Doing Business

Vietnam and the Philippines: Reaching USD 10 billion in two-way trade by 2026

Trường Lăng

September 6, 2023

Doing Business

Vietnam and the Philippines: Reaching USD 10 billion in two-way trade by 2026

Trường Lăng

September 6, 2023

The last 47 years have witnessed several milestones in the establishment and development of the bilateral relationship between Vietnam and the Philippines. The two countries have cooperated across various areas, especially in their investing  and trade activities. Hosted recently, the 10th Meeting of the Joint Committee on Bilateral Cooperation has proposed several prospects for further promotion of the Vietnam – Philippines strategic partnership and opened investment opportunities for investors in both countries. This article highlights the expansion of the two countries’ relations through important milestones, statistics, and government support. 

Highlights of Vietnam – the Philippines relationship

Vietnam and the Philippines established diplomatic relations on July 12, 1976. Since then, the two countries have signed several agreements and established cooperation mechanisms to enhance their relationship. In 1992 and 1994, they signed the Maritime Agreement and the Agreement on the Establishment of the Joint Commission for Economic, Scientific, and Technical Cooperation. In 2001, they signed an agreement to avoid double taxation.

In 2007 and 2011, they signed the Action Program for the periods of 2007-2010 and 2011-2016, respectively, to promote cooperation in various areas. In 2014, they established the Philippines-Vietnam Friendship Association. The most significant milestone in their relationship came in 2015 when they elevated their relationship to a strategic partnership, bringing benefits to both countries and promoting bilateral cooperation in depth.

In 2019, they signed the Action Program to implement the Strategic Partnership for the period of 2019-2024, aiming to strengthen cooperation in various areas, including defense and security, trade and investment, education and training, culture, and people-to-people exchanges

The strategic ties between Vietnam & the Philippines

The Vietnamese and the Philippine leaders have underscored the importance of their countries’ strategic partnership in ASEAN, with high-level officials and business communities recognizing the recent visit as a significant milestone in bilateral relations. 

During the Vietnam – the Philippines Investment and Trade Forum, Chairman of the Vietnamese National Assembly, Vuong Dinh Hue, emphasized that Vietnam and the Philippines share numerous strategic and similar values, hold important positions in ASEAN, and are two vibrant developing economies that can learn from one another’s experiences.

Mr. Paul Vincent L. Uy, Representative of the Embassy of the Republic of the Philippines in Hanoi, affirmed that the Philippines and Vietnam have a good political relationship at all levels. The two countries share many similarities in terms of geography, population, culture, and level of development, and complement each other well in production and trade.

The bilateral trade between the two countries has made significant progress. The two-way trade turnover between Vietnam and the Philippines in 2022 witnessed a sustainable growth of 15% compared to the previous year. There are increasingly more Philippine companies investing throughout Vietnam’s territory.

In his overview of the economic and social development situation in Vietnam, as well as his assessment of the results of the two countries’ relationship in the past and the potential for future bilateral cooperation, Chairman Vuong Dinh Hue stressed that Vietnam and the Philippines share many strategic and similar values, and are two dynamic developing economies with a two-way trade volume of USD 8 billion in 2022.

Mr. Zubiri – The President of the Philippine Senate, believes that Vietnam and the Philippines have great potential for cooperation in the fields of economy, trade and investment. He hopes that the two countries will continue to strengthen cooperation, promote exchange and investment between the two countries, contributing to the development of the economy and society of both countries.

Vietnamese National Assembly Vuong Dinh Hue and The President of the Philippine Senate Juan Miguel Zubiri in Investment and Trade Forum – 2022 (Source)

In conclusion, Chairman of the National Assembly Vuong Dinh Hue stressed that both sides have enormous cooperation potential, and today’s forum is one of the driving forces for establishing cooperation mechanisms. The governments and National Assemblies of both countries will create all necessary conditions, but the success of this initiative will ultimately depend on investors and businesses.

Vietnam & the Philippines economic – trade relationship 

According to the reports of the authorities, the Philippines is the fifth largest trading partner of Vietnam with the two-way trade turnover increasing by 3.5 times, from USD 2.4 billion in 2010 to USD 8 billion in 2022, and the largest importer of rice from Vietnam. In the first 5 months of 2023, Vietnam has exported 1,5 million tons (over USD 770 million) of rice to the Philippines, accounting for 42,3% of Vietnam’s total rice exports. In the meantime, Vietnam is the Philippines’ 11th trading partner and the 12th export market of the Philippines.

Despite the challenges posed by the COVID-19 pandemic, both sides have evaluated their relationship as having developed positively in recent years, with bilateral trade becoming a bright spot. In 2021, the total two-way trade between the two countries reached a record high of USD 6.8 billion, and at the end of 2022, it reached nearly USD 8 billion.

In a message to the business community of the two countries, President of the National Assembly Vuong Dinh Hue  proposed that the business community of the two countries continue to promote investment and trade cooperation, and strive to achieve total two-way investment of over USD 1.5 billion and trade turnover of USD 10 billion by 2026, in order to strengthen the connectivity and complementarity between the two economies, on the occasion of the 50th anniversary of the establishment of diplomatic relations between the two countries.

As of October 2022, the Philippines has 89 investment projects in Vietnam with a total registered capital of nearly USD 607 million and ranks 30th out of 141 countries and territories investing in Vietnam. Vice versa, Vietnam has 05 investment projects in the Philippines with a total investment capital of USD 4 million in the fields of software development, services and trade.

JG Summit Holdings is currently the largest Philippine investor in Vietnam, with an accumulated capital of USD 200 million through two subsidiaries – URC and Cebu Pacific, focusing on manufacturing food and beverage products. In June 2023, AC Energy (Acen) from the Philippines completed its first acquisition phase of 49% ownership of the solar energy project “Solar NT” in Vietnam from Super Energy Corporation (Thailand), the total value of which reached up to USD 165 million. 

Prospects and trends in future bilateral relations

On August 2nd 2023, in Hanoi, Foreign Minister Bui Thanh Son and Foreign Minister Enrique Manalo of the Philippines co-chaired the 10th Meeting of the Joint Committee on Bilateral Cooperation between Vietnam and the Philippines. The two sides agreed on a number of specific measures to further promote cooperation in all areas, including:

  • Strengthening exchange of delegations and high-level contacts, especially the visit of Philippine President Ferdinand Romualdez Marcos Jr. to Vietnam at an appropriate time;
  • Effectively implementing bilateral cooperation mechanisms, including the Joint Committee on Maritime and Ocean Affairs, the Joint Trade Sub-Committee, the Joint Working Group in the field of agriculture, and the Joint Working Group in the field of fisheries.
  • Promoting the development of the Action Plan for the Implementation of the Strategic Partnership for the 2025-2030 period;
  • Strengthening defense and security cooperation;
  • Striving to bring two-way trade turnover to 10 billion USD as soon as possible, with a focus on rice trade;
  • Promoting cooperation in the maritime and ocean;
  • Strengthening information sharing and coordination in addressing maritime issues in a timely manner;
  • Enhancing the effectiveness of cooperation in combating illegal, unreported and unregulated (IUU) fishing activities.
  • Promoting cooperation in other important areas such as agriculture, culture, tourism, education, transportation, science and technology, environment, and people-to-people exchanges.
Foreign Minister Bui Thanh Son and Foreign Minister Enrique Manalo of the Philippines exchanged the Joint Communiqué of the 10th Meeting of the Joint Committee on Bilateral Cooperation between Vietnam and the Philippines (8/2023)

At the end of the 10th Joint Committee Meeting, the Foreign Ministers of the two countries signed the Joint Communiqué of the meeting and agreed to hold the 11th Meeting of the Joint Committee on Bilateral Cooperation in the Philippines at an appropriate time in 2025.

Conclusion 

Looking ahead, there is great potential for further growth in economic and trade relations between Vietnam and the Philippines. The two countries have a number of areas where they can cooperate, such as agriculture, manufacturing, tourism, and information technology. 

If you are a Philippine investor looking to expand your business into Vietnam, Viettonkin Consulting can help. We have extensive experience in the Vietnamese market and can provide you with the support you need to succeed. Contact us today to learn more. With our help, you can take advantage of the many opportunities available in Vietnam and build a successful business. Don’t hesitate to reach out to us

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