PM Returns from Saudi Arabia After Fruitful Trade and Investment Talks
The Vietnamese Prime Minister has returned from Saudi Arabia where increasing trade and investment with the wealthy Middle East nation was high on the agenda. Here’s what was discussed.
Vietnam’s Prime Minister Pham Minh Chinh was in Saudi Arabia last week for the ASEAN-Gulf Cooperation Council (GCC) Summit. In somewhat of a whirlwind trip, Vietnam’s leader met with overseas Vietnamese living in the Gulf state, prominent Saudi business persons, and government officials.
High on the agenda for the PM’s trip was joint efforts to develop the countries’ respective tourism industries. The two countries signed an ‘action program’ to boost information sharing and advice on developing two-way tourism. In particular, Vietnam has been looking to develop its halal food industry to cater more to tourists from its Islamic neighbors, Malaysia and Indonesia.
Energy was also a big feature. The crown prince and prime minister of Saudi Arabia, Mohammed bin Salman Al Saud, reportedly told the Vietnamese PM he would instruct Saudi Arabia’s sovereign wealth fund to study the possibility of investing in Vietnam’s renewable energy sector.
Furthermore, the PM also met with the Vice President of Aramco, Yasser M. Mufti. The oil industry expert and the Vietnamese leader discussed Aramco developing a refinery in Vietnam with the oil company requesting support from the Vietnamese government to study the idea.
Moving forward, the two leaders also pledged to work toward speeding up negotiations on a Comprehensive Economic Partnership Agreement which promises to see trade and investment between these two nations enhanced exponentially.
In this light, the Vietnam-Briefing looks at the current status of trade and investment between Vietnam and Saudi Arabia.
Trade relations between Saudi Arabia and Vietnam
Vietnam and Saudi Arabia have seen continued improvement in their trading relationship since the 1990s though they do not currently have a free trade agreement falling back on World Trade Organisation rules instead.
That, however, has not prevented the two nations from seeing a trade boom. In fact, two-way trade between Saudi Arabia and Vietnam was over US$2.6 billion in 2022 up from US$1.8 billion in 2018.
Saudi Arabia FDI projects in Vietnam
Saudi Arabia has not been a huge investor in Vietnam in the past. As of the end of 2022, Saudi Arabia had established seven projects in Vietnam for a combined capital contribution of US$49.87 million.
Whereas this may be relatively small to other similar-sized economies, this may be about to change as Vietnam pushes for greater global integration and advocates for greater investment from Saudi Arabia.
Saudi Arabia exports to Vietnam
As a major oil producer, Saudi Arabia’s exports to Vietnam are mostly chemical-related. Plastics, for example, were Saudi Arabia’s biggest export to Vietnam, worth over US$1.35 billion in 2022.
Saudi Arabia’s export to Vietnam, 2022
|Liquefied petroleum gas (LPG)||240,004,353|
|Iron and steel||350,840|
Source: Vietnam General Department of Customs
Vietnam’s exports to Saudi Arabia
Vietnam’s biggest export to Saudi Arabia in 2022 was mobile phones with US$251 million of the handheld devices shipped to the Middle Eastern nation. There were, however, a number of agricultural products as well including rice, cashew nuts, and fruits and vegetables.
Saudi Arabia’s lack of arable land for farming gives Vietnam a distinct trade advantage. With an economy in which the agriculture sector plays a big role, Vietnam is well poised to profit from demand from Saudi Arabia for agricultural products.
Vietnam’s exports to Saudi Arabia, 2022
|Telephones, mobile phones, and parts thereof||251,831,699|
|Machine, equipment, tools, and instruments||56,932,048|
|Textiles and garments||40,682,096|
|Wood and wooden products||39,199,470|
|Computers, electrical products, spare parts, and components thereof||24,864,815|
|Fruits and vegetables||11,260,393|
|Iron and steel products||7,147,832|
|Pastries, sweets, and cereals products||6,271,042|
|Other means of transportation, parts, and accessories thereof||3,036,538|
|Iron and steel||230,820|
Source: Vietnam General Department of Customs
The future of trade between Vietnam and Saudi Arabia
On the back of the Vietnamese Prime Minister’s trip to Saudi Arabia, the relationship between these two nations will likely grow stronger. With complimentary economies and comparative advantages, there is huge potential for trade to grow exponentially moving forward.
With offices in both the Middle East (Dubai) and Vietnam (Hanoi, Ho Chi Minh City, and Danang) Dezan Shira and Associates is well-positioned to provide the right support and guidance for Middle Eastern firms looking to invest in Vietnam. Contact the business advisory experts today.
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