vietnam russia invest 10jul2

vneconomy

Directinvestment the key to Russia
(VNS- 27/6/2002)- Direct in­vestment is theway to grab a share of the lucrative but difficult Russian market, Trade Deputy MinisterHo Huan Nghiem has said.

Russia poses many prob­lems forbusinesses seeking to export goods there, among others, its vast dis­tances, complicatedmodes of payment and high import tariffs, and Vietnamese goods confronted just thesechallenges.

Trade Ministry officials said levies onRussia's im­ports and exports accounted for 30 per cent of its total tax revenue,compared to 0.5 to 1 per cent in Western Euro­pean countries.

Viet Nam has focused its export effortsto Russia in recent years on strong indus­tries such as textiles and gar­ments, rubberand tea, but has met with rather limited suc­cess.

In textiles and garments, for instance,Vietnamese products only hold a modest share; textile products from Viet Nam have beenunable to infiltrate the big Russian trading centres and super­markets where Italian andFrench goods have ruled the roost for several past years.

According to Nghiem, to gain a foothold,Vietnamese businesses need to boldly re­organise their business methods.

They should look at direct investmentsor joint ventures with Russian part­ners in areas like pork processing, farm production,tea, coffee, tropical fruit juice, instant noodles and garments.

He said that direct invest­ment couldget around the problem of high tariffs as the tax imposed on commodities produced locallyis much lower than that on goods im­ported from Vi6t Nam.

The Trade Ministry said that regulationsto establish companies in Russia are fairly simple and more than 300 Vietnamese companieshave already set up shop in Russia.

Most of these were estab­lished asprivately-run 100 per cent foreign-owned firms or joint ventures with Rus­sian partners.However, most of these companies -are en­gaged in trading, and there are only a handfulof Vietnamese companies actually producing and distributing in Russia.

Among the pioneering firms to have madea direct investment in Russia is Thach Ban ceramic tile company.

Its director Nguyen The Cuong said theRussian economy is now growing ro­bustly, offering a great op­portunity for Vietnamesebuilding materials compa­nies to make direct invest­ment there.