FTA boosts Russia and Belarus deals
FTA boosts Russia and Belarus deals
One full year after the entry into force of the Vietnam-Eurasian Economic Union Free Trade Agreement, the union has boosted the local establishment of automobile and industrial joint ventures and the exports of both sides.
Belarusian Ambassador to Vietnam Vladimir Goshin said the agreement (VEAEUFTA) has benefited local businesses in Belarus, one of the union’s five members along with Russia, Kazakhstan, Armenia, and Kyrgyzstan. The pact has strengthened Belarus’ strategic plan to co-operate with Vietnamese partners via joint ventures to produce goods, which will be consumed in Vietnam and exported to other ASEAN markets.
“We consider Vietnam our big springboard to consolidate our strong foothold in Southeast Asia,” Goshin said at last week’s press conference on the trade deal’s one-year anniversary.
The VEAEUFTA, inked on May 29, 2015, took effect on October 5, 2016.
He revealed that later this year, a Vietnam-Belarus joint venture will put a factory into operation to manufacture and assemble Minsk MAZ-branded trucks in the northern province of Hung Yen, with an annual capacity of 1,500 units.
“Following the FTA, other Belarusian projects concerned with making urban buses and processing milk products will also be implemented in Vietnam in the near future,” Goshin said. “The truck- and bus-making projects will be deployed on a pilot basis. Many other Belarusian firms are also planning to invest in Vietnam’s industrial sector via joint ventures, from which they can transfer know-how and high technology to Vietnamese partners.”
Russia is also pushing its plans to invest in Vietnam to cash in on the FTA’s benefits.
Russian automaker GAZ Group said its commercial vehicle lines have enjoyed tax reductions since October last year. GAZ used to be famous in Vietnam with brand names such as Volga or GAZ 53 and 69. With the tax exemption, GAZ is hoping to renew its local trade.
Under the FTA, lorry import tariffs will be reduced from a current average of 17 to 0 per cent by 2025.
Since last October, the firm has been exporting completely-built units and spare parts to Vietnam thanks to the FTA, according to Andrey Kuznetsov, commercial development director of GAZ.
Other auto firms such as Ulyanovsky Avtomobilny Zavod and KAMAZ are also preparing to export their vehicles to Vietnam in the near future.
It is expected that from now until 2019, the tax reduction will enable each Russian auto exporter to save more than $50 million per year.
“In the near future, there will be many joint ventures between Vietnam and Russia and between Vietnam and Belarus operating in the sectors of machinery and goods production in order to meet the demand of ASEAN markets. This will create many new jobs for Vietnam,” said Mukai Kadirkulov, Minister of Customs Co-operation under the Eurasian Economic Commission. “Not only firms from Russia and Belarus, but also those from Kazakhstan, Armenia, and Kyrgyzstan are planning to seek investment opportunities in Vietnam thanks to the FTA.”
The FTA has also significantly increased trade co-operation between Vietnam and the union.
Kazakhstani Ambassador to Vietnam Beketzhan Zhumakhanov stated that from October 2016 to July 2017, Kazakhstan-Vietnam trade turnover more than doubled. In this year’s first eight months, the figure hit $365 million – with Kazakhstan earning $193 million from exports to Vietnam, and spending $172 million purchasing Vietnam’s goods – almost equalling the two countries’ trade turnover of $366 million in all of 2016.
According to the commission, from October 2016-July 2017, the turnover gained from the union’s exports to Vietnam grew more than 32 per cent year-on-year, while the turnover from Vietnam’s exports to the union increased 28 per cent year-on-year.
Russia’s trade representative in Vietnam V.N. Kharinov reported that in this year’s first seven months, Russia-Vietnam trade turnover expanded by 20 per cent to $2.5 billion, thanks to the FTA.
“In this year’s first seven months, the two countries’ foodstuff trade turnover doubled year-on-year to $420 million. Russia’s foodstuff and pharmaceutical exports to Vietnam increased by 10 and four times, respectively,” he said.
