Vietnam-New Zealand trade ties: Realizing the 1.7 billion USD goal

Update: 10:19 | 19/06/2020
Economic and trade cooperation between Vietnam and New Zealand has developed in a strong and stable manner thanks to the great resolve of two countries’ leaders. Both sides are aiming at realizing the goal of 1.7 billion USD in trade turnover in 2020.
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New Zealand Ambassador to Vietnam Wendy Matthews visits a dragon fruit farm in Tien Giang Province.

Throughout four decades since Vietnam and New Zealand officially established diplomatic relations (1975-2020), the two countries’ cooperation have expanded across multiple fields, most notably in terms of economic, trade and agriculture.

Agricultural spotlight

In July 2019, one pivotal agricultural cooperation project between Vietnam and New Zealand – the safe vegetable brand “La Lanh” - was officially introduced to customers and distributed in major supermarkets in the Southern market.

The product is VietGAP-qualified as they are grown following sustainable good agricultural practices (GAP). This ensures the production and supply of high quality products that are safe for customers’ health and confidence, and environmental-friendly.

The “La Lanh” production model was piloted in Binh Dinh province with the technical support of the New Zealand Plant and Food Research Institute. It was first applied in Tuy Phuoc, An Nhon, Tay Son and Vinh Thanh districts, then in other areas of Hoai An, Hoai Nhon, Phu Cat and Phu My areas. The project aims to recruit 2,000 farmer households in the next few years to contribute to expanding the total area of safe vegetable farms in Binh Dinh to 2,000 ha.

Vietnamese products introduced at Go Green Expo in New Zealand

Vietnamese products introduced at Go Green Expo in New Zealand

Dr. Michael Lay-Yee, Director of the Binh Dinh Safe Vegetable Project considered the “La Lanh” project “the achievement of the sense of community responsibility and great efforts of relevant agencies of Vietnam and New Zealand. This unique and effective cooperation model should be further multiplied and expanded in scope.”

In addition to the safe vegetable project in Binh Dinh, through the Development Aid program in the Southern area, New Zealand is also assisting Vietnam in many agricultural projects such as cultivating a new family of dragon fruit which improves in disease-resistance and flavor, or growing higher-quality avocado and passion fruit varieties in Dak Nong province, or researching on reduction of post-harvest losses of rice.

Prior to these efforts, in 2018, after 7 years of application and negotiation, Vietnamese rambutans have been exported to the New Zealand market (apart from mangoes and dragon fruits). This has contributed significantly to increasing agricultural trade turnover between the two countries.

New Zealand is currently the 31st largest trading partner of Vietnam, while Vietnam is the 16th largest partner of New Zealand.

Two-way trade turnover between the two nations increased steadily over the years.

Potential partners

New Zealand is currently the 31st largest trading partner of Vietnam while the latter ranks 16th on the former’s list, according to the South East Asia - South Asia - South Pacific Department (Ministry of Foreign Affairs). Two-way trade turnover between the two nations has been increasing steadily over the years, from 300 million USD in 2009 to 750 million USD in 2013 (the average growth rate is about 20% per year), reaching over 800 million USD in 2014. In the following 3 years, this figure was consistently over 700 million, approximately 707 million and rose to nearly 1 billion USD, respectively.

In just 2019, the total two-way trade turnover in goods and services between Vietnam and New Zealand increased by 12% to over 1.1 billion USD. Both sides are implementing measures to promote trade and working towards the goal of 1.7 billion USD two-way trade turnovers in 2020.

Vietnam and New Zealand are complementary economies in many aspects. New Zealand is currently an important export market with great potential for Vietnam in terms of agricultural products such as seafood, coffee, cashew, and other commodities including computers, phones, electronic products, textiles, shoes and sandals, building materials, and so on.

Regarding investment, as of February 2020, New Zealand owns 41 effective direct investment projects in Vietnam with a total registered capital of 209.44 million USD, being the 47th out of 132 countries and territories having foreign direct investment projects in Vietnam.

In the other end, Vietnam also has 10 investment projects in New Zealand, with a total registered capital of 32.7 million USD. Investments from Vietnam mainly focused on processing and manufacturing; wholesale, retail and maintenance of automobiles, motors, motorbikes and motor vehicles. New Zealand ranked 27/76 countries and territories that receive Vietnam’s foreign investment.

Taking advantage of opportunities from FTAs

Data from the Ministry of Industry and Trade showed that trade between New Zealand and Vietnam has increased by 330% since the Free Trade Agreement (FTA) between ASEAN, Australia, and New Zealand (AANZFTA) entered into force in 2010.

According to a former Vietnam Ambassador to New Zealand – Mr. Nguyen Viet Dung, other than the advantages from AANZFTA, Vietnam and New Zealand could also gain from their memberships of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) concluded in Chile in 2019. The agreement would further deepen the two countries’ relationship by opening trade in goods and services and increasing investment flows, as well as opening new venues for bilateral trade cooperation.

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Vietnam Vietnam's trade with 10 members of CPTPP

Business cooperation between New Zealand and Vietnam is burgeoning in fields of high-quality foods and beverages, agricultural technology, education and high-tech services in areas such as healthcare, finance or aviation transportation. These ties will continue to be bolstered thanks to the CPTPP.

National economies within CPTPP accounted for 13.3% of the world's GDP with a total value of 10.6 trillion USD. The CPTPP also provided for commitments to ensure that economies at all levels of development and enterprises at all sizes could benefit from enhanced trade.

According to New Zealand Ambassador to Vietnam Wendy Matthews, this is a major opportunities for the two countries’ businesses. “It is important to make sure that Vietnamese enterprises, especially small and medium ones, receive adequate information to seize such opportunities. This will be the key to ensure successful and full utilization of the FTA”, said Wendy Matthews.

Assessments by economic pundits show that the AANZFTA, the CPTPP and the Regional Comprehensive Economic Partnership (RCEP) in the future would provide ample and better choices for enterprises in both Vietnam and New Zealand. This allows enterprises to participate more substantively in the regional supply chain and thereby helps establishing effective multilateral and bilateral cooperation programs in the region.

“In the past, New Zealand primarily exported to China, but is now promoting exports to Vietnam. New Zealand companies are also promoting cooperation with Vietnamese enterprises in some areas such as joinery manufacturing. There is much room for further cooperation between the two countries, such as in education and services, and I think that New Zealand enterprises all view Vietnam as one of the ideal partners in comparison to many other countries in the region”.

New Zealand Minister for Economic Development, Tertiary Education,

Skills and Employment Steven Joyce.

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Van Chi

(TGVN)