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Ministry eyes Mideast market
The Middle East were emerging as a high-potential market for Vietnamese products, a senior official said at a seminar in HCM City yesterday.
Ly Quoc Hung, Head of the Ministry of Industry and Trade's Southwest Asia and Africa Market Department, said that with a total population of 300 million, the Middle Eastern region, which consists of 15 countries, was an attractive market for Vietnamese exporters.
Since their economies were based on oil and gas, many countries in the region except Turkey and Israel had to import large volumes of food to meet local consumer demand, he said.
Le Thi Cam Van, Director of the Ben Tre Import-Export Company (Betrimex) which does good business in the region, said demand from these markets was very stable since they were less affected by the global economic downturn.
The markets also did not require the same strict standards as the US, the EU or Japan, she said.
Hung said many countries in the region, such as Qatar and Saudi Arabia, were building large infrastructure projects, creating opportunities for Vietnamese companies to export building materials to the region.
In addition, the region also had a large demand for guest workers, he added.
Currently, around 6,800 Vietnamese labourers are working in Saudi Arabia. The country is willing to receive an additional 400,000-700,000 Vietnamese guest workers to diversify its guest worker sources, but local labour export companies were not able to meet the demand. Bilateral trade between the two sides has increased significantly in the past few years, topping US$2.15 billion last year.
Exports still modest
In the first nine months of the year, the figure reached $2.37 billion, of which $1.19 billion came from Vietnamese exports.
Viet Nam's key export items to the Middle East include rice, coffee, textiles and garments, computer and electronic components, footwear, seafood, rubber, coal, tea and wooden furniture. It imports petroleum, petrochemicals, fertilisers, chemicals, steel and plastic products from the region.
However, Viet Nam's exports to the region remained modest compared to their potential due to the lack of information on each other's markets, their geographic locations, customer preferences, legal systems and customs regulations, Hung said.
Moreover, instability in some places had also discouraged local business from exploiting this market well, Hung said.
Despite the potential, there were still risks that Vietnamese companies have to prepare for while doing business in the Middle East, including those associated with payments, Hung said.
To avoid this risk, payment should be made by banks via Letter of Credit at sight or exporters should negotiate with importers to receive at least 20-30 per cent of total export value in advance, he said.
Trade barriers set by importing countries in the region have also caused many difficulties for Vietnamese exporters since each country has its own regulations that are different from others.
Turkey, for example, requires strict product quality and other standards, and has a restricted list of eligible importers.
Exports to Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates must be labeled in accordance with requirements set by the Arab Gulf Countries' Council. Also, because the region had very low import taxes of 0-5 per cent, Vietnamese firms had to face harsh competition from foreign rivals, Hung said.
Domestic firms needed to study the region's business customs and customers' tastes carefully if they wished to penetrate the market successfully, Van of Betrimex said.
She also recommended that local firms focus on building brands to increase product value.
Companies should ask trade offices in the region for information about potential partners and co-operate with these offices to solve disputes (If any) as soon as possible, she added.
Van also asked Government organisations to intensify support for businesses via trade promotion activities and assist domestic enterprises in opening branches or representative offices in the region.
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