Economic cooperation between Vietnam and Poland

Vietnam and Poland established diplomatic relations on February 4, 1950. Since then, the traditional friendship and multifaceted cooperation between the two countries has been continuously consolidated and developed through high-level visits, regular delegation exchange, trade and economic links as well as people-to-people contacts. From the Vietnamese perspective, Poland is famous for its successful economic transition from a centrally planned economy to a market economy. The success and experience of the two countries in the path of international integration and development during recent years has opened up new prospects and opportunities for cooperation in the future.

Vietnam’s economic rise over the past thirty years is also remarkable. Economic and political reforms since 1986 have spurred economic development, rapidly transforming Vietnam from one of the poor countries in the world to a lower-middle-income country. From 2002 to 2019, GDP per capita in Vietnam increased by 2.7 times, reaching over 2,700 USD in 2019. In this context, both Vietnam and Poland are in the process of accelerating economic reform, opening up as well as strengthening international integration and reaching many achievements in economic development. The prospect and space for cooperation between the two countries in the future is huge. In addition, the European Union-Vietnam Free Trade Agreement (EVFTA) into effect from August 2020 and the proposed European-Union Vietnam Investment Protection Agreement (EVIPA) will contribute to improving a favourable business environment and positively impact business activities among the business communities of the two countries. Although Vietnam and Poland have great potential and many opportunities for cooperation in trade and economic development, economic relations between the two countries face many difficulties and challenges such as geographical distance, difficulties in transportation, and differences in tastes between the countries’ consumers. Therefore, in order for economic cooperation between Vietnam and Poland to become effective, it is necessary to find solutions to promote trade and investment between the two countries.

In terms of trade turnover, Poland is currently Vietnam’s most important trading partner in Central and Eastern Europe, while Vietnam is Poland’s third-largest trade partner in South-East Asia and the 22nd outside the European Union (EU). With an important geo-economic position located in the heart of Central and Eastern Europe, accessing Poland’s dynamic economic market will help Vietnamese goods penetrate the EU market, which has a population of approximately 500 million people. In recent years, the growth of Vietnam–Poland trade has always exceeded double digits. Trade between the two countries proved to be very robust even during the pandemic of 2020. Significantly, the two-way trade turnover between Vietnam and Poland in 2020 reached 1.774 billion USD, of which Vietnam’s exports to Poland were approximately 1,771 billion USD, an increase of 11% compared to 2019; imports reached 341 million USD, an increase of 14%.

Table 1. Bilateral trade turnover between Vietnam and Poland from 2010 to 2020

Year	2010	2011	2013	2014	2015	2016	2017	2018	2019	2020
Trade Turnover (million USD)	346	569	500	660	761	790	1.005	1.600	1.796	2.112
Export to Poland	241	445	348	509	585	597,6	775	1.334	1.500	1.772
Import from Polan	105	124	152	151	176	191,4	231	266	298	340

Source: General Department of Vietnam Customs

The main sectors of focus in exports from Vietnam to Poland are footwear, seafood, coffee, pepper, confectionery, agricultural products, computers, electronics and spare parts. Products that account for a large proportion of Polish export goods to Vietnam include machinery, equipment, tools, spare parts, pharmaceuticals, milk and dairy products, aquatic products, textile materials, garments, leather and shoes. The commodity export structure between Vietnam and Poland reveals that the two markets have few direct competitive products. The complementarities of the two markets create favourable conditions for promoting mutual trade.

Figure 1. Main Vietnamese export goods to Poland in 2019

(Unit: USD) / (Source: General Department of Vietnam Customs)

Figure 2. Main Polish export goods to Vietnams in 2019

(Unit: USD) / (Source: General Department of Vietnam Customs)

As regards investment relationship, by October 2020, Poland ranked 35th out of 138 countries and territories investing in Vietnam, with 21 projects and a total registered capital above 371 million USD. Foreign direct investment projects by Poland in Vietnam are mainly in real estate, industrial processing and manufacturing, and information and communications technology. Meanwhile, Vietnam has three projects in Poland with a total investment capital of approximately 3.03 million USD in services and food technology.

Economic cooperation between Poland and Vietnam is expected to grow rapidly as a result of the EVFTA, which came into force on August 1, 2020, and the proposed EVIPA. More business opportunities are opening up to both countries as EVFTA will remove tariffs, reduce regulatory barriers and bureaucracy, ensure protection for geographical indications, open up services and the public procurement market, and ensure that the agreed rules are feasible. It is forecast that the EVFTA would help Vietnam’s export revenue to the EU to increase by approximately 18%, equivalent to eight billion Euro. Nearly 99% of custom duties between the EU and Vietnam will be eliminated. Approximately 65% of duties on EU exports to Vietnam will be done away with while the remaining duties will be gradually phased out over a period of 10 years. Additionally, 71% of duties will be eliminated on Vietnam exports to the EU, with the remaining duties to be phased out over a period of seven years. Almost half of the pharmaceutical products from the EU, including those from Poland, are exempt from the current eight percent8% customs duty directly after the agreement came into force, and the rest after seven years.

The traditional friendship between Vietnam and Poland, in general, and the economic relationship in particular has been enhanced by a strong Vietnamese community of approximately 35,000 people in Poland. Many of them are involved in developing businesses or in scientific cooperation. There are currently about 1,000 enterprises in Poland established by Vietnamese. These firms can take advantage of the opportunities offered by the EVFTA to switch over to importing input materials from Vietnam instead of China.

Considering the potential economic cooperation between Vietnam and Poland and Vietnam’s priority policy of extensive international economic integration, the Vietnam Embassy in Poland always regards economic diplomacy as one of its key tasks. In recent years, the Vietnam Embassy has actively coordinated with the relevant agencies of the two countries to carry out economic diplomatic activities such as organising seminars to introduce the EVFTA and connecting businesses in potential areas such as agriculture, pharmaceuticals and digital technology, where Poland has the competitive advantages and Vietnam has specific needs. In the near future, when the COVID-19 epidemic is under control, it is expected that a number of local delegations and businesses of the two countries will visit and learn about each other’s markets. It is hoped that with the strengthening of trade and investment cooperation, with the EU in general, and Poland in particular, Vietnamese enterprises will improve their internal production capacity, increase competitiveness, and develop exports in a sustainable way, thereby joining the global value chain more intensively.

Autorem artykułu jest Ambasada Socjalistycznej Republiki Wietnamu. Publikacja powstała w ramach projektu „GospoStrategie – dyplomacja gospodarcza w Polsce!”, który został objęty honorowym patronatem Ministerstwa Rozwoju, Pracy i Technologii.

Tweets by MOFAVietNam