Vietnam - Cuba: Exploiting trade cooperation potentials

Trade exchange between Vietnam and Cuba achieved remarkable results in 2014, but still modest compared to the potentials of the two countries. 2015 is opening up opportunities to further promote economic relations as well as bilateral trade and investment cooperation.

Exploiting potentials

Cuba has been identified as a potential market for exports of Vietnam. The successes in expanding into this market will open many business opportunities for Vietnamese companies to access other Latin American markets.

According to experts, Vietnam has many favorable conditions to boost exports to Cuba. Despite being a small country in Latin America, Cuba has great demand in importing consumer goods such as rice, garments, shoes... These are also items of Vietnamese major exports.

According to research by the Vietnam Trade Office in Cuba, in 2014, Cuba’s national budget for import was approximately14.5 billion USD, of which 2 billion USD was for import of cereals such as rice, corn, beans, coffee, rice and wheat.

In 2014, Vietnam - Cuba relations continued to be tightened and strengthened through visits by leaders of the two countries to promote bilateral cooperation and set the stage for developing trade and investment cooperation.

At the meeting with the Deputy Director General of Vietnam Trade Promotion Agency (VIETRADE) – Mr. Hoang Linh Ta on 01/14/2015, Mrs. Loida Rivera Fabre, Economical and Commercial Counselor of the Cuba Embassy in Vietnam said, in order to enhance the trade relations between the two countries, especially on the occasion of 55th anniversary of bilateral diplomatic relations in 2015, Cuba would organize a business delegation to display and introduce products at The 25th Vietnam International Trade Fair  (Vietnam Expo 2015) from 15th -18th April 2015 in Hanoi and The Vietnam International Food Industry Exhibition 2015 Vietnam (Vietnam FoodExpo 2015) from 13th -16th May 2015 in Ho Chi Minh City.

Mrs. Loida Rivera Fabre said, at Vietnam Expo 2015, besides the exhibition of Cuban companies, the Cuba Chamber of Commerce will be present there for the first time. It is expected that Cuba will introduce biotechnology and pharmaceuticals, medical services and tourism… At Vietnam FoodExpo 2015, Cuba will have about 2 to 3 booths to introduce their seafood products, including lobsters - the major agricultural export of this country. In addition, Cuban compppanies will bring famous wines, rum, and canned fruits to the Exhibition.

According to Ms. Loida Rivera Fabre, Vietnam has imported seafood from Cuba as materials to process and re-export to other countries since 2013. Therefore, Vietnam FoodExpo 2015 is an opportunity for Cuban seafood to get better known in Vietnam market.

Mrs. Loida Rivera Fabre affirmed that the Embassy of Cuba to Vietnam and the Consulate General of Cuba to Ho Chi Minh City will support Cuban companies to participate successfully in these events.

For the VIETRADE’s side, Deputy Director General Hoang Linh Ta also committed to create favorable conditions for foreign businesses in general and Cuban companies in particular to participate in Vietnam Expo 2015 and Vietnam FoodExpo 2015.

Mr. Ta said that the historic move by the USA to nomalize relations with Cuba would motivate Cuba itself to innovate the whole country economic in the future. Many Vietnamese companies would pay more attentions to the Cuban market.  Vietnam Expo 2015 and Vietnam FoodExpo 2015 would be useful promotion channels for businesses of the two countries to meet, and exchange information towards long-term cooperation.

Mr.Ta Hoang Linh also said that the potential for cooperation between Cuba and Vietnam was very large,therefore the trade promotion agencies of  the two countries should try their best to support companies of both sides effectively.

Overcoming limitations

Besides favorable conditions, Vietnam exports to Cuba still have faced with many difficulties and challenges. The Vietnam Trade Office in Cuba said the commercial pratice of Cuba is using deferred contracts which bring Vietnam partners many financial trouble. Recently, the payment method from Cuban side has better changes so more Vietnamese import – export companies has paid attention to this market.

However, in order to promote bilateral trade to a new level, both Vietnam and Cuba need appropriate support policies which enabling companies to access loans with low interest rates, helping companies to balance the competitiveness and the business risks ...

In addition, since the 6th Congress of the Communist Party of Cuba (in 2011), with the view to saving the national budget, Cuba has urged domestic production to replace imports. Therefore, in the long term Cuba will not import goods which they can produce domestically, especially the consumer goods. This issue will affect exports from Vietnam to Cuba because the major exports of Vietnam to Cuba are consumer goods.

Commenting on the situation of trade cooperation between Vietnam and Cuba, the Vietnam Trade Office in Cuba said, up to now the increase or decrease in trade between the two countries has not been only stable but relative, depending on the needs of each time.

Last year, Vietnam and Cuba signed a number of important cooperation documents, including a Memorandum of  Industrial Cooperation signed by the Minister of Industry and Trade of Vietnam and the Minister of Industry  of Cuba (3rd June 2014),  which is particularly important to promote cooperation in industrial sector between the two countries.

Also on 3rd May 2014, 2 co-chairmen of the Vietnam - Cuba Intergovernmental Commission signed a Bilateral Economic Cooperation Program which will be held in medium term. Furthermore, at the meeting of the 32nd Vietnam - Cuba Intergovernmental Committee took place in La Havana, Cuba (October, 2014),  they had signed three documents, including the Review of Session 31st,  the Review Session 32nd,  and the Cooperation Agreement of manufacturing ceramic between Viglacera (Vietnam) and Cuba Industrial Construction Group./.

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According to the Vietnam Trade Office in Cuba, in 2014, turnover of two-way goods trade between Vietnam and Cuba was approximately 205.4 million USD. In particular, Vietnam exports to Cuba reached 199.5 million USD and imports from this country were 5.9 million USD.

 

 

The structure of imports and exports between the two countries remained stable. The top export categories of  Vietnam were various kinds of food, cereal, candy, footwear, ceramic products, hygiene products, building materials, coal, textiles, chemicals .. .

 

Leading the exports from Vietnam to Cuba in 2014 was rice, occupying 66% of total exports from Vietnam to Cuba. Currently, Cuba is still expected to import 350,000 tons of rice per year. This is an opportunity for Vietnam's rice to continue export to this market. Along with exports to Cuba, Vietnam also imported pharmaceuticals and functional food from Cuba.

 

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