play an important role in closer cooperation between the business communities.

In the past, Viet Nam was not considered by Sri Lanka to be a major trading partner or a partner with much potential for bilateral trade. However, it is now accepted that trade with emerging economies will be more important than trading with the developed countries of the West as they offer growing market opportunities as compared to the declining markets of the West. With a current population of 90 million people her domestic market is also considerable.

Although we may be competitors in some of their major export items, experience shows that we have successfully improved trade with other competitors in the region. Growing economies with growing middle classes offer opportunities for enterprising entrepreneurs with vision and modern Viet Nam offers such entrepreneurs with opportunities.

Considering Viet Nam’s ties with ASEAN and APEC in particular and the Bilateral Trade Agreement with the US, Viet Nam also offers opportunities for investment in each others’ countries. Sri Lanka not being a member of ASEAN Free Trade Agreement, collaboration with Viet Nam is a way to penetrate ASEAN markets. An important opportunity has been created by the Viet Nam President’s high profile visit and the inauguration of the Business Forum by him. If the forum is confined to events such as Annual General Meetings, the usefulness of this newly-created forum will be limited to paper. But if the forum members and the chambers involved take a dynamic approach and follow up on the high profile inauguration with visits and participation in their trade fairs in addition to encouraging them to visit our trade fairs, etc., the forum will get on to a sound, established footing resulting in regular interaction. Such moves will definitely result in Sri Lanka improving her trade with Viet Nam.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)