Vietnamese businesses are encouraged to tap into the Russian market on the back of Russia’s recent WTO membership and current progress in FTA negotiations between Vietnam and the Customs Union.

For the past three consecutive years, Vietnam’s export earnings from Russia have recorded an annual average growth rate of more than 20%, reaching a staggering US$1.9 billion in 2013 alone.

Key export items included telephones and spare parts, computers, electronics and spare parts, garment and textiles, footwear, coffee, rice, cashew nuts, and seafood.

Vietnamese trade counselor to Russia Pham Quang Niem says Russia’s WTO admission in August 2012 and the FTA between Vietnam and the Customs Union, due to be signed late this year, will enable Vietnamese businesses to penetrate a large market with more tax incentives.

Russia’s WTO membership means tariffs imposed on Vietnamese goods are slashed by a further 30-50%, making it easier for them to get the lion’s share in this potential market, he elaborates.

Meanwhile, the FTA will foster bilateral economic, trade and investment ties. Vietnam can make use of the state-of-the-art technology from the Customs Union to modernize its economy. The trade pact will also help develop Vietnam’s tourism and services sector and generate jobs for local people.

However, Vietnamese businesses encounter difficulty in establishing representative offices or trading centres to expand their operation in Russia.

In addition, Vietnamese products face tough competition from similar products imported from Thailand, China and other countries. Russian businesses rarely use letters of credit in payment, posing difficulty for Vietnamese exporters.

Niem also warns Vietnamese businesses should carefully study their Russian counterparts and contract terms before penning deals in order to protect their rights and avoid disputes.

Source: VOV Online