08:30 | 24/07/2016 Cooperation
(VEN) - The United Kingdom of Great Britain and Northern Ireland is one of Vietnam’s largest importers in the EU. With nearly 52 percent of UK votes to leave the EU, a possible exit by the UK from the EU could affect Vietnamese trade. Vietnamese businesses may need to adopt plans and solutions to adapt to the new situation in order to maintain exports to the UK.
Effects on trade and investment
According to the General Department of Vietnam Customs, total trade turnover between the UK and Vietnam has constantly increased over the years, especially during the 2008-2015 period. Vietnam’s exports to the UK reached US$4.65 billion in 2015, accounting for 15 percent of the export value to the EU and 2.9 percent of the country’s total export turnover. In the first five months of this year, Vietnam achieved trade surplus of around US$1.7 billion with the UK.
The Ministry of Industry and Trade’s European Market Department Director Dang Hoang Hai said that Vietnam has maintained trade surplus with the UK in recent years. However Vietnam’s exports to the UK have mainly gone through intermediate markets such as France, the Netherlands and Belgium. Therefore, Brexit could affect Vietnamese trade.
According to the Ministry of Planning and Investment’s Foreign Investment Agency, the UK has invested more than 250 projects in Vietnam with total registered capital of over US$4.8 billion, ranking 15 among the 106 countries and territories and second among EU partners investing in Vietnam. In the first five months of the year, the UK had 18 new projects and added capital for two projects with total registered and additional capital of nearly US$200 million. UK projects in Vietnam have small capital compared to other partners such as Japan, the Republic of Korea and Singapore. Therefore, Brexit could not lead to a strong fall in foreign direct investment in Vietnam.
Minister of Planning and Investment Nguyen Chi Dung said that the Vietnamese economy would not largely influenced by Brexit.
The General Statistics Office’s Price Statistics Department Deputy Director Do Thi Ngoc said that Brexit would affect the Vietnamese economy, but not much like Japan, Singapore and Hong Kong, China as they are large markets with strong development, while Vietnam is an emerging market. In particular, Vietnam has promoted integration into the global economy thanks to bilateral and multilateral free trade agreements. However its integration has just entered the first period, so effects on the Vietnamese economy will not be great.
General Statistics Office Director General Nguyen Bich Lam said that UK votes to leave the EU was a referendum and it would take several years to implement its policy. However to specify Brexit’s effects on the Vietnamese economy, the Ministry of Planning and Investment has directed the General Statistics Office to review all UK projects, and export and import activities in Vietnam in order to seek appropriate solutions in response.
Making most of opportunities
The Ministry of Planning and Investment’s Central Institute for Economic Management Former Director Le Dang Doanh said that the UK is one of the EU-Vietnam Free Trade Agreement members. Therefore, Brexit could lead to careful consideration for the signing process, affecting Vietnam’s integration in the global economy.
In response to Brexit’s effects, Vietnamese businesses need to adopt solutions to reduce costs and time in exports to the UK and the EU. In particular, businesses should drive towards direct exports to the UK instead of intermediate partners. In addition, Vietnam needs to approve plans in order to seek new export markets, while ministries, departments and agencies should focus on overcoming difficulties for businesses exporting to the UK and the EU.
Dang Hoang Hai said that the UK would promote to seek more new markets. Therefore, Vietnamese businesses should make most of opportunities to improve economic relations, trade and investment with the UK.
The Ministry of Industry and Trade’s European Market Department Director Dang Hoang Hai said that the Ministry of Industry and Trade would positively support Vietnamese businesses in exports to the UK, firstly through the Vietnam Trade Office in the UK in order to seek direct export orders to its market.