Viet Nam-Philippines: Two markets with ample room for growth
2021 marks the 45th anniversary of diplomatic relations and the 6th anniversary of the Strategic Partnership between Viet Nam and the Philippines. Throughout the years, these friendship and partnership have been tirelessly nurtured and cultivated across various fields. Notably, the extraordinary growth in bilateral trade turnover has made Viet Nam and the Philippines each other’s key trade partner.
|Dr. Nguyen Hong Dien, Minister of Industry and Trade.
Key trading partners
Between 2010 and 2020, trade volume between Viet Nam and the Philippines doubled, from 2.4 billion USD to 5.3 billion USD, growing by 10% annually and boasting an increasingly diversified structure.
Despite the ongoing complex developments of the COVID-19 pandemic affecting the two economies, bilateral trade in the first five months of 2021 still saw an encouraging growth. According to the General Department of Viet Nam Custom, bilateral trade turnover in the first five months this year totaled 2.5 billion USD, a 15.7% year-on-year increase, in which Viet Nam’s export to the Philippines yielded 1.7 billion USD (a 37.6% increase) and import was 620.2 million USD (a 24.7% increase).
Viet Nam is now a proven exporter of quality agricultural produce (rice, coffee, pepper), aquaculture produce, confectionery, and manufacturing products such as clinker and cement, mobile phones, ceramic tiles, iron and steel, electric wire and cable, textile, footwear, among others, to the Philippines. The Philippines stands out as a traditional trade partner and key market for Viet Nam’s rice exports.
In recent years, the Philippines imported around 1-2 million tons of rice every year from Viet Nam. In 2020, though hindered by the COVID-19 pandemic and unfavorable weather besetting rice production such as droughts and saline intrusion, Viet Nam made every endeavor to maintain stable rice supplies and ensure food security for the Philippines in its battle against the pandemic. 2020 also saw Viet Nam’s record of 1 billion USD in rice export value to the Philippines.
At the same time, the Philippines’ signature products, such as computers, electronic devices and components, fertilizer, base metals, livestock feed, to name a few, also receive attention from Vietnamese importers. The Philippines is now Viet Nam’s 17th largest trading partner in the world and 6th largest in Southeast Asia, while Viet Nam is the 10th and 4th largest trading partner of the Philippines in the world and the region respectively. It is clear that both countries have ample room to further advance their trade partnership.
Viet Nam and the Philippines are both dynamically growing economies in the region, boasting rapid urbanization and a growing middle class population. The two economies’ respective export structures are mutually complementary, and geographically the two countries are closer to each other than other partners. Accordingly, the economies of Viet Nam and the Philippines are well-positioned and geared to further bolster this connectivity and complementarity.
Alongside the bilateral channel, both countries enjoy close cooperation and mutual support at various multilateral frameworks for economic and trade cooperation, such as APEC, ASEM, WTO, or RCEP.
In 2020, the Philippines worked closely with Viet Nam and supported the latter’s initiatives and priorities in its 2020 ASEAN Chairmanship. The conclusion of negotiations and signing of the RCEP in November 2020 was a highlight, demonstrating the determination of ASEAN and its partners in strengthening the regional supply chain and rebounding after the COVID-19 pandemic.
|Truong Hai Auto Corporation (Thaco) held a ceremony at the Chu Lai Port, Quang Nam province on December 28, 2019 to hand over 15 Vietnamese branded buses for export to the Philippines.
Five key measures
Throughout 45 years of development, the Viet Nam-Philippines trade cooperation has evidently been growing deeper, more substantive and more effective. However, given the profound changes in the global and regional economies, the rising tendency of protectionism, the ongoing complex developments of the COVID-19 pandemic and its negative impact on bilateral trade, Viet Nam and the Philippines need to bolster their political will and forge stronger coordination in the promotion of economic and trade cooperation activities.
Accordingly, the following measures require special attention in the upcoming period:
First, to continue to reinforce the legal framework for cooperation activities, resolve and refrain from applying trade barriers, and facilitate the flows of goods between the two countries and the normal operation of the regional supply chain.
Second, to effectively implement trade cooperation areas as agreed upon in the Plan of Action for the Viet Nam-Philippines Strategic Partnership for the period of 2019-2024 and enhance cooperation through the Joint Commission for Bilateral Cooperation and the Viet Nam-Philippines Joint Trade Sub-committee.
Third, to maintain cooperation in order to effectively roll out trade promotion activities and help connect the two business communities.
Fourth, to expedite relevant procedures and processes to grant market access to the signature agricultural produce of each country on the basis of harmonizing the interests of both parties.
Fifth, to continue working closely with and supporting each other at various multilateral frameworks for economic and trade cooperation. This includes realizing the 2025 ASEAN Economic Community Blueprint and, alongside other ASEAN Member States, speeding up the ratification of RCEP in order to bring about optimal benefits for the two countries’ businesses and those of all RCEP members at large, and highlight ASEAN’s leading role in the regional economic integration process.
Building upon the firm foundation of the bilateral relations, the efforts and determination of the two Governments and peoples, trade relations between Viet Nam-Philippines trade cooperation will enjoy even more engines for growth in the years to come, thereby bringing more prosperity to the business communities and the peoples of our two countries and elevating the friendship and cooperation between us to a new height.
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