Sunny future for Vietnamese trade with Cuba

09:04 | 15/07/2017 Cooperation

(VEN) - Cuba’s socioeconomic situation has undergone positive change since 2016. Following improvements in its relations with the United States and European Union, Cuba has attracted greater global attention. Vietnam, one of Cuba’s top 10 trading partners, regards Cuba as a gateway to a new era of exchanges with Latin America and the Caribbean region for mutual benefits.  

Photo: quochoi.vn

Economic prosperity

The Cuban government recently declared its intention to attract foreign investment in domestic production, saying this would be achieved with a new legal framework to manage and encourage foreign investment. In addition, Cuba has established the Mariel Development Zone that offers investors many incentives. However, so far only two or three foreign investment projects in Cuba have been developed, while most others remain in preliminary procedural stages. Foreign investors keep coming to Cuba mostly to develop and maintain their relationship with this market.

Meanwhile, Cuba has fulfilled its debt payment commitments and gradually regained foreign partners’ trust, and has fostered stability in managing the state budget and the domestic currency.

Cuba’s dynamic external relations, especially with the US and the EU, reflect its entry into a new development period with new opportunities to expand regional and international cooperation. This, in turn, is expected to pave the way for improvements in socioeconomic development and in people’s lives.

Cuba and the US have promoted cooperation in telecommunications by establishing international roaming between the two countries. In the field of civil aviation, the US has granted licenses for six airlines to offer direct flights to Cuba. In postal cooperation, Cuba and the US have established a service network that enables direct mailing of parcels between the two countries. Bilateral cooperation has also been promoted in other fields, such as culture and agriculture.

Vietnam, important partner

Economic relations and trade between Vietnam and Cuba have increased. Although bilateral trade is not yet as high as it should be, Vietnam is among Cuba’s top 10 trading partners, ahead of Russia (US$200 million) and Japan (US$160 million), and is Cuba’s second most important trading partner in Asia.

The balance of bilateral trade is tilted towards Vietnam. Vietnam spends approximately US$10 million on imports from Cuba annually, which mostly include pharmaceutical products, medicines and finished biological products. Last year, trade between the two countries reached approximately US$240 million.

The number of Vietnamese companies coming to Cuba to carry out market surveys and seek business cooperation and investment opportunities has increased strongly, especially in the fields of tourism, health, construction, production of consumer goods, electronics, seafood and real estate. Businesses of the two countries have been implementing agreements signed at Vietnam-Cuba business forums organized on the occasion of Vietnamese President Truong Tan Sang’s visit to Cuba in September 2015.

The two sides have recorded positive results from three negotiating sessions on a new bilateral trade agreement. Under the guidance of the Ministry of Industry and Trade, in general, and the America Market Department, in particular, the Commercial Section of the Vietnamese Embassy in Cuba has maintained regular contact with relevant Cuban authorities to promote the signing of the agreement to significantly benefit businesses.

Vietnam’s rice production support project has helped Cuba increase rice yields from 2.5 tonnes to 4.2 tonnes per hectare. Some farming households can even produce 9-10 tonnes of rice per hectare. Rice output has grown from 80,000 tonnes to about 300,000 tonnes in 2015, meeting 50 percent of domestic demand. The total rice field area has been expanded from 137,000ha to 200,000ha. Most importantly, the project has helped Cuban farmers master wet rice cultivation techniques. Cuba is pursuing the goal of becoming self-sufficient in food in the coming years. The project’s fourth stage ended in late 2015. The fifth stage has been approved by the Vietnamese government and is expected to be implemented this year.

Some other cooperation projects are underway, including a five-star hotel and office-for-rent construction project between Hanel Corporation and its Cuban partner, Thai Binh Company’s nappy production project based in the Mariel Development Zone, Vico Company’s detergent production project, Hung Thang Company’s bottled water project, and a ceramic production project between Viglacera Corporation and a Cuban partner.

Vietnamese companies have maintained good trade relations with Cuban partners despite procedural difficulties on the Cuban side. Examples include the Thai Binh Company with annual revenue of more than US$100 million, and Hung Thang Company, which imports Cuban pharmaceutical products.

Boosting bilateral trade

The government needs to support businesses and facilitate their access to loans to enhance their financial capacity, helping them compete with Chinese goods that are overwhelming the Cuban market, and US products that are forecast to be more competitive in price thanks to transport advantages.

Market research should be intensified along with organizing workshops and seminars to provide businesses with updated information about the Cuban market in the new period, which offers Vietnamese businesses many opportunities.

For their part, domestic companies should have clear strategies when doing business with Cuban partners. They should seek support from Cuban managers, from the business community to the central levels, to deal with problems arising in the cooperation process. Further, they should try to minimize costs, especially transportation costs, to enhance the competitiveness of Vietnamese exports against products of other countries, including the US and China.

Do Viet Phuong, Commercial Section Head, Vietnamese Embassy in Cuba