The bilateral trade between Viet Nam and Russia is expected to reach US$10 billion by 2020. — Photo cafef.vn

HA NOI (Biz Hub) — The bilateral trade between Viet Nam and Russia is expected to reach US$10 billion by 2020, following a Free Trade Agreement between Viet Nam and the Eurasian Economic Union.

The Eurasian Economic Union (EEU) includes Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan.

The Finance Ministry said that with the signing of the FTA in May, Viet Nam can benefit from its commitment to elaborate import tax on some key Vietnamese export items, including seafood, processed fish, fruits, and rice.

It added that this can facilitate Vietnamese enterprises to promote the country's exports to Russia.

Ha Duy Tung, deputy head of the ministry's International Cooperation Department, told Hai Quan newspaper (Customs) that Russia has been one of the world's major consumption markets, so this FTA can create great opportunities for Viet Nam.

The Chief Representative of the Russian Trade Office in Viet Nam, Maxim Golikov, noted that during 2005-09, the turnover of the bilateral trade between the two countries was $1.1 billion per year. This increased three times to around $3.5 billion during 2010-14.

He added that the two-way trade will rapidly increase after the signing of the FTA.

Nguyen Ton Quyen, the vice chairman-cum-general secretary of Viet Nam Timber and Forest Products Association (Vifores), pointed out that businesses have much expectation from the Russian market as the country has been the third largest importer of Viet Nam's wooden products, following the United States and European Union.

Quyen expressed his hope that enterprises in this sector will exploit market opportunities, considering that the export turnover to Russia has been around $40-50 million.

A representative of the Viet Nam Association of Seafood Exporters and Producers (VASEP) said seafood firms will enjoy preferential status in terms of tax norms. Agreements on the food hygiene and sanitary and phytosanitary fields will be integrated and transparently implemented in accordance with international norms.

Domestic seafood companies will be able to avoid complications in food hygiene, he added.

However, the signing will also create challenges for businesses, said Duong Hong Minh, deputy head of the Ministry of Industry and Trade's European Market Department.

According to Minh, local firms lack in information on markets as they have focused on markets in English-speaking countries.

Another challenge especially for small and medium Vietnamese enterprises will be to deal with the methods of payment. Russian firms often send payments via telegraphic transfer (T/T) instead of Letter of Credit. T/T payments are usually made when samples or small quantity shipments are transported by air, with documents such as air waybills, commercial invoices, and packing lists are sent along with shipments. This has been a barrier that dissuades local companies.

However, he said, Russian businesses have been believable, which causes less disputes.

He observed that enhancing the quality of agricultural, forestry, and seafood products has been a challenge for Vietnamese companies.

He suggested that relevant agencies should provide adequate information to businesses on regulations relating to product quality that are prevalent in markets, including those in the Eurasian Economic Union.

The ministry in cooperation with the Ministry of Agriculture and Rural Development and Russian management agencies should resolve this issue. — VNS