Vietnam – a key partner on development cooperation with Finland

Finland and Vietnam established their diplomatic ties in January of 1973. The same year, the Finnish Government decided to list Vietnam as one of its eight long-term partner countries. Vietnam’s position was reaffirmed in recent policies of the Finnish government this year.
     A high economic growth rate and economic reforms of Vietnam have created favourable conditions for Vietnam-Finland economic cooperation, especially in trade and investment. The total trade (imports and exports) between the two countries was in the order of EUR 80 million in 2003. The growth rate of bilateral trade has increased 20 percent during the last few years.
     Lehtomaki was visiting Vietnam to understand more about the country and its achievements in economic cooperation and development, so that she could keep the Finnish government informed of Vietnam’s economic development and growth rate. Also during the visit, the Finnish minister said that she would like to bring with her a plan to provide soft loans for Vietnamese enterprises, so that they could buy equipment from Finland. This shows that Finland is a long-term partner of Vietnam in development cooperation and her country’s wish to increase economic exchange with Vietnam.
     “Vietnam is one of Finland’s key partners in our new policy and Finland’s official development aid (ODA) to Vietnam will increase,” she affirmed.
     The development cooperation focuses on rural development, forestry and water. The cooperation aims at poverty reduction and elimination based on the Comprehensive Poverty Reduction and Economic Growth Strategy (CPRGS) of Vietnam.
     The minister said she hoped that Vietnam’s accession to the World Trade Organisation (WTO) would make its economic environment more stable. She added that Vietnam’s accession to WTO, the Vietnam-Finland investment agreement, and the framework agreement on Vietnam-European Union cooperation would be a basis for increased bilateral relations in the coming years.
     The minister also said the two countries could promote cooperation in a number of areas including energy, telecommunications, medical instruments, the environment, forestry and food processing.
     She explained that Finland would use the Finnish development cooperation fund to pay loan interests on development projects, mainly those relating to Finnish companies’ exports. Finland’s preferential credit to Vietnam is about EUR 100 million.
     Nokia, the world’s leader in cell phone manufacturing, is one of the 25 enterprises accompanying the Finnish minister in her visit to Vietnam. It is estimated that every three cell phones in the world has one made by Nokia.
     Over the past years, Nokia has always been the leader in the top ten enterprises with highest revenues in Finland. Now, Nokia’s products have been available in more than 130 countries. The cell phone manufacturer expects the number of Nokia cell phone users to reach two billion in 2008, and half of world population to become users of Nokia cell phones by 2015.
     Another company in the delegation, Wartsila, is one of the world’s leading designers and manufacturers of medium and high-speed diesel engines and controlling systems for ships. Last year, the company won orders to supply engines and controlling systems for 1,400 ships in Asia and 400 ships in Europe. The company has a great advantage in supplying technology for small-sized energy plants. Vietnam is one of the markets attracting much attention of Wartsila with projects in Phu Yen, Ba Ria-Vung Tau and Quang Ninh provinces.
     Especially interesting among the enterprises accompanying the minister is Hutamaki Packaging Company from Helsinki, which specialises in making consumer packages including soft and hard plastic packages for food and drinks. This year, the company continues to manufacture new products with a focus on markets with high economic growth rate, including Vietnam.
     Until recently, Hutamaki has had only one agent in Vietnam and its products in Vietnam – including packages for Nescafe, Nestea, Milo, Omega and Maggi Ngon Ngon – are made in Thailand.
     But because of Vietnam’s high economic growth rate, stable socio-political environment, great potential in food processing and export, as well as a strong development in tourism, Hutamaki has decided to build a modern packaging plant in Binh Duong, 17 kilometres away from Ho Chi Minh City. Situated in the Vietnam-Singapore industrial park with a total area of 20,000 square metres, this facility is considered one of the most modern packaging plants in Asia. The plant was inaugurated during the visit to Vietnam by Minister Lehtomaki.
     The total investment capital for the first phase of the plant is put at EUR 20 million. The plant has already employed 300 workers, and with its integrated manufacturing from designing, printing and manufacturing of finished packages, it will supply high-quality wrapping products to the local food and drink industries.
     Pentola, director of the plant, said Vietnam had become an important food exporter and his plant would contribute to this process.
     Also in the business delegation were Instrumentarium, a supplier specialised in medical equipment, and Tamglass, a world-leading manufacturer of safety glass for automobiles and architectural works.
     The presence of representatives from 25 companies in Finland during Lehtomaki’s visit early May and two business seminars held in Hanoi and Ho Chi Minh City – on potential for trade and investment co-operation between Vietnam and Finland, and the role of development co-operation in boosting bilateral relations – will certainly become a driving force for promoting economic ties between the two countries.
     However, according to Lehtomaki, the EU has yet to be satisfied with the existing tariffs of Vietnam and expected for further progress in the forthcoming negotiations on Vietnam’s WTO accession. The investment environment relates to national policies, growth rate, stability and predictability, and especially the economy’s integration into the world economy. Therefore, Finland has always attached importance to Vietnam’s accession to WTO and a breakthrough in investment environment can be made if Vietnam finalise and maintain WTO standards.

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