Vietnam business should be careful in Russia trade amid rouble crisis – economist

23-Dec-2014 Intellasia | Dtinews | 6:00 AM Print This Post

Sharp declines in the value of the rouble were posing a serious risk to companies in Vietnam, particularly exporters, doing business with Russia, a leading economist has said.

Le Dang Doanh, former head of Central Institute for Economic Management (CIEM), told reporters the rouble had dropped by more than 50 percent in value in US dollar terms and warned of serious consequences for Vietnamese companies doing business with Russia.

“I am concerned about the ability of Russian importers to pay their bills,” he said.

Vietnam’s Ministry of Industry and Trade said bilateral trade with Russia has been growing, from USD400m in 2000 to USD1.01bn in 2007 after Vietnam was admitted to the World Trade Organisation.

Bilateral trade was reported at USD1.83bn in 2010, USD2.76bn in 2013 and is expected to be worth USD4bn in 2014, with growth forecast to reach USD10-12 billion in five years. Russia is Vietnam’s 23rd largest trade partner. Over the past three years, Vietnam has posted trade surpluses with Russia, of more than USD1bn in 2013 and USD669 million in the first ten months of 2014.

The collapsing rouble may slow the Russian economy, with adverse consequences for Vietnam’s exports.

Vietnam’s major imports from Russia include oil, fertiliser, steel, iron ore and coal from Russia, with the depreciation of the rouble likely to increase competition for local producers by making the imports cheaper.

The collapse of the rouble was also having an impact on trade with the former Soviet republics of Kyrgysstan, Tajikistan, Uzbekistan, Turkmenistan, Kazakhstan, Armenia and Belarus, which have suffered currency declines of five-to-20 percent against the US dollar as a consequence of their close relationship with the rouble.

Doanh warned that Vietnamese companies should be careful in transactions with Russian partners.

“It is important to regulate clearly whether the deal is in US dollars or roubles,” Doanh said.

 

Category: Economy, Vietnam

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