Country Profile – Vietnam
• As per World Economic Outlook Database, 2018, Vietnam is ranked 35th in world in GDP in PPP terms at a value of US$ 705.78 billion while ranked 47th in GDP in nominal terms at a value of US$ 240.78 billion.
• Vietnam’s exports increased from US$ 150 billion in 2014 to US$ 243 billion in 2018. Similarly, its imports figures surged from US$ 147 billion in 2014 to US$ 237 billion in 2018.
• India’s exports to Vietnam increased by US$ 6.5 billion in 2014 to US$ 6.7 billion in 2018, experiencing a growth rate of 4.8%. But on the other hand, India’s imports from Vietnam have sharply jumped from US$ 2.7 billion to US$ 7.2 billion in past five years.
• Though India is an agrarian exporter, broadly the trade basket is complimentary and there is immense scope for escalating bilateral trade in merchandise and services.
Vietnam is located in easternmost part of South Asian Continent. It is a developing country and is a member of the most successful regional economic group – ASEAN. The United Nations Development Programme ranks Vietnam 116th in terms of Human Development Index with the value of 0.649. It is ranked 69th in ‘Ease of Doing Business’ by World Bank released in 2018 with 21st rank in dealing with construction permits and 27th rank in getting electricity. Extensive market-oriented and outward-looking economic policies have helped Vietnam achieve sustained and inclusive economic growth.
As per World Economic Outlook Database, 2018 estimate Vietnam is ranked 35th in GDP in PPP terms at a value of US$ 705.78 billion while ranked 47th in GDP in nominal terms at a value of US$ 240.78 billion. The per capita GDP of Vietnam in PPP terms is estimated to be US$ 7,463 and in nominal terms it is estimated to be US$ 2,546 in 2018 by World Economic Outlook Database.
Source: ITC Trade Map, 2019
Vietnam’s exports increased from US$ 150 billion in 2014 to US$ 243 billion in 2018. Similarly, its imports figures surged from US$ 147 billion in 2014 to US$ 237 billion in 2018.
Natural resources are the primary export products of Vietnam. Its top export product at HS-6 digit level last year was telephones for cellular networks, parts of telephone sets for cellular networks, electronic integrated circuits, sports footwear and fresh or dried cashew nuts. These products constitute just 28% of the total export basket of Vietnam, i.e. its export basket is much diversified.
Vietnam’s import basket is primarily led by parts of telephone sets for cellular networks, electronic integrated circuits for processors and controllers, electronic integrated circuits excluding processors and controllers, medium oils and printed circuits, which together make up the top 5 imports of Vietnam. The import basket is primarily dominated by HS code 85 i.e. electrical machinery and equipment.
Vietnam has been a vital partner of India for centuries and both share a cordial and amenable relation. Visit of Pt. Jawaharlal Nehru, the then prime minister of India in 1954 ameliorated the diplomatic relations with Vietnam, which was reciprocated by the visit of the then president of Vietnam Ho Chi Minh in 1958. Vietnam is considered as an indispensable economy when it comes to India’s vision for Southeast Asia as also its ‘Act East’ policy.
India and Vietnam has paved a new approach of diplomatic and economic partnership to identify vivid routes for their economic growth. During the past few years, India has undergone a rapid technological revolution focusing on vocational skills, digitization, environment, renewable energy, and has established itself as a knowledge and business centric economy. Vietnam requires technological assistance for its socioeconomic and trade logistics development and India is an appropriate partner for it to achieve these desired goals. Both countries have identified biotechnology in agriculture and healthcare, technology for new materials, IT and electronics, super-computing, nuclear energy for peaceful uses, science and technology policy making and administration, remote sensing, non-traditional energy for cooperation for expanding trade and investment and achieving the target of US$ 15 billion worth of bilateral trade by 2020.
Source: ITC Trade Map
India’s exports to Vietnam increased by US$ 6.5 billion in 2014 to US$ 6.7 billion in 2018, experiencing a growth rate of 4.8%. But on the other hand, India’s imports from Vietnam sharply jumped from US$ 2.7 billion to US$ 7.2 billion in past five years. India is the 10th largest exporting partner and 9th largest importing partner of Vietnam. The top trading partner of Vietnam is China, followed by US and South Korea.
India’s major exports to Vietnam includes frozen meat, fish & crustaceans, cotton, spices, iron and steel products, plastics, animal feed and automobiles. Our imports from Vietnam includes electrical machinery, copper articles, organic & inorganic chemicals, rubber, footwear, textiles, iron & steel and coffee.
Though India is an agrarian exporter, broadly our trade basket is complimentary and thus there is immense scope for escalating bilateral trade. Also trade in services is a prominent path for enhancing our trade quantum as under India-ASEAN services trade agreement, mobility of skilled and semi-skilled laborers under mode 4 has been liberalized, which can definitely be used as a policy instrument.
India now has 132 projects with total investments of about US$ 1.07 billion. Foremost sectors of investments are energy, mineral exploration, agro-processing, sugar manufacturing, agro-chemicals, IT and automobile components. India has also established a US$ 2 million Advanced Resource Centre in Information and Communications Technology (ARC-ICT), which trains students and government officials in several areas such as network systems, web designing, java, GIS applications and e-governance. The Prime Minister of India enunciated a new US$ 500 million line of credit for Vietnam to expedite deeper defence cooperation and affirmed US$ 5 million for instituting a software and IT park to generate IT and ITES related jobs in Vietnam.
Focus centres of entrepreneurship development, English and IT training have also been set up by the Indian government under IAI (Initiative for ASEAN Integration) programme at Technical University in Vietnam.
Prioritized Sectors for Encouragement
The Indian prime minister has also been strongly promoting “Make in India” campaign overseas. India is one of the preferred destinations, which foreign investors can not overlook. Quantum of investment is projected to surge in the near future with the realization of an ASEAN-India Free Trade Agreement in services and investment. This can be complimented by the increased manufacturing capacities of both India and Vietnam, both seen at as preferred destinations for FDI in their respective manufacturing sectors.
It is forecast that education and vocational training, entertainment, health, raw and processed food, automobiles and renewable energy are the key sectoral groups, relevant from the perspective of both the economies. The Indian entertainment sector, especially audio-visual industry has amplified tremendously, and therefore any related projects and MoUs, if initiated, could prove remunerative. It is going to act as a positive catalyst in promoting and reinforcing the Vietnamese entertainment and media sector, which can be one of the major sources of revenue generation in the near future as cell phones have been in the past.
Due to geographical proximity of eight north east states and Vietnam, establishing a training hub for professional English courses and job oriented skills is pragmatic and percipient. This will facilitate the youth of Vietnam to develop requisite skills, thus helping them to be a part of their skilled labor force.
Double digit growth rate has been registered by Indian medical services in the past five years, which is signaling popularity at the global level. Due to relative similarity in the ethnicity, old school medical practice like Yoga, Unani and Ayurveda can be easily commercialized in Vietnam, as economic growth and demographic changes are driving demand for healthcare services. India and Vietnam must also work for direct bilateral connectivity and easing visa regulations for business individuals.