Russia-Vietnam plans displaying confidence

December 06, 2021 | 10:00
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With Vietnam and Russia vowing to swell their bilateral cooperation in investment and energy via improved policies, investors from both sides will have more opportunities to cultivate their projects in the countries’ respective territories.
Russia-Vietnam plans displaying confidence
State President Nguyen Xuan Phuc met with Russian counterpart Vladimir Putin in Moscow last week, Photo: VNA

Since 2018, Vietnam’s TH Group has been running a $2.7-billion dairy farm and milk processing mega-complex in the Borovsk Special Industrial Economic Zone in the Kaluga region and Moscow, turning the page for Vietnam’s investments in this nation.

Despite some difficulties, TH Group imported into Russia 1,100 high-yield dairy cows from the US, and the number has grown to over 2,000. Each cow can provide around 40 litres of milk per day on average – also the highest milk output in Russia where the average daily output is only 17 litres.

In Moscow, construction of the farm’s first phase in Volokolamsk district will be completed imminently, making room for 6,000 cows. The second farm for another 6,000 cows in Shatura district will be built in 2023 and 2024.

In Kaluga, meanwhile, the farm in Ulyanovo district will have 6,000 cows, with the first and second phases to be completed in April 2022 and Q4/2023, and another farm in Khvastovichi district with the same size will complete construction at the end of 2024.

TH Group will also begin construction of the first phase of the milk processing plant in Kaluga this month, with a daily capacity of 500 tonnes, which will be completed by 2024. The second phase’s construction, with a daily capacity of 1,000 tonnes will be finished around 2026.

“The projects will help connect our two economies,” said Vietnamese State President Nguyen Xuan Phuc who last week paid an official visit to Russia, where President Vladimir Putin told him, “Vietnam remains our reliable, loyal friend and strategic partner.” To that, Phuc responded with, “We always view Russia as a very important foreign policy priority, and a close friend and partner.”

Fostering close ties

Both nations last week adopted a joint statement, reflecting a shared vision for developing the comprehensive strategic partnership between Russia and Vietnam until 2030, which President Putin believed “will reflect the level and status of our relations. We will continue moving forward.”

President Phuc added, “This statement is very important. We believe it facilitates the long-term development of our relationship. We also need other agreements that will become guideposts for bilateral cooperation. This highly important document contains many specific items that are important for our relations in the short- and long-term perspective.”

With the statement, while taking advantage of benefits from the Vietnam-Eurasian Economic Union Free Trade Agreement, both nations encourage bilateral investments into their respective territories in traditional and new fields, such as renewable energy, industry, high technology, urban and housing development, agro-forestry, and facilitating the operation of the high-level Vietnam-Russia taskforce in charge of implementing key projects.

According to a priority list for jointly implemented Vietnam-Russia projects, 17 have been adopted by both counties. They will be developed in oil and gas, transport, agriculture, electricity, construction, industry, and high technology.

Vietnam and Russia are also working out a specific roadmap for the implementation of these 17 projects. “We are striving to create the most favourable conditions for the work of our companies to take our relations to a new, more substantive, and higher level,” said President Phuc.

Both countries last week also agreed on increasing ties in industrial development, including the construction of Russian vehicle assembly plants in Vietnam.

For example, it is expected that a certificate of eligibility for automobile manufacturing and assembly will be granted to GAZ Thanh Dat, a joint venture between Russian Gorkovsky Avtomobilny Zavod and Vietnam’s Thanh Dat Group.

According to Russia’s Ministry of Industry and Trade, the number of spare parts and components imported into Vietnam amounts to more than 230 sets in 2021.

At last week’s Vietnam-Russia investment promotion conference held in Russia, President Phuc called for Russian investors to participate more in Vietnam and make use of the open business-friendly climate. “Vietnam is offering all the best conditions to you all,” he stated. “Your success is also our success.”

At last month’s strategic dialogue between Vietnam and the World Economic Forum held online, Vietnamese Prime Minister Pham Minh Chinh also stated that over the past two years, with the concerted efforts of the entire political system and people, and the assistance from friends, partners, and the business community at home and overseas, Vietnam has managed to fundamentally overcome the period of tremendous hardships.

“We are gaining confidence in shifting to safely and flexibly adapting to the circumstances, and effectively containing the pandemic. Initial successes enable us to resume production and supply chains, ensuring macroeconomic stability and major balances, serving as a springboard for rapid and sustainable development in the future,” PM Chinh stated.

Vietnam has a highly open economy, with 17 free trade agreements spanning over 60 countries. Its economy has increased 1.4 times in scale within five years, becoming the fourth-largest economy in ASEAN, and ranking 37th worldwide. In infrastructure alone, Vietnam has a great demand for investment until 2030, totalling up to $30 billion per annum.

“The current hardships are just temporary, and the Vietnamese economy, with its solid macroeconomic foundation and stable major balances, is still capable of offering vast potential, advantages, and drivers for future growth,” the PM stressed.

According to figures from the Vietnamese Ministry of Planning and Investment, Russia has now 149 valid investment projects in Vietnam, registered at $953.7 million. Russian projects are implemented in oil and gas, manufacturing, mineral exploitation, transport, telecommunications, and fisheries.

Vietnamese investors are also in Russia, with 22 projects registered at nearly $3 billion. The biggest project in Russia is TH Group’s aforementioned dairy production complex.

A representative from TH Group told VIR that together with the construction of plants, the group will soon market its products in Russia.

“Many jobless people in Moscow and Kaluga who used to leave for urban areas have returned to work at the TH plants, with good income,” the representative said. “When the project is completed, thousands of locals will be employed. We are also working with the Kaluga government on projects to build houses for workers. This demonstrates our commitment to long-term investment in Russia.”

Expansion of oil and gas

The joint statement between the two nations continued that Vietnam and Russia will strengthen cooperation in the energy and oil and gas sectors, deemed the most important cooperation pillar under the comprehensive strategic ties. “Support will be provided for expanding cooperation in promising industries such as gas-fired power plants and supplying liquefied natural gas for Vietnam and development of renewable energy,” said the joint statement. “Both sides will also support the implementation of existing and new projects partaken in by PetroVietnam and Russia’s Zarubezhneft, Gazprom, Novatek, and Rosatom, as well as other companies.”

Favourable conditions will also be created for the expansion of Vietnam’s oil and gas firms in Russia and Russian oil and gas firms in Vietnam’s continental shelf, as well as for the implementation of joint projects in third nations elsewhere in accordance with international laws including the UN Convention on the Law of the Sea 1982 and the laws of Vietnam and Russia.

Russian businesses have been operating in Vietnam effectively for many years. About 30 per cent of crude oil and about 25 per cent of gas in Vietnam are exploited by firms involving Russian investment, with the involvement of companies like Zarubezhneft, Rosneft, and Gazprom.

By Thanh Dat

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