"Rise of India, China an opportunity for Vietnam and Asia"

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Pham Gia Khiem: "It is time for us to lift our traditional friendship and multi-faceted cooperation to a new height."
Pham Gia Khiem: "It is time for us to lift our traditional friendship and multi-faceted cooperation to a new height."

Amit Baruah

Vietnam's Deputy Prime Minister and Foreign MinisterPham Gia Khiem, currently in India on a visit, speaks of taking bilateral relations with India to a new high. Some of the questions were sent in advance by e-mail to Mr. Khiem, others were answered by him in person. Excerpts from the interview:

How would you describe the current state of India-Vietnam relations?

Founded by President Ho Chi Minh and Prime Minister Jawaharlal Nehru and nurtured by generations of leaders and peoples of Vietnam and India, our bilateral relations of traditional friendship and comprehensive cooperation have stood the test of time, becoming an invaluable treasure of the two countries and peoples. The relations are now witnessing encouraging developments in almost all fields, such as politics, economy, trade, science and technology, education and training, security and defence under the framework for comprehensive cooperation between the two countries as they enter the 21st century, the action plan for the 2004-2006 period, and other agreements.

At international and regional forums, the two sides have shared common views on numerous issues, closely collaborating with each other, making contribution to peace, stability, cooperation, and development in the region and the world over.

In 2007, Vietnam and India celebrate the 35th Anniversary of the establishment of full diplomatic relations. It is time for us to lift our traditional friendship and multi-faceted cooperation to a new height. In this spirit, Prime Minister Nguyen Tan Dung will pay an official visit to India, tentatively in April 2007 and Vietnam is looking forward to receiving President Abdul Kalam in Hanoi later this year.

Can you tell us something about the trade-investment relationship between the two sides?

With the joint efforts of both sides, in recent years, trade and investment relations between the two countries have also been improved. The two-way trade value increased considerably from $697 million in 2005 to more than $1 billion in 2006 as targeted in the action plan for the period 2004-2006. India is now enjoying a large surplus in the bilateral trade with its export value to Vietnam in 2006 standing at $80 million. By the end of 2006, India has had 12 effective FDI [foreign direct investment] projects in Vietnam with a registered capital of $46.4 million, ranking 34th in 73 countries and territories investing in Vietnam. Interestingly, the realised capital has reached $580 million 13-fold of the registered capital thanks to an oil and gas exploitation project between Vietnam Petroleum, ONGC Videsh Ltd (India), and BP Exploration (U.K.), which has the realised capital of $578.4 million 34-fold of the registered capital.

I learnt that early this February, ESSAR group, a leading Indian conglomerate, signed a joint venture agreement with Vietnam Steel Corporation (VSC) and Vietnam General Rubber Corporation (GERUCO) to build a hot strip mill plant in Ba Ria-Vung Tau. Estimated to cost $527 million and be completed in 30 months, the project will significantly raise total investment from India into Vietnam. A Vietnamese company, FPT, has made an investment of $150,000 in an Indian technology development and investment project.

These figures show that trade and investment relations between Vietnam and India remain modest and incommensurate with our political ties and cooperation potentials. I hope that the two governments will soon work out effective measures to further promote bilateral trade and investment, especially now that Vietnam has become a WTO member. Right now, Vietnam is seeing an inflow of foreign investment and I would like to call upon Indian investors to do business in Vietnam. The Vietnamese Government will grant you maximum incentives.

On security and defence issues, what kind of cooperation is going on between India and Vietnam?

In defence and security, we cooperate in education and training and information-sharing. The two Defence Ministries and Ministries of Internal Affairs have also engaged in a lot of exchanges. We share information in counter-terrorism in the region and the world.

India is active both in Asean and the East Asia Summit, Vietnam is a leading member of Asean and a driving force in EAS. Is the idea of an East Asia Economic Community desirable in Vietnam's view?

First of all, Vietnam always supports and highly values India's role in the EAS as well as India's active contribution to the Asean countries and community building in East Asia. I hope that India will continue to support Asean's leading role in the EAS.

East Asian community building is a long-term objective that our countries have been working hard for. The dynamic developments in East Asian cooperation in all areas over the last few years have indeed laid a strong foundation for greater regional integration.

Building on the success we have had so far, I think we will need to continue to further advance East Asian cooperation in both scope and depth and in a more substantive manner, making better use of the Asean+1, Asean+3 and EAS frameworks on a mutually supporting and complementary basis.

In particular, I think economic cooperation is to remain a priority, with increased focus on the process of trade and investment facilitation and liberalisation. In this regard, an in-depth study should be carried out on the possible establishment of a comprehensive East Asian Free Trade Area, which will eventually link all the free trade arrangements between ASEAN and partners in the region.

Unilateralist tendencies on the global stage persist. What does Hanoi feel about the Iraq and Iran issues? How can these be addressed?

In our opinion, the Iranian nuclear issue should be settled through negotiations. We also hope that a satisfactory solution will be reached soon so as to reduce tension and instability in the region.

As for Iraq, we are hopeful that peace will be resumed soon so that the Iraqi people can concentrate on the reconstruction of their war-torn country. Vietnam wishes to develop political, economic, and trade ties with Iraq. We are also willing to participate in the reconstruction of Iraq.

Is China's and India's rise an opportunity for Asia?

We view India's and China's rise as an opportunity for Asia and Vietnam. Thanks to high economic growth, India and China are two large and potential markets for other Asian countries as illustrated by the rapidly growing trade between India and China with other Asian countries. Furthermore, as globalisation is advancing, India, China, and other Asian countries can develop closer economic linkages such as East Asian linkages, Asean-China FTA, Asean-India FTA and so on. Those economic frameworks will better serve economic development in Asia as a whole.

While competition for investment is fierce and there exists some concern that China and India would attract foreign investment, which should have come to other Asian countries, it is our view that each country in the region could draw certain portion of FDI, given appropriate policies and their own comparative advantages.

Are there any links between your government's domestic policies and foreign policy priorities?

Our overall objective is to maintain high and sustainable economic growth. Therefore, our domestic and foreign policies will concentrate on mobilising all resources for the modernisation and industrialisation of the country.



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