Prospects for Trade Cooperation Between Vietnam and Gcc Countries

Enterprises participating in the center can be in 3 forms: sending samples and catalogues for general display; sending samples and catalogues for separate display in a separate booth; sending samples and catalogues for separate display in a separate booth while sending company representatives to reside in Dubai. Major projects in the world to turn Dubai into a world-class Trade Center are continuing to be implemented at a rapid pace. Regulations and procedures for import and export are increasingly open. This will be a springboard market for Vietnam in the GCC countries in particular and the Middle East region in general.

2.3.1.3. For the Kuwait market

Vietnam and Kuwait established diplomatic relations on January 10, 1976, and in May 1995, the two countries signed an Economic Cooperation Agreement and a Trade Agreement. After the Trade Agreement was signed, the import-export turnover between the two countries increased every year. Kuwait achieved the largest turnover of Vietnam in 2005, and the second largest in 2006. In 2000, the import-export turnover between the two countries was 115 million USD, we only exported 2.4 million USD and imported about 112.5 million USD. In 2006, this turnover was 172.5 million USD, Vietnam's export volume increased to 27.9 million USD, import turnover increased to 144.9 million USD, import turnover in 2006 decreased significantly compared to 2005. The reason for the trade deficit is that Vietnam mainly exports garments, leather shoes, spices but in small quantities, the main reason is the fierce price competition in the market. The price of Vietnamese goods is currently higher than that of some neighboring countries such as India, Thailand, China, Malaysia, Indonesia... and some countries in the Middle East region that have similar export sources such as Türkiye, Iran, Egypt..., in addition, high transportation costs reduce the competitiveness of Vietnamese goods in the Kuwaiti market. Although the domestic market is small, Kuwait depends mainly and for a long time on imports, especially for agricultural products.

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Industry, food and foodstuffs have demand for products that Vietnam has strengths in such as fruits, fresh vegetables, coffee, cashew nuts, spices... and industrial products such as garments, leather goods... To increase our export turnover to Kuwait, Vietnamese enterprises not only create sources of goods with competitive prices but also need to invest in market penetration, understanding the characteristics and trading practices. If goods want to penetrate and have a long-term position in Kuwait, it cannot be done in the traditional way of opening L/C and delivering goods, but must have initial investment to find local partners to act as agents, guarantors, joint ventures... to open stores, product showrooms or trade centers.

2.3.2. Restrictions on trade cooperation

Although there are certain advantages, the development of economic and trade relations between Vietnam and the GCC markets still has many limitations.

Firstly, the Middle East region always has potential political instability and risks. Economic competition along with religious and ethnic conflicts have led to continuous wars and conflicts between countries and within countries in the Middle East market. Wars and conflicts have greatly limited the ability to develop the economy and foreign trade, and the ability of Vietnamese enterprises to penetrate the GCC market.

Second, due to the lack of accurate information about the GCC market, Vietnamese enterprises do not have a suitable business strategy for this market. The limitation in capturing information leads to a limitation in meeting the needs of the capital market which is constantly changing, which has greatly limited the increase in trade turnover, especially in increasing export turnover.

Third, in the past, the trade turnover between Vietnam and the GCC countries was still small, and Vietnam often had a trade deficit. According to statistics, the Asian market accounted for 57.7%, Europe 28%, Oceania 5.3%, North America 4.4%, the CIS and Eastern European markets 2%; while the Middle East and Africa markets only accounted for about 3%, of which the GCC only accounted for about 0.8% of Vietnam's total import and export turnover. This proportion is too small, not commensurate with the inherent potential of the two sides.

Fourth, the GCC is a fiercely competitive market in terms of price. Enterprises present in this market area are often large economic groups and compete fiercely in the GCC market. With their financial potential and experience in dominating the market, these groups have created a solid position in the market. Currently, the price of Vietnamese goods is higher than that of some neighboring countries such as India, Thailand, China, Malaysia, Indonesia... and some countries in the Middle East region that have similar export sources such as Turkey, Iran, Egypt... In addition, high transportation costs reduce the competitiveness of Vietnamese goods in the GCC market. Vietnamese enterprises currently have not invested much in market penetration and have not fully understood the characteristics and trading customs in the region. If goods want to penetrate and have a long-term position in GCC countries, it cannot be done in the traditional way of opening L/C - delivering goods, but must have initial investment such as: finding local partners to act as agents, guarantees, joint ventures to open stores, product showrooms or shopping centers.

Fifth, some Vietnamese agricultural products such as rice, pepper, tea, coffee and some other consumer goods such as leather shoes, garments, electronics... have been present in some countries of this market. In general, our above products all meet the requirements of quality and market.

Your consumer tastes, but the insignificant quantity has not been met in a stable and regular manner, so it has not created a position in the market.

Sixth, some Vietnamese goods are not competitive with similar goods produced domestically or imported from other countries. The prices of Vietnamese goods are often high and slow to change according to the tastes and specifications of the regional market and are not well known.... Meanwhile, goods from China and India have a rich variety of types and designs, are changed regularly according to market tastes, and are cheap. In addition, goods from the UK, the US and other Western countries with famous brands and high quality also consider Dubai as a place to market and sell to the region.

Seventh, due to relatively similar natural conditions, the countries have similar comparative advantages in exporting oil and importing similar agricultural products and consumer goods. This partly limits the equal trade relations between Vietnam and the GCC countries.

Eighth, the business relationship between Vietnamese enterprises and other countries is not numerous and stable. Customs and business practices have many differences compared to ours and other countries.

Ninth, most Vietnamese goods when reaching this market must go through a third country, which is an intermediary partner that has a position and experience in doing business in the GCC market. Moreover, the intermediary partner is sometimes two or three different companies. This greatly reduces the competitiveness of Vietnamese enterprises' products, making prices much higher, greatly affecting the economic efficiency of export activities, as well as the ability of Vietnamese enterprises to penetrate the market.

2.3.3. Causes

The first reason is that Vietnam has not paid enough attention to developing trade relations with the GCC market region due to objective and subjective reasons. First of all, the transformation of the economic mechanism from a centrally planned to a market economy and the process of trade liberalization in our country with the policy of a multi-sector economy have on the one hand created a large number of enterprises, on the other hand, created a new business environment allowing these enterprises to gradually participate in the import and export process. The growth in the number of import and export traders has gradually shared the import and export function with a number of state-owned monopolies that previously held this function. Although large in number, in general, the scale of newly established enterprises is small, these enterprises are not large enough to penetrate and jump into difficult markets, with high risks, lacking information... such as the GCC market. In the past, although the import-export sector was undertaken by a very small number of state-owned enterprises, market penetration and expansion were often the responsibility of the state. The exchange of goods with foreign countries, mainly countries in the socialist bloc, was often based on government contracts. The main form of transaction was barter, without taking into account the economic efficiency of import-export activities. That greatly limited the ability of enterprises to operate when entering the market economy in the field of import-export activities.

The second reason is that Vietnam's economy has a low starting point and is in a transitional period, so internal accumulation is not high. The investment and business environment is not completely favorable. The investment structure is not suitable. Production, especially agricultural production, is still quite scattered. Export activities

Export, in the sense of being the final stage of the production cycle, is naturally affected.

Third, some Vietnamese enterprises still do business in a "hit and run" manner in cooperation with GCC countries. Because of the fear of business risks and lack of long-term prospects, they have not been able to create a solid momentum in trade cooperation with GCC countries.

The fourth reason is that the economic and trade relations between us and these countries are still limited, along with the limited information supply... All of the above factors not only greatly limit Vietnam's market penetration and trading capacity at present, but also possibly in the near future.

The fifth reason is that among the agreements signed between Vietnam and the GCC countries, there are still no trade agreements, agreements in the form of Free Trade Agreements (AFTA), Most Favored Nation (MFN). Because we have not enjoyed this trade treatment, it greatly limits the penetration of our goods into the GCC markets. On the other hand, if our goods do enter, with high tax rates, the competitiveness will also be greatly limited, and the economic efficiency of export activities will be low.

The sixth reason is that due to the geographical distance, transportation costs are high. The cost of market research as well as other trade promotion activities is very expensive. Therefore, this factor contributes to reducing the competitiveness of Vietnam's export products in the GCC market.

The seventh reason is that the market area is mostly composed of countries with underdeveloped economies, and import-export support services are generally underdeveloped, so payment methods in international trade face many difficulties. The limited cash of businesses along with the strict management of foreign exchange by the state has caused

This is a huge obstacle for Vietnamese enterprises to export to this market. In fact, many GCC enterprises often request late payment, while Vietnamese enterprises are limited in capital, so sometimes both have the demand but the result is that they cannot be implemented. As mentioned above, many times, enterprises of the host country do not pay by opening L/C, one of the popular payment methods in international trade, but pay by CAD.

The eighth reason is that the mentality of leaders and businesses in GCC countries is to do business with rich countries and large companies, which greatly affects the penetration of small countries like Vietnam. Vietnam's penetration into this market is late, so it has not yet created sympathy with businesses in other countries in the region, especially with consumers.

CHAPTER 3

PROSPECTS AND SOLUTIONS TO PROMOTE TRADE COOPERATION BETWEEN VIETNAM AND OTHER COUNTRIES

GULF COOPERATION COUNCIL.

3.1. Prospects for trade cooperation between Vietnam and GCC countries

The Gulf countries are implementing a Look East policy, in which Vietnam is one of the important focal points. On the other hand, Vietnam is a bright spot in the region in terms of political stability, impressive economic development achievements, more open investment policies... Meanwhile, the Gulf countries want to invest in stable markets with low risks. They also do not want to be dependent on traditional investment countries.

Foreign relations between Vietnam and the GCC in 2007 had many positive developments and were vibrant. All high-level diplomatic delegations between Vietnam and the GCC visited each other. Specifically, the high-level Vietnamese delegation led by Permanent Deputy Prime Minister Nguyen Sinh Hung visited Oman, Qatar and Bahrain from December 7 to 14, 2007; the high-level UAE Prime Minister delegation visited Vietnam from September 3, 2007; the high-level Vietnamese delegation led by Deputy Minister of Trade Do Nhu Dinh visited Saudi Arabia from May 18, 2007; the high-level Kuwait Prime Minister delegation visited Vietnam on May 23, 2007. 2007 also marked a strong qualitative change in the field of economic diplomacy between Vietnam and the Gulf countries. There were trade, labor and investment cooperation agreements signed between businesses during visits between high-level leaders of the two sides. This is a great prospect to further strengthen trade relations between Vietnam and the GCC countries, especially increasing exports to the rich Gulf markets. Vietnam needs to continue to consolidate and strengthen its traditional friendship with the GCC based on the foundation of

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