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Friday, October 21, 2016

In the biggest Asian game Russia puts on Vietnam

In connection with the ASEAN summit in Sochi, opening on Thursday, of particular interest is the Russian cooperation with Vietnam, which the Prime Minister has already arrived in Russia. Vietnam became the first country to sign an agreement with the EEC on the free trade zone, however, the Russian-Vietnamese plans are the United States, with large views of Hanoi in the framework of its project of the TRANS-Pacific partnership.

The recent visit to Russia the Prime Minister of Vietnam Nguyen Xuan Fuca confirmed that this country remains the most loyal partner in South-East Asia. So, Vietnam has become the first state to sign a free trade agreement with the Eurasian economic Union opens prospects for further growth of Russian-Vietnamese trade, last year, demonstrated resilience to crisis.

The challenge of the crisis was successful

“The Americans are going to reconfigure the economy of the TRANS-Pacific partnership participants to their advantage, and it’s much more profound form of dependence, than free trade”

“It is not only the first visit of my colleague in our country in a new capacity, but also the first foreign visit that we are particularly pleased. I see this as a symbol of the special trust that exists between our countries, and, of course, evidence of the strategic partnership that unites our state,” he greeted the Russian Prime Minister Dmitry Medvedev and his Vietnamese counterpart Nguyen Xuan Fuca during their meeting in Moscow. “The Vietnamese leadership was strongly in favour of the development of friendly relations with the Russian Federation”, – assured in response, Nguyen Xuan Phuc.

This meeting took place a few days after Russian President Vladimir Putin signed a law on ratification of the free trade agreement between Vietnam and the Eurasian economic Union, which was concluded a year ago in Kazakhstan. One of the key objectives of this document marked “connect the EEU to the dynamically developing integration processes in the Asia-Pacific region”.

The share of Vietnam in total volume of Russian trade are not too high, only 0.7% of the total turnover by the end of 2015. However, in the past year, Vietnam has become one of the very few countries in the world, which showed the growth of trade with Russia on the background of a serious fall (other States in this very short list are Bulgaria, Peru and Papua New Guinea). According to the Federal customs service, the total volume of trade turnover between Russia and Vietnam last year increased by 4% to 3.896 billion. At the same time Russian exports to Vietnam increased by 26.9 percent to 1,843 billion, while imports decreased by 10.6% to 2,053 billion. This allowed us to approach the balance in trade with Vietnam, while a year earlier it was observed a significant surplus in the Vietnamese favor (to 844.1 million dollars). Among APEC economies Viet Nam’s trade with Russia last year took the sixth place, almost catching Taiwan.

For Russia Vietnam is interesting primarily as a fast-growing market, which facilitate long-standing friendly relations (the Vietnamese remember what support of the Soviet Union rendered their country during the war with the United States). The potential of this market is increasing along with the growth of the population and its income. According to the portal Tradingeconomics.com over the last ten years, the population of Vietnam has increased from 83,3 to 91.7 million people, and, according to UN projections, by 2050 Russia and Vietnam will be compared according to this indicator. GDP per capita of Vietnam from 2006 to 2016 increased from 3687 to 6024 dollars (world Bank data). However, this allowed him to take only 125-e a place in the world (next to Uzbekistan, Nigeria and India), but this does not prevent active capacity of import of different products – over the last decade, its volume has increased almost five times (from 3 to more than 14 billion dollars). Main article Vietnamese imports – machinery, vehicles and equipment (32%), various consumer goods (24%), chemical products (14.2 percent), fuel (10%), food products (7%).

Main countries, importing Vietnam products, are its neighbors in Southeast Asia – China (28% of imports) and South Korea (15%), another 29% of imports come together at Japan, Taiwan, Thailand and Singapore. The share of Russian goods in total imports in Vietnam is significantly lower, but in some segments of the domestic producers have significant potential, especially transport equipment, fertilizers and fuel. In 2014, the Russian export to Vietnam in these areas increased respectively by 2.9 times, 2.3 times and by 51.2%.

Not less important direction of Russian-Vietnamese trade – exports of arms. At the end of the last decade, according to the Centre for analysis of world arms trade (TSAMTO), Vietnam ranked fifth in the structure of military exports of Russia (6,3%), having a portfolio of orders 1.88 billion for 2008-2011, and the next four-year period it was planned to increase to 3.2 billion dollars. It was assumed that the volume of purchases of Russian arms to Viet Nam come in third place after India and Venezuela. The most significant project in the framework of military-technical cooperation was the construction of diesel-electric submarines, the first of which arrived in country in late 2013.

Certain hopes for the Vietnamese market and lay Russian farmers. In February, the Ministry of agriculture and rural development of Vietnam has included Russia in a permanent register of exporters of products of plant origin, paving the way for the Vietnamese market Russian grain. And in November last year, speaking at the Dairy forum II of Russia, the Minister of agriculture of the Russian Federation Alexander Tkachev said that if the state program of development of dairy industry is working, “in 5-7 years we have to fill and we will be in Vietnam to supply”. “We are keen to supply livestock products to the Vietnamese market, to high quality meat from the Russian Federation came to Vietnam,” confirmed Medvedev during the meeting with the Vietnamese counterpart.

Difficulties will ensure America

“The volume of Vietnamese investment in Russia by the end of 2014 – $ 2.4 billion”

One of the main outcomes of the visit of Vietnamese Prime Minister to Russia was the agreement on investment cooperation signed between the Russian direct investment Fund and the Vietnam national investment Fund. In the framework of this agreement is expected to create on a parity basis a joint investment platform with a total cost of $ 500 million with the aim of finding promising projects that meet the joint interests of the two countries.

According to the Ministry of planning and investment of Vietnam, at the end of 2014 the volume of Russian investments in the country amounted to 1,961 billion dollars, the main areas of investment were manufacturing and engineering (approximately 58%) and mining (around 30%). Investment activity among investor countries in 2013, Russia ranked fifth.

The volume of Vietnamese investment in Russia by the end of 2014 was slightly higher – $ 2.4 billion, with most of these funds came in joint initiatives in the oil and gas industry. The first joint Russian-Vietnamese oil and gas venture Vietsovpetro was established in 1981, the largest worked Deposit Batho (White tiger) located on the shelf of the South China sea. In 2006, Russia made a reciprocal gesture, giving Vietnamese access to their fields. The company Rusvietpetro”, a joint venture between Russian Zarubezhneft and State Corporation of oil and gas of Vietnam (Petrovietnam), is now engaged in the oil production in the Komi Republic and Nenets Autonomous district. In addition, in 2010, Petrovietnam set up a joint Gazprom venture Gazpromviet, which has licenses for development of oil fields in Orenburg region and Yamal-Nenets Autonomous district.

According to Medvedev, the Russian-Vietnamese cooperation in the oil and gas sector “is unprecedented, because we do not just supply their technology, the extracted oil or gas, but, in fact, made the exchange fields, which we have practically any other country does not exist.” “In this sense, we have really advanced form of cooperation in fuel and energy sector”, – he stressed. However, in a situation of international sanctions imposed on Russia, this cooperation can lead to unexpected complexity.

As the Chairman of the Board of Directors of Creon Energy fares Kilzie, Vietnam is a potentially large fuel and energy power, but all of its hydrocarbon reserves are hard to recover, so the main thing in joint projects in the oil and gas industry is technology. In Southeast Asia the necessary level of technology can offer China and Japan, but these countries traditionally difficult relationship with Vietnam (the history of Chinese-Vietnamese conflict has nearly a thousand years), which gives the advantage of Russia. “However, Russia is able to provide Vietnam with only conventional technologies in the oil and gas sector, says Kilzie. – Before you could buy the necessary technology from third parties and develop with Vietnam joint projects or grant loans for its technology. But now we have problems with financing, and access foreign technologies is difficult because of sanctions and falling oil prices. In General, to work with Vietnam to Russia is beneficial, but the question is that we are able to offer him.”

The same time emphasizes and Director of the center for economic research Institute of globalization and social movements Vasily Koltashov, Recalling that Viet Nam is a party to the agreement on the TRANS-Pacific partnership, signed in Auckland new Zealand in February last year. This integration project, initiated by the United States, is much deeper than with the EEU signed an agreement on free trade, – the format, according to Vasily Koltashov, is “old game” in the global economy.

“Moscow is trying to keep relations with Vietnam and to show that it conducts a certain policy in Asia and does not lose the initiative here,” says the economist. But in this region many competitors, and all big claims to leadership here, bringing the United States, pushing China and Russia. The Americans are going to reconfigure the economy of the TRANS-Pacific partnership participants to their advantage, and it’s much more profound form of dependence, than free trade”.

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