How Vietnamese Businesses Plan to Conquer Middle East Market

Cooperation between Vietnam and the Middle East spans many fields, has been concretized into cooperation agreements and has been implemented over the years. Photo: Gulf Times

Vietnam and countries in the Middle East have good diplomatic and political relations, creating favorable conditions for businesses of the two sides to increase understanding, expand markets, promote trade and investment.

According to economic expert Can Van Luc, cooperation between the two sides spans many fields, has been concretized into cooperation agreements and has been implemented for many years.

The fields of interest and cooperation between the two sides are economics, science and technology, trade, air transportation, industrial development, and labor cooperation.

By the end of August 2021, Vietnam exported US$5.22 billion of goods to the Middle East and imported US$5.49 billion of goods from this region; contributing 2.45% and 2.5% to the export and import turnover of the whole country, respectively.

Currently, 9/15 countries in the Middle East, including all major economic partners of Vietnam in the region, have opened embassies in Hanoi.

There is still room for cooperation

According to Can Van Luc, in terms of investment in Vietnam, the opportunities open to Middle Eastern enterprises are not small.

First of all, Vietnam always focuses on cooperation in many fields; is a potential market with nearly 100 million consumers, people's income increases quite quickly and the economic development rate is quite high (forecast 6.5-7%/year in the period of 2021-2030).

Dr. Can Van Luc. Photo: WVR

In addition, Vietnam is both a destination and a "door" to open other markets when it signed 17 free trade agreements (FTAs), especially multilateral FTAs such as EVFTA, CPTPP, UVFTA and soon RCEP, with most of the world's major economies.

Vietnam also attaches great importance to attracting and effectively using high-quality FDI capital; The government is also committed to improving the business and investment environment.

In the opposite direction, doing business in the Middle East, Vietnamese enterprises have the opportunity to cooperate and interact with countries with high economic development level, quality, synchronous and modern infrastructure, high standard of living.

However, businesses of both sides faced many difficulties, making the cooperation efficiency still modest, not commensurate with the potential and needs of enterprises of the two sides.

In this regard, Luc said that the most significant difficulties of enterprises are: Information about the business environment is limited, especially information about legal regulations, market potentials and cooperation opportunities. Besides, there are differences in culture and consumption habits.

Vietnamese enterprises also face difficulties in payment because the financial markets of some countries in the region are not too developed.

Moreover, due to lack of information about the Middle East market, to avoid risks, Vietnamese enterprises often export through international intermediaries, which increases the price of goods and reduces competition.

What should Vietnamese enterprises do?

To promote and create favorable conditions for cooperation between Vietnam and Middle Eastern countries in the coming time, according to Can Van Luc, businesses need to follow up and discuss regularly with diplomatic missions and trade offices in the Middle East.

At the same time, businesses need to be more proactive in capturing and updating information, and carefully researching the market; boldly and creatively changing the advertising and trade promotion methods to be more effective.

Luc said it is necessary to increase meetings and direct contact with partners through participation in promotion programs, fairs and exhibitions held in countries in the region.

Nguyen Quoc Hung, secretary general of Vietnam Bankers Association. Photo: WVR

Discussing this issue, Nguyen Quoc Hung, secretary general of Vietnam Bankers Association, said that Vietnam and countries in the Middle East need to continue to improve the legal framework, mechanisms and policies to facilitate the activities of trade exchange and investment cooperation of enterprises.

According to Hung, the management agencies need to focus on issues such as: Strengthening high-level exchanges to promote economic, trade, investment and health cooperation in depth; maximizing the interests of Vietnamese enterprises as well as Middle East enterprises.

In particular, he said: "Vietnam needs to master the standards required from the cultural characteristics of countries in the Middle East (Islamic countries). Halal standards are the key for Vietnamese businesses to enter the Middle East market.”

Speaking at a seminar held at the end of August 2021, Deputy Foreign Minister Pham Quang Hieu affirmed that the Ministry of Foreign Affairs will closely coordinate with central and local ministries and branches to support enterprises in enhancing effective and substantive investment cooperation between Vietnam and the Middle East.

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