~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Trade imbalance to be addressed

The new dynamics in India's economic diplomacy towards Vietnam is the "catalytic effect" of two ongoing projects in the information technology sector.

At a total investment of $5 million, the India-sponsored Advanced Resources Centre and the Human Resources Development Project are reckoned to have the potential of spurring Vietnam to a phase of rapid progress.At another level, India has assured Vietnam of "maximum flexibility and accommodation" during the negotiations for its entry into the World Trade Organisation (WTO), perhaps by 2005. India is among the "accession parties" for this purpose.

These and other aspects of the growing economics-related interactions between the two countries came into sharp focus during the External Affairs Minister, K. Natwar Singh's visit to Hanoi last week. The political ambience of his participation in the celebration of the 50th anniversary of the first-ever meeting between Ho Chi Minh and Jawaharlal Nehru was reflected as much in the discussions of the 12th meeting of the India-Vietnam Joint Commission as in the bilateral talks of a more strategic nature.

Vietnam considers a quick correction of its current trade imbalance with India to be just as important as the friendship-diplomacy of seeking to capitalise on the proven Indian skills in the IT sector. Vietnam's exports to India were provisionally estimated at $70 million in calendar 2003, as against $53.12 million in the previous year. In contrast, India's exports to Vietnam were of the order $316.59 million in the first six months of 2004, compared to $324.6 million in the entire 2002 and $456.95 million throughout 2003.

India's exports cover pharmaceuticals and fine chemicals, machinery and equipment, iron and steel, leather and leather garments etc, while Vietnam's exports include crude oil, worth $16 million - $17 million per annum during the last three years, as also pepper, tea, electronic components, coal etc. It is in this context that India has now agreed to discuss ways of addressing the trade imbalance, according to officials on both sides.

As of now, Vietnam, which joined the Association of South East Asian Nations in 1995, is not treated as a trade gateway to the much older forum, which has 10 countries in its fold. However, the buoyancy of Vietnam's economy, still in a phase of "doi moi" or market-oriented "renovation", is said to go beyond its emergence as the second largest exporter of rice (after Thailand) and of coffee (after Brazil) and as the biggest exporter of pepper in the world.

With Hanoi now engaged in widening the country's industrial base, India has once again expressed "interest" in a "long-term partnership" in Vietnam's energy sector. The "success" of the ONGC's $200-million Nam Con Son upstream gas project is said to be the context for this new offer of Indian participation in Vietnam's production of power and refinery projects and marketing of downstream petroleum products. While there is no Indian move for the setting up of an atomic energy plant, Vietnam is already being aided by New Delhi in research for peaceful uses of nuclear energy.

A renewable three-year action plan for overall economic ties has now been drawn up for the first time, and India is keen to diversify its joint ventures/direct investment, now of the total value of over $270 million. The independent sugar factories of Nagarjuna International (Vietnam) and KCP (Vietnam) Ltd, besides the pharmaceutical venture of Ranbaxy Vietnam Ltd are estimated to rank behind the ONGC project. Experts suggest that India should explore the Vietnamese railways sector and make its presence felt in Vietnam in the specific context of the imminent new realities of the global multi-fibre scene.

Sify.com - October 25, 2004