CONSULATE GENERAL OF THE SOCIALIST REPUBLIC OF VIET NAM IN MUMBAI, THE REPUBLIC OF INDIA
VIETNAM-INDIA ECONOMIC RELATIONS I. NEW MOMENTUMS IN VIETNAMES II. ECONOMY III. TRANS-PACIFIC PARTNERSHIP (TPP) IV. MOST SUITABLE LOCATIONS FOR INDIAN ENTERPRISES IN EXPORT- MANUFACTURE FROM VIETNAM TO TPP CONCLUSION V.
1.1 Political relations Traditional friendship cooperation Start of the period of deeper cooperation in the spirit of strategic partnership
1.2 Economic relations Current performance India - 20/200 trade partners Investment projects: India 250; VN: 27 Trade: 8 bn. USD. Tourism: very small volume (0.3% as Viet Nam has 7.8 million foreign visitors last year, but from India only 23,000 visitors). Planning Political: excellerating each side and both sides. Economic: trade up to 15 bn. in 2015.
2.1 Structural reforms or “Renovation Two” 1. Achievements GDP: $185 bn. in 2014 1986 renovation “One”: GDP per capita Trade (billion $US) ($US) 320 245 2200 200 1 Vietnam’s export: No 1 in black pepper, No 2 in rice 1986 2015 1986 2014 2020 and café. Now exporting smart phones, computer.
2.1 Structural reforms or “Renovation Two” (cont.) 1. Achievements (cont.) FDI: 1987-2014: attracted $255 bn. with 17,520 investment projects from more than 100 Real countries and FDI Distribution Estate 21% territories. FDI brings 25% GDP Manufactu and 70% export re 53% Others of Viet Nam. 26%
2.1 Structural reforms or “Renovation Two” (cont.) 1. Achievements (cont.) Viet Nam (18/75) Trade: 2014 $245 bn. with surplus. Russia Bloomberg forecasted Vietnam (19/75) is among 20 countries UAE with surplus 3.5% (20/75 GDP up in 2015. China (22/75) US (53/75)
2.1 Structural reforms or “Renovation Two” (cont.) Exports from ASEAN 1. Achievements (cont.) counrties to US in 2014 Vietnam has enjoyed leading position Singapore, 12.50% Viet Nam, among ASEAN 22% exporters to US. Indonesia, 14.70% Others, Malaysia, 9.40% 21.60% Thailand, 19.80%
Structural reforms or “Renovation Two” 2.1 (cont.) Corporate Law: 1. Freely doing Renovation Two 2. business in the Heavy effect of global financial crises sectors the Government doesn’t Shifting of growth pattern ban Restructuring the economy 2. State-owned Reforming the basic laws enterprise is 100% capital Real Estate Law: 3. FDI is when 51% capital 1. First time allow foreigners 4. Ratio of vote in buy houses enterprise decisions 2. Limit only in quantity in downs from 75 to one community unit. 65% and 65 to 51%.
Structural reforms or “Renovation Two” 2.1 (cont.) Renovation Two (cont.) 2. Advantages VS. Challenges Advantages i) Favourable location; Challenges ii) Good business 1. State-owned environment; enterprises; iii) Cheap production 2. Bad debts. costs (land, electricity, labour).
2.2 Joining a series of international free trade areas Joining 6 new FTAs, while being members of 8 FTAs Vietnam is a member of 8 Viet Nam is under Free Trade Agreements, negotiations with 6 including those with new FTAs: ASEAN ASEAN, ASEAN+ (India, Economic Australia and New Community (AEC); Zealand, South Korea, EU; Korea; Customs Japan and China), Chile Union with Russia, and Japan CERP , TPP
2.2 Joining a series of international free trade areas (cont.) Influence of FTAs: change the features and weight of Vietnamese economy toward more developed. TPP brings two most important benefits 1.Low and no tariff; 2.No competition from China
3.1 What and why TPP? What is TPP? Trans-Pacific Partnership and US-led economic organization in the Pacific Scale: 35% of global GDP and 40% global trade; • 12 countries • Population: 750 GDP $28 trillion. million • Economic Output: US$ 28 trillion US accounts for 57% of TPP .
3.1 What and why TPP? (cont.) What is TPP? (cont.) Form: a FTA for 21 st century with huge liberation and ease trade, investment, labour and public expenditure. • 12 countries • Population: 750 million • Economic Output: US$ 28 trillion
3.1 What and why TPP? (cont.) Why is TPP? Europe is aging, Euro-zone crises, while Asia-Pacific is growing and dynamic The immerge of China and the US need a separated economic block without China
Mr Michael Forman, US Trade Representative: “USA would like to help Vietnam to be a country of strong and prosperous economy and comprehensively integrated to the world…. Based on some independent surveys, Vietnam is the country who get most benefits from TPP."
3.2 The meanings for Vietnam and Indo- Vietnamese economic collaboration The meanings for Vietnam The one of the bets ways for Vietnamese export. Open a huge market for Vietnam, especially US market with low and no taxes (currently TPP enjoys 40% VN’s export) From existing 11,000 types tariff (12%, To 0% or 5% of taxations 17%, 65%)
3.2 The meanings for Vietnam and Indo- Vietnamese economic collaboration (cont.) The meanings for Vietnam (cont.) Help Vietnam in attracting more FDI and approaching new technology; help Vietnam in entering global value chain In general help Vietnam in achieving more economic weigh. GDP of Vietnam would increase 25% and trade 35%. Vietnam might join the top 20 largest economies by 2025.
3.2 The meanings for Vietnam and Indo- Vietnamese economic collaboration (cont.) The meanings for Vietnam (cont.) Challenges The biggest challenge for VN is TPP requires all the production process must be inside TPP when VN imports 80% materials in which garment and textile material imported 70% from China. Anti-dumping sues Property rights More rights for FDI enterprises (can sue country’s government if the latter violate TPP terms and rules)
3.2 The meanings for Vietnam and Indo- Vietnamese economic collaboration (cont.) The benefits for India TPP helps India approaching the Pacific Rim - a huge export market and most advanced and dynamic economic and technological area in the world. India could enjoy low and zero tariff by exporting from Vietnam to TPP countries (while ASEAN-India tariff is 8% from 2016)
3.3 What opportunities for enterprises from India? • Textile and garment Supplying materials to Viet • Foot wear Nam • Wood processing Set up Manufacture bases in • Agricultural Viet Nam for producing goods and exporting to TPP product processing Sectors Indian enterprises • Electronics could run in Viet Nam for • Leather TPP countries • Oil refinery Sectors Indian enterprises products could supply for Vietnamese • Polymer domestic market under TPP
3.3 What opportunities for enterprises from India? (cont.) Supplying materials to Viet Nam • Garment Set up Manufacture bases in • Pharmacy Viet Nam for producing • Real Estate goods and exporting to TPP • Tourism and Sectors Indian enterprises Hospitality could run in Viet Nam for • Leather TPP countries • Steal Sectors Indian enterprises could supply for Vietnamese • Trade domestic market under TPP
3.3 What opportunities for enterprises from India? (cont.)
4.1 Ha Noi City and Ho Chi Minh City - booming development locations for all Overview of Ho Chi Minh City (HCMC) Market shares and competition
4.2 East - West Economic Corridor and India Understanding and development of EWEC Meanings of EWEC for India
4.2 East - West Economic Corridor and India Understanding and development of EWEC Meanings of EWEC for India
4.3 “Exceptional” locations for Indian Enterprises Special locations and roles of Da Nang City and Quang Binh Province In the prospect of both Trans-Pacific and EWEC (strategic locations)
4.3 “Exceptional” locations for Indian Enterprises Special locations and roles of Da Nang City and Quang Binh Province In the prospect of both Trans-Pacific and EWEC (strategic locations)
4.3 “Exceptional” locations for Indian Enterprises (cont.) Special locations and roles of Da Nang City and Quang Binh Province In the area of the Indian past cultural influence in South East Asia
4.3 “Exceptional” locations for Indian Enterprises (cont.) Da Nang City - a market “vacuum” for Indian enterprises to make a service “base” in filling up in Vietnam Economy: growth 7-8%; GDP pc: $3,000USD; Trade: $2.2 bn.; Rank: No 1 in the PCI (Provincial Competiveness Index) for 2008, 2009, 2010 and 2013
4.3 “Exceptional” locations for Indian Enterprises (cont.) Da Nang City (cont.) Industry: footwear, garment & textile, building material, IT , fine arts Service: seaport logistics, tourism and hospitality, finance, education, insurance. Agriculture: fishing, forestry, farming
4.3 “Exceptional” locations for Indian Enterprises (cont.) Da Nang City (cont.) Export: garment, electronics, electrical, toy, seafood, furniture, rubber FDI: US$3.3 bn. with around 300 projects from 34 counties and territories
4.3 “Exceptional” locations for Indian Enterprises (cont.) Da Nang City (cont.) Advantages: Strategic location; i. ii. Tourism infrastructure and hospitality; iii. Technical infrastructure; iv. Skilled human resources; v. Friendly business environment.
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