THE RECENT VIETNAM-BANGLADESH BILATERAL TALKS AND ITS FUTURE PROSPECTS

Assignment: 03

Prepared for: Professor Dr. Abu Yousuf Md. Abdullah Course Instructor International Business Environment (L301)

Prepared by: Saif Hasan ZR-21 BBA 18th Batch

IBA, University of Dhaka November 26, 2012

Introduction
As soon as it gained independence in 1971, Bangladesh followed with keen interest and supported Vietnams struggle against the U.S. The Government of Bangladesh condemned the U.S.s bombing in the North of Vietnam. There was a strong nationwide movement of the Bangladeshi people to support Vietnams fighting against the U.S. Bangladesh was the first country in South Asia and second one in Asia to recognize and establish diplomatic relations at ambassadorial level with Provisional Revolutionary Government of the Republic of South Vietnam. On February 11, 1973, Vietnam and Bangladesh officially established diplomatic relations. The two sides started exchange of visits and economic and trade interaction. In July 1982, Vietnam closed its Embassy in Dhaka. Bangladesh was the first South Asian and second Asian nation to establish relations with the provisional revolutionary government of South Vietnam at ambassadorial level in 1973. North and South Vietnam were united as one country on April 30, 1975, when northern communist forces seized control of the US-backed South Vietnam. In 1982, Vietnam closed its embassy in Dhaka for financial reasons and reopened it in January 2003. Bangladesh opened its embassy in Hanoi in November 1993. The relationship between Vietnam and Bangladesh governments has been perceived to grow. In particular, the cooperation in the field of trade and economic investment in the two countries has been focused on and highly assessed, contributing to actively promote the bilateral relationship between Vietnam and Bangladesh. In recent years, there have been new and important political and economic progresses in the relations between Vietnam and Bangladesh. In November 1993, Bangladesh opened its Embassy in Ha Noi. Vietnam re-opened its Embassy in Dhaka in January 2003.

History between the two sides

International visits The two sides have exchanged a number of high-level visits over the years. Vietnamese leaders visits to Bangladesh: Prime Minister Vo Van Kiet (1997), President Tran Duc Luong (2004), and Minister of Foreign Affairs Nguyen Dy Nien (2003) visited Bangladesh. Bangladeshi leaders visits to Vietnam: Minister of Commerce (September 1996), Minister of Foreign Affairs (May 1999), Minister of Agriculture (October 2003), Minister of Foreign Affairs and Minister of Cultural Affairs Selima Rahman (July 2004), and Prime Minister Khaleda Zia (May 2005) visited Vietnam. Vietnam and Bangladesh maintain good cooperation at international fora namely United Nations, Non-Aligned Movement and ASEAN. Bangladesh supported Vietnams candidature for non-permanent membership of the United Nations Security Council. Bangladesh has requested Vietnam to support its participation into ARF, MGC, ASEM and EWEC. Economics, Investment, Commerce, Science-Technology and Culture: Vietnam-Bangladesh bilateral trade, though modest, is progressing positively with an average growth rate of 20% per year. Bilateral trade turnover was US$ 14 million in 2002 (Vietnam exported US$ 7 million and imported US$7 million), US$ 20 million in 2003 (Vietnam exported US$ 14 million and imported US$ 7 million), US$ 39 million in 2004 (Vietnam exported US$ 17.8 million and imported US$ 21.2 million), US$ 76 million in 2005 (Vietnam exported US$ 22 million and imported US$ 54 million). During Prime Minister Khaleda Zias visit to Vietnam in May 2005, the two sides set a target of US$ 100 million of two-way trade by the year 2008. The cooperation between the two countries in other fields is still at low level, mainly focusing on experience sharing in infrastructure development, small and medium enterprises and aqua-culture and environment protection. The two sides are trying to upgrade cooperation in economic and commercial fields and others namely

agriculture and fisheries, industry, handicraft, finance and banking, culture, training and education, tourism and health in pace with good political relation. Bilateral cooperation mechanisms: On March 10, 1997, Vietnam and Bangladesh signed an Agreement on Establishment of the Joint Commission for Economic, Trade, Cultural, Scientific and Technological Cooperation. The first meeting of the Joint Commission was held in Hanoi, Vietnam on February 6-7, 2006. Bangladesh Delegation was led by H.E.Mr M. Saifur Rahman, Minister for Finance and Planning, Government of the Peoples Republic of Bangladesh. Vietnam and Bangladesh signed an MOU on political consultation between the two Ministries of Foreign Affairs in 1994. In 2005, the two sides planned to hold the first political consultation meeting in Dhaka, which was then postponed indefinitely due to unstable security situation in Dhaka. Bilateral Treaties and Agreements: - Agreement on Aviation Transportation (1993) - MOU on Political Consultation between two Foreign Offices (1994) - Agreement on Economic and Scientific and Technological Cooperation (1994) - Trade Agreement (1996) - Culture Agreement (1997) - Agreement on Establishment of the Joint Commission for Economic, Trade, Cultural, Scientific and Technological Cooperation (1997) - Agreement on cooperation between Vietnam News Agency and National News Agency of Bangladesh (1997) - MOU on cooperation between Vietnam Chamber of Commerce and Industry and Federation of Bangladesh Chamber of Commerce and Industries (1997) - Agreement on cooperation in water resource development and flood management (1999) - Agreement on visa exemption for diplomatic and official passport holders (1999) - Agreement on double taxation avoidance (2004) - Protocol on cooperation in agriculture (2004) - Protocol on cultural exchange programme for 2004-2007 (2004) - Agreement on Investment Promotion and Protection (May 2005)

The recent visit

Bangladesh Prime Minister Sheikh Hasina visited Vietnam on November 2-4, preceding the Asia Europe Meeting (ASEM) Summit of heads of state/government in Laos. That a business delegation accompanied the prime minister shows that the private sector is keenly interested in having collaborative or joint ventures with Vietnamese entrepreneurs.

A few highlights from the released joint communiqu At the invitation of Nguyen Tan Dung, Prime Minister of Vietnam, Prime Minister Sheikh Hasina of Bangladesh paid an official visit to Vietnam from November 2-4, 2012. The visit was historic for the fact that it was the first official visit of Prime Minister Sheikh Hasina to Vietnam. The bilateral talks were held in an atmosphere of friendship, mutual trust and understanding. The two sides informed each other of each countrys political and economic situation. Prime Minister Sheikh Hasina expressed her admiration for the courageous struggle of the Vietnamese people for national independence and reunification and congratulated the Vietnamese Government and people on their tremendous achievements in the reform process conducted over the past years. Prime Minister Nguyen Tan Dung congratulated the Government and people of Bangladesh on their great achievements in national construction and development and on the countrys growing role and position in the region and the world. The two leaders noted with satisfaction the development and diversification of bilateral relations over the past 40 years since the establishment of diplomatic relations on February 11, 1973. The two Leaders agreed to promote the exchange of high-level visits with a view to further enhancing bilateral ties. Accordingly, the Bangladesh Prime Minister invited Prime Minister Nguyen Tan Dung to pay an official visit to Bangladesh. Prime Minister Nguyen Tan Dung accepted the invitation with pleasure. The time of the visit would be arranged through diplomatic channel. The Prime Minister of Bangladesh also extended an invitation to the Secretary General of the Communist Party of Vietnam to pay an official visit to Bangladesh in the coming years.

The two Leaders agreed to further strengthen cooperation on political, security, defence, economy, trade and investment, information-communication, and agriculture. They also agreed to organize the Second Meeting of the VietnamBangladesh Joint Commission and the first Political Consultation between the two Ministries of Foreign Affairs at an early date to review and set out directions for bilateral cooperation in the coming years. The two Leaders witnessed the signing of the Memorandum of Understanding between the Ministry of Agriculture and Rural Development of Vietnam and the Ministry of Fisheries and Livestock of Bangladesh in the field of Fisheries and Livestock; and the Extension of the MOU between the Government of the Socialist Republic of Viet Nam and the Government of the Peoples Republic of Bangladesh on cooperation in the field of agriculture signed on 22nd March 2004 in Dhaka; Memorandum of Understanding on trade promotion between the Viet Nam Trade Promotion Agency (VIETRADE) under Ministry of Industry and Trade of the Socialist Republic of Viet Nam and the Export Promotion Bureau (EPB) under Ministry of Commerce of the Peoples Republic of Bangladesh; MOU on cooperation on establishment of the Bangladesh-Vietnam Business Council and the VietnamBangladesh Business Council between the Federation of Bangladesh Chamber of Commerce and Industries (FBCCI), and the Vietnam Chamber of Commerce and Industry (VCCI) . The two Leaders noted that these agreements provide important legal foundation for relevant Agencies and Ministries of the two countries to implement and expand cooperation in specific fields. The two sides agreed to continue working together on institutionalisation of a global compact to deal with climate change in the four recognised tracks of action - viz adaptation, mitigation, financing and technology transfer. They also stressed that the developed countries must take the lead in making ambitious commitments on emission cuts, climate finance and technology transfer and the developing countries must also do their part on the basis of differentiated responsibility. Vietnam noted Bangladeshs desire to foster the partnership and cooperation with ASEAN, to join the East-West Economic Corridor (EWEC) and Mekong-Ganges Cooperation (MGC) and assured Bangladesh of pursuing the matter with other members. The two Leaders noted with satisfaction the positive outcomes of the official visit by Prime Minister Sheikh Hasina, which stands as a testimony to the continuation of excellent ties between the two countries.

Economic prospects of the visit

Bangladesh is a big market in the South Asian region with a large population and a high consumption power. Although Vietnam and Bangladesh have many similarities in the structure of exports, the two countries still have many areas and sectors that can complement each other. The Vietnam-Bangladesh trade is not much but is growing in a good way. The bilateral trade turnover between Vietnam and Bangladesh has steadily increased over the years. To boost the bilateral trade exchange, the two governments agreed to consider and have preferential policies for importing commodities, especially tax incentives and creating favorable conditions for the direct payment. Vietnam has advantages of commodities that Bangladeshs market needs to import as well as the industries that the Bangladesh has attracted investment. In addition, Bangladeshs market has many opportunities for Vietnamese enterprises in the fields of footwear, agricultural foods, textiles and ceramics. Bangladesh with its market of 160 million stands between Indias 1.2 billion and South Asia on one side, and Myanmar and South East Asia on the other. The Prime Minister mentioned that Bangladesh has also developed a vibrant business sector with innovative entrepreneurs, efficient managers, and skilled workforce from a population where 60 percent is below the age of 40 years, laying a strong foundation of growth. She added that bilateral trade between the two countries, despite the combined market of 250 million people, does not do justice to the total potential. According to the Vietnam Chamber of Commerce and Industry (VCCI), the two-way trade turnover between Vietnam and Bangladesh remains low. From 2007 to 2012, the bilateral trade value increased instantly, from US$47.4 million in 2007, US$64.7 million in 2008, US$82 million in 2009, US$288 million in 2010 and US$483 million in 2011. The General Department of Customs said Vietnam's export turnover to Bangladesh totalled US$228.8 million in the first eight months of 2012, down 32 per cent from a year ago (US$335.5 million). Key exports included fibre and yarn (US$18.7 million, up 16.9 per cent on year); apparels (US$12.4 million, down 19.5 per cent); iron and steel (approximately US$8 million, down 52.4 per cent). In addition, Vietnam did not export rice to Bangladesh in 2012, a cause to the significant reduction of its exports to Bangladesh.

Meanwhile, Vietnam spent US$16.8 million on imports from Bangladesh, down 27.3 per cent compared with the same period in 2011 (US$23 million). Vietnams major imports from this market include pharmaceuticals (US$4.4 million, up 21.8 per cent); textile materials, garments, leather and shoes (US$4.2 million, down 9 per cent). However, according to statistics, Vietnams export outlook with the Bangladesh market remains positive in 2012. Clinker shipment is estimated to have a good growth as cement producers in Vietnam continued to sign contracts to export to this market. Rice continues to face difficulties as the Government of Bangladesh has halted importing rice until mid-2012 and then imported the food from neighbouring countries, Pakistan and India, instead of Vietnam, because of huge parboiled rice supplies. In general, according to VCCI, economic cooperation between Vietnam and Bangladesh remains weak. Currently, both sides are striving to bring economic cooperation, trade and other fields like agriculture, fisheries, industry, handicraft, finance, banking, culture, education and training, tourism and health care to match political relations.