The trade target of US$ 1 billion by 2020 between Vietnam and Sri Lanka is unlikely to be achieved, given the global economic challenges and the trade war between China and the US, Vietnamese Ambassador to Sri Lanka, Phan Thi Ngoc told Ceylon FT.
Ngoc was speaking on the sidelines of a ‘business opportunities forum’ organized by the National Chamber of Commerce on Wednesday.
She said Sri Lankan trade with Vietnam during the first six months of 2018 had reached US$ 169.77 million, with exports of US$ 46.67 million and imports reaching US$ 123.10 million; pointing out, however, that the growth of trade at the end of 2018 may remain stagnant at around 20% – the average growth rate seen in the last few years.
In 2017, trade revenue between Vietnam and Sri Lanka exceeded US$ 200 million.
Ngoc further revealed that Vietnam had attracted 15 Foreign Direct Investment (FDI) projects from Sri Lanka, while Sri Lanka had only been able to attract a single FDI project – in the fisheries sector – during the year.
“FDI continued to be the major driver for the Vietnamese economy, with a registered FDI of US$ 35.9 billion in 2017, and foreign investors’ net long value on Vietnam’s stock exchanges reaching US$ 1.2 billion in 2017,” she said.
The Ambassador said opportunities for Sri Lanka, in terms of investment promotion, relied heavily on sectors such as telecommunications, agricultural machinery manufacturing, aquaculture, seafood processing, oil and gas exploration and production, plastics products, and construction materials.
Highlighting that textile and apparel were the most lucrative of all sectors at the moment for Sri Lanka, the Ambassador, however, said that in the years to come, the tourism sector had great potential in the scope of religious tourism, as both countries shared the same cultural and religious values.
Ngoc said regional tourist packages – marketing Nepal, India and Sri Lanka together – may prove a more attractive proposition to many Vietnamese tourists.
Speaking about the discussions over direct flights between Sri Lanka and Vietnam, which had been brewing in the last couple of years, she said that at the moment, the Vietnamese were seeking measures to receive services of private jet operators in Vietnam for such purpose.
However, she noted that the success of bilateral trade between both countries, and the improvement of Sri Lanka’s tourism sector, was imperative for such airlines to operate profitably.
According to her, the most lucrative sectors for investment in Vietnam are textiles, rubber, electricity, electronics, agri-products processing, food processing, gem processing and jewellery. In the World Economic Forum’s (WEF) Global Competitiveness Report 2017-2018, Vietnam rose to rank 55 in terms of competitiveness, among 138 economies.
Vietnam and Sri Lanka have maintained trade relations over 14 years. In 2017, Vietnam ranked 23rd among Sri Lanka’s export markets, with a market share of 0.87%, while Vietnam ranked 19th in Imports, with a market share of 1.32%.