Vietnam trade ties get longer term boost

Russian investors have been setting their sights on the emerging markets of South East Asia. They're looking for opportunities to seize market share from the region's traditional trading partner, China, with experts warn

During the four day industrial trade fair in Hanoi last week, Moscow sent a clear signal it wants to get its piece of this rapidly growing market.

Economic growth in Vietnam is viewed as solid, with cash flooding in. Despite the crisis, the country's GDP grew by 4% in 1Q 2009, but Andreas Dernbach, a partner at HR Solutions, working, thinks investors should be aware of the hurdles they may encounter.

“Vietnam is still a very bureaucratic country. So, newcomers to Vietnam often face problems dealing with authorities. For example, with the tax authorities. Then the second challenge is to find qualified staff. The third difficulty is the underdeveloped infrastructure.”

To tackle the problem of educational development and to encourage an exchange of specialists, Vnesheconombank has initiated a special programme, with Deputy Chairman, Anatoly Tikhonov, saying increased understanding is the key.

“We have launched a programme to help Vietnam repay its foreign debt to Russia. Specialists from Vietnam come to Russia's universities. This boosts scientific exchange and cultural ties and the integration of our business communities.”

The areas of interest for investors are infrastructure, IT, energy and shipbuilding. With the number of middle class families on the rise, tourism has become an attractive niche as well, and Dernbach, says industries should find labour costs attractive.

“The factory worker earn on average at least $60 to $70. This is the minimum wage by the law. And up to $150 – $200 per month if they are blue collar factory worker."

But a longer term relationship is the focus of the renewed ties, with analysts pointing out that a successful investment in Vietnam will require a long term strategy and vision.