Overview of Vietnam's Economy and Foreign Trade

The US and Western countries are also the causes of the weakening of the Russian economy. The economic difficulties have caused the growth rate of domestic consumption to decline as in 2009 due to the decrease in real income and wages. Specifically, the growth rate of domestic consumption in Russia in 2012 reached 6.4%; in 2013 it reached 3.9%; in 2012 it reached 0.9%; in 2015 it is forecasted to be -4%; and in 2016 it is -1.1% [39]. The only bright spot of the Russian economy at this time is the weakening of the RUB, which will create momentum to expand trade activities. However, complicated procedures, costs and credit restrictions in importing goods can hinder the promotion of exports. In addition, the embargo imposed by the US and Western countries on Russia may have a positive effect on the restructuring of the Russian economy and the process of Russia's integration with the rest of the world. More specifically, Russia is gradually shifting its attention to the Asia-Pacific region in general and Southeast Asia in particular. Along with that, the risks caused by low oil prices and ongoing embargoes need to be closely monitored, so that Russia can come up with appropriate policies to avoid the economy falling into crisis. In the medium term, the decline in FDI inflows may limit the transfer of science and technology, negatively affecting Russia's economic growth potential. In the long term, due to limitations in accessing external financial resources, Russia will need policies to strictly manage risks and support in the financial sector.

Having gone through many years of domestic political instability, and now facing an embargo from outside, the Russian Federation has continuously faced difficulties in the process of national development. However, in the face of these challenges, Russia has always strived to find solutions and new directions in the process of international economic integration, in order to restore, maintain and develop the country's economy, as well as to reaffirm its position in the international arena.

3.1.2. Overview of Vietnam's economy and foreign trade

In 2007, the first year of official accession to the WTO, Vietnam's economy achieved a growth rate of 8.5%, the highest in the previous 10 years. This positive result shows that Vietnam has made good use of the opportunities after joining the WTO. However, deeper international economic integration also means greater dependence on international trade, making it vulnerable to changes in the world economy. Before the global crisis and recession, from October 2008, Vietnam's economy also began to suffer negative impacts, causing exports in 2009 to decline, reaching only 8.9% compared to 2008 at 29.1%. In 2010, exports grew again, marking a remarkable recovery of Vietnam's economy.

According to the latest report on the Vietnam Economic Situation released by the World Bank, the Vietnamese economy has stabilized in the macro economy and is recovering, and foreign trade has also achieved positive results. The macro economy has been maintained stably with low inflation under control, and the stable exchange rate has helped Vietnam improve its credit rating, allowing capital mobilization in the international market. Vietnam's economic growth has shown signs of improvement. GDP in the third quarter of 2014 is estimated to increase by 6.2% compared to the same period in 2013, contributing to the growth rate of 5.6% in the first nine months of the year. GDP growth in the agricultural, industrial and construction sectors all increased compared to the same period last year, except for the service sector which is showing a slight downward trend.

Affected by the global economic downturn as well as domestic market inadequacies, domestic private enterprises are facing many difficulties, the number of enterprises closing or having to temporarily suspend operations is increasing. In 2010, the number of enterprises closing or having to temporarily suspend operations reached 47 thousand, in 2013, it was 61 thousand, and in the first 10 months of 2014, this number was 54 thousand, an increase of about 9% over the same period last year.

In the gloomy economic context, foreign trade has made the most positive contributions. Thanks to the dynamism of the foreign-invested sector, Vietnam's import and export turnover continues to increase strongly. In the first 10 months of 2014, Vietnam's export value of goods is estimated at 123 billion USD, up 13.4% over the same period last year, while import value is estimated at 121 billion USD, up 11.2% [39]. Export turnover of traditional manufactured goods such as garments, footwear, and furniture continues to grow rapidly. In addition, high-tech and high-value products (such as mobile phones and components, computers, electronics and accessories, and auto parts) are also becoming the items with the largest export turnover of Vietnam.

Vietnam's commodity export market is considered quite diverse, in terms of geographical area. Among Vietnam's major trading partners, the US still ranks first, contributing 19% to Vietnam's total export value, followed by the European Union, China and Japan. Among the top ten trading partners accounting for more than 80% of Vietnam's total import turnover, China is the largest import partner, with over 29% of the total import value.

Besides the trade in goods, Vietnam's trade in services is still considered small but has potential. In 2013, export (revenues) of commercial services accounted for 7.4%; import (payments) accounted for about 8.3% of the total import turnover of goods and services. Of which, export of tourism services accounted for 72% of Vietnam's total service export value while transport and import of goods accounted for 62% of the service import value.

In general, Vietnam's economy and trade activities are having positive changes, making Vietnam one of the countries with the highest growth rate in Southeast Asia.

is an attractive destination for many international investors. Vietnam's role and position in the international arena is increasingly affirmed.

3.1.3. Overview of Vietnam - Russian Federation trade relations in the period 2007-2014

The period 2007-2014 was an important historical milestone for Vietnam and the Russian Federation with the accession of the two countries, Vietnam (in 2007) and the Russian Federation (in 2012), to the World Trade Organization (WTO). This was also an important period, recording many economic and trade achievements in the relationship between the two comprehensive strategic partners Vietnam - the Russian Federation, with positive changes in import-export turnover and growth rate of import-export turnover.

The growth rate of two-way import-export turnover between Vietnam and the Russian Federation has increased sharply, over 60%/year. According to data from the Russian Customs Agency, the export turnover of Russian goods to Vietnam has increased gradually over the years, from 580.9 million USD (2008) to 1,334.6 million USD (2010), and reached 802.8 million USD (first 9 months of 2013). The average annual growth rate of Russian exports is over 100%.

Table 3.1: Import-export turnover between Vietnam - Russian Federation (2007-2013)

Year

Export		Import		Total		Trade balance
Turnover (Million) USD)	Growth (%)	Turnover (Million) USD)	Growth (%)	Turnover (Million) USD)	Growth (%)
2007	458.5	11	552.2	21	1010.7	16	-93.7
2008	672.0	47	969.6	76	1641.6	62	-297.6
2009	414.9	-38	1415	46	1829.9	11	-1000
2010	829.7	100	999.1	-29	1828.8	0	-169.4
2011	1287	55	694.0	-31	1981	1	593
2012	1618	26	829.4	20	2447.4	24	788.6
2013	1921	19	855.1	3	2776.1	13	1065.9

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• Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015 zt2i3t4l5ee zt2a3gsnon-credit services, joint stock commercial bank zt2a3ge zc2o3n4t5e6n7ts At that time, the Branch had to set aside a provision for credit risks, which reduced the Branch's income. Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015 Unit: Billion VND 140 120 100 80 60 40 20 0 63.3 80.34 89.29 110.08 131.99 2011 2012 2013 2014 2015 Profit before tax (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) However, through chart 2.2, it can be seen that BIDV Tien Giang's profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project "Restructuring the system of credit institutions in the period 2011-2015" approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: "Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services". 2.2. Current status of non-credit service development at BIDV Tien Giang. 2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times. Along with the development of the Head Office, BIDV Tien Giang's products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,... 2.2.1.1. Payment services: In accordance with the Prime Minister's Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers' cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc. Chart 2.3. Net income from payment services in the period 2011-2015 Unit: Million VND 6000 5000 4000 3000 2000 1000 0 3922 4065 4720 5084 5324 2011 2012 2013 2014 2015 Net income from payment services (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment. 2.2.1.2. Treasury services: BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giang's treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17]. Chart 2.4. Net income from treasury services in the period 2011-2015 Unit: Million VND 350 300 250 200 150 100 50 0 105 122 309 289 279 2011 2012 2013 2014 2015 Net income from treasury services (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services. 2.2.1.3. Guarantee and trade finance services: BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance. Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015 Unit: Million VND 14000 12000 10000 8000 6000 4000 2000 0 5193 5695 2742 3420 8889 3992 11604 12206 5143 5312 2011 2012 2013 2014 2015 Net income from guarantee services Net income from Trade Finance (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) Through chart 2.5, we can see that BIDV Tien Giang's income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giang's corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area. are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future. 2.2.1.4. Card and POS services: As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services. In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system. Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments. Chart 2.6. Net income from card services in the period 2011-2015 Unit: Million VND 3500 3000 2500 2000 1500 1000 500 0 687 1023 1547 2267 3104 2011 2012 2013 2014 2015 Net income from card services (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) Through chart 2.6, it can be seen that BIDV Tien Giang's card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25]. Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area. Unit: Machine STT Bank name Number of ATMs Cumulative number of ATM cards POS machine 1 BIDV Tien Giang 23 97,095 22 2 BIDV My Tho 7 21,325 0 3 Agribank Tien Giang 29 115,743 77 4 Vietinbank Tien Giang 16 100,052 54 5 Dong A Tien Giang 26 97,536 11 6 Sacombank Tien Giang 24 88,513 27 7 Vietcombank Tien Giang 15 61,607 96 8 Vietinbank - Tay Tien Giang Branch 6 46,042 38 (Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21]) Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6). div.maincontent .content_head3 { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: bold; text-decoration: none; font-size: 14pt; } div.maincontent .p { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; margin:0pt; } div.maincontent p { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; margin:0pt; } div.maincontent .s1 { color: black; font-family:"Courier New", monospace; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; } div.maincontent .s2 { color: black; font-family:"Times New Roman", serif; font-style: italic; font-weight: normal; 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Source: Compiled from ITC data

According to Table 3.1, the import and export turnover of goods between Vietnam and the Russian Federation in the period 2007-2013 increased, but the growth rate of import and export turnover was uneven. Specifically, the growth rate of import turnover from Russia of Vietnam in 2013 compared to 2012 had a sharp decline, from 20% to 3%, and significantly decreased compared to 76% in 2008. The growth rate of export turnover to Russia of Vietnam in 2007 reached 11%, and by 2008 it had skyrocketed to 47% as a result of Vietnam's accession to the WTO. By 2009, due to the impact of the global financial crisis, the growth rate of Vietnam's export turnover to Russia decreased by 38%, increased to 100% in 2010 and from 2011 to 2013 decreased for 3 consecutive years, down to 19% (2013), but still higher than 11% (2007). In 2011, after many years of deficit, for the first time Vietnam's trade balance with the Russian Federation showed signs of surplus, although the reason was due to a decline in import turnover instead of a trade surplus to the Russian market.

In general, the import and export turnover between Vietnam and the Russian Federation is still on the rise, although the growth rate of import and export turnover is unstable. This shows the initial success of the two countries in their efforts to increase trade and restore the economy after the global crisis in 2008.

However, compared to other major trade partners of Vietnam, the import-export turnover between Vietnam and the Russian Federation is still limited. Of the total export turnover of goods of Vietnam, exports to Russia account for only 1.5% (including exports of FDI enterprises) while exports to the US account for 18.8% and to Japan account for 8.8%. Goods exported to Russia are mainly low-value items such as textiles, footwear, agricultural products and seafood.

Meanwhile, the value of service exports and imports between the Russian Federation and Vietnam has recently improved significantly, although there are still many limitations. Regarding service exports, the value of Russian service exports to the Vietnamese market only reached 161,620 USD in 2010, 180,470 USD in 2011, 197

562 USD in 2012, by 2013 it had only reached 184,449 USD [44]. Compared to the value of Russia's service exports to the world, the value of Russia's service exports to Vietnam is still very modest.

Regarding service imports, in 2007, the value of Russia's service imports from the world only reached 60.578 million USD; by 2014, this figure was 121.056 million USD, a 2-fold increase. Meanwhile, the value of Russia's service imports from Vietnam was only modest at 123,220 USD in 2010, and by 2013, it increased to 683,538 USD, a 5-fold increase [44]. Although the value of service imports and exports between Vietnam and the Russian Federation is still very small compared to the world, the rapid increase in service trade between the two countries has shown that the great potential of both markets has not been fully exploited.

3.2. Analysis of the current status of Vietnam - Russian Federation trade relations in the period 2007-2014

3.2.1. Vietnam's exports to the Russian Federation

3.2.1.1. Scale of exported goods

Over the years, the Russian Federation has always been an important trade partner of Vietnam. From 2007 to 2014, Russia was the 23rd largest trade partner of Vietnam and the 5th largest export market of Vietnam. The total two-way trade turnover between Vietnam and the Russian Federation from 2007 to 2013 tended to increase, from 1010.7 million USD to 2776.1 million USD. According to statistics of the General Department of Vietnam Customs, in the first 10 months of 2013, Russia was the 23rd largest trade partner of Vietnam and the 5th largest export market of Vietnam.

In early 2014, Vietnam's export turnover to Russia reached 1.44 billion USD. The average export growth rate to this market is estimated at 17.8% [43]. However, the two-way trade turnover between Vietnam and the Russian Federation is still modest, accounting for only nearly 1% of the total trade turnover between Vietnam and the world and between Russia and the world. In general, although the scale of trade between the two countries has improved significantly in recent times, it is still not really commensurate with the potential for trade in goods between the two countries.

Source: Compiled from ITC database

Figure 3.1: Export scale of some countries in the Russian market in 2014 (unit: %)

Figure 3.1 shows the scale of goods exported to Russia by ASEAN countries in general and Vietnam in particular, showing that the scale of goods exported by these countries is very small compared to other major trading partners such as China or the US. In 2012, the scale of Chinese exports to the Russian market topped the list, accounting for 15% of the market, with an estimated value of 48 billion USD; second place was German goods accounting for 14% of the market;

The third is Ukrainian goods with a scale of 5.5% of the market; the fourth is Belarus with 4.6%; the fifth is Japan with a scale of 4.4% of the market; the sixth is the US with 4.1% [41]; the scale of exported goods of most other Asian countries in the Russian market is very modest. In the period 2007-2014, the scale of Chinese exported goods in the Russian market increased from 12% to 17%; the scale of Vietnamese exported goods also grew strongly from 0.3% to 0.8%; the scale of Singaporean goods remained almost unchanged at 0.2%; the scale of Thai exported goods increased slightly from 0.5% to 0.8%; the scale of Malaysian exported goods decreased from 0.7% to 0.5%. Although Vietnam's export turnover to Russia is still very small compared to other trade partners of Russia, the increase in the scale of Vietnam's export goods to the Russian market in recent times proves that the trade relations between the two countries have had many positive improvements, despite many limitations.

3.2.1.2. Export commodity structure

In 2013, according to ITC statistics, Vietnam exported 78 items to the Russian Federation with two-digit HS codes. The total export value to the Russian market reached 2.6 billion USD; the annual export growth value in the period 2009-2013 was about 40%; accounting for 1.9% of Vietnam's export proportion. Meanwhile, the total export value of Vietnam to the world reached 140.1 billion USD; the annual export growth value in the period 2009-2013 was about 24%; accounting for 0.8% of global exports. Vietnam's main export items to Russia are electronics and electronic equipment, textiles, footwear, agricultural products, and aquatic products. According to statistics from the General Department of Vietnam Customs, in the first 10 months of 2014, 80% of Vietnam's export turnover to the Russian market was mainly light industrial and consumer goods.