Czech-Vietnamese relations - “Golden Age”

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1.The year 2020 marks the next important milestone in the relationship between Vietnam and the Czech Republic: 70th anniversary of diplomatic relations. Can you describe (in a few sentences) the most outstanding feature of the relations between the two countries in the past 70 years?
The relationship between Czech and Vietnamese people has been extraordinary. Seven decades of diplomatic relations between both countries, defined by mutual understanding, respect and trust, as well as selfless support both in the good and bad times. A 70-years-long history of mutually supportive and advantageous cooperation between the Czech Republic and Vietnam make me call the current stage of Czech-Vietnamese relations their “Golden Age”.

 

The best proof of that is a high frequency of high-profile political visits in the last couple of years. It is of the greatest importance for both countries and their needs to keep such a frequency ongoing. Thanks to a very satisfactory cooperation in many fields like trade, defense, science, education and culture, among others, the Czech-Vietnamese relations have an outstanding past, an excellent present and without any doubt, a very promising future too.

2. Regarding economic and trade relations, what specific remarkable achievements have there been in the past 70 years?
An undisputed core of Czech-Vietnamese relations is trade. Vietnam is one of the most important trading partners of the Czech Republic in South East Asia. Our bilateral trade has been growing steadily while the trade volume has exceeded 1 billion US dollars. There is a strong interest on both sides to further increase economic cooperation at the government and corporate levels.

 

Vietnam appears in the Czech strategic documents on trade and investment as one of the priority countries. Strong and steady economic growth and rapid modernization of its economy have made Vietnam an increasingly attractive partner for the Czech Republic. Vietnam has tremendously improved the conditions for international investors over the past decade and has become an attractive investment destination for Czech companies as well.

 

The Czech businesses have already invested almost 100 mil. USD in 30 different investment projects in Vietnam and we believe that this positive trend will continue.

3. In the present time, are there any projects or plans in economic relations between the two countries?
A direct flight between Hanoi and Prague is ready for take-off as soon as we overcome Covid-19 and restore the health standards. This direct flight will greatly support and boost our bilateral cooperation in virtually every aspect of our relations including trade, tourism, investment or cultural exchange.

 

Apart from the traditional ways of trade, the Czech companies are increasingly interested in transfer of their technologies and investment to Vietnam. The Czech Republic, being a real European automotive power-house, sees the biggest potential in transfer of automotive technologies to Vietnam. In per-capita terms, the Czech Republic is second in the world in passenger-car production and has a long and strong tradition in production of trucks and buses as well. Traditional Czech car brands like Škoda, Tatra or Avia are looking for new opportunities in Asia and have plans to enter the automotive market in Vietnam as well.

 

The cooperation in defence industry is another important pillar of our economic relations. We are glad that we can help Vietnam in modernization of its army and enhancing its defence capabilities. The Czech Republic as a traditional producer and exporter of defence technologies is ready to continue its cooperation with Vietnam not only in the field of technology supplies but also in the education of its current and future military personnel.

 

Worth mentioning is cooperation in mining industry, which is also a traditional field of our economic relations. Czech geological companies cooperate with Vietnamese partners in prospection of mineral deposits in Vietnam and in training of Vietnamese specialists in the Czech Republic. The Czech Republic, a renowned producer of crystal glass, is ready to help Vietnam with the exploitation of high quality silica sands and modernization of its glass industry.

4. What advantages and specific plans can Vietnamese businesses expect in the future after the EVFTA and after the current Covid-19 pandemic?
The ambitious EU-Vietnam Free Trade Agreement (EVFTA), which came into effect in August 2020, is going to have far-reaching impact on our bilateral trade and investment thanks to tariff cuts and strong commitments articulated by both the EU and Vietnam.

 

The most visible benefits are expected in significantly increased trade supported by substantial reduction or even total elimination of tariffs and non-tariff barriers as the EVFTA cuts an unprecedented 99% of customs duties on goods traded between the Czech Republic and Vietnam. In addition, Vietnam’s commitments to guarantee open and transparent investment and business environment will effectively help boost high-end investment from the Czech Republic into Vietnam.The time has never been more suitable for doing business than it is now. That is why I myself see the future of Czech-Vietnamese economic relations with more than justified optimism.

5. What specific advantages will Czech enterprises have and whatthey are looking for at possible cooperation and at which fields in their relationship with Vietnamese enterprises?
For many Czech export items to Vietnam, such as machinery and equipment, glass, weapons, ammunition or toys, etc., duties will be reduced to zero or a fraction of the current tariff rate. Imports of motor vehicles and car parts, agricultural imports, including imports of Czech beer and hops, will be fully liberalized a little later, in the range of four to eleven years.

EVFTA will allow transparent and non-discriminatory access for Czech companies to public procurement in Vietnam and the protection of copyrights and patents on pharmaceutical products will also be strengthened.  We expect that the EVFTA will bring around 20% increase in Czech agricultural and food exports to Vietnam. After the end of all transitional periods, exports of Czech engineering production will increase by 35%. Exports of Czech glass products can increase by up to 269%.

 

6. The cooperation in general and the economy in particular is not commensurate with the relationship potential (very good in all levels, all fields) which has been talked about for many years, for a long time. Will there be any changes in the future? Or will it be "potential" forever?
The potential for the economic and trade cooperation has surely not been reached yet. There are many opportunities in trade and investment that have not been explored so far. One of the reasons may be the geographical distance between the two countries and cultural differences in doing business but the globalized world today shortens the distances between supply and demand, offers new ways of marketing and opens new business opportunities even for very distant countries. 

 

7. What specific supports and plans can the Economic section of Czech Embassy do for Vietnamese businesses if they want to cooperate with Czech businesses?
The economic section of the Czech Embassy provides a wide range of trade and investment services and practical support. Our primary goal is to help Czech companies to succeed on the Vietnamese market, however, we are also ready to support Vietnamese companies, which are interested to set up a business or invest in the Czech Republic.

8. In your opinion, what is the biggest difficulty (or problem, barrier) of cooperation between the companies of Vietnam and the Czech Republic? Is there a realistic chance to deal with those difficulties?
There are still many barriers that need to be removed in our mutual trade relations like harmonization of standards, licensing of agricultural and pharmaceutical products, etc. and it is difficult to single out just one of them.Anyway, I believe that a new big game changer has just come to the scene. Its name is encrypted in abbreviation of EVFTA. It will very soon make the life of businessmen and investors in both countries much much easier.

 

9. Please provide a short summary about Czech Republic, Czech economy and trade relation between Vietnam and Czech Republic to arrange a information page (go along with interview) separately.
The Czech Republic, the picturesque land which the Czechs have called their home for over 1,200 years. Located in the centre of Europe, since the early Middle Ages, this country has always been a crossroad of trade routes, and an inspiring place of encounter of people of different nationalities, beliefs and cultural backgrounds. This is perhaps best embodied by the country’s capital, Prague. A city that is a harmonious blend of over a thousand years of the very finest in Europe’s arts, stunning architecture, and scientific advances. Unknown to some, the Czech Republic is actually a modern union of three historical territories – Bohemia, Moravia, Silesia, each of which enriches the country’s culture in their own special way.

What is the Czech Republic today? It is a promised land of car-making, splendid crystal, lovely music, intellectual literature and witty films, world-class athletes, delicious beer, spontaneous irony and humour, and an unbearable lightness of being. It is also a modern democratic country with a high standard of living and fine quality of life. A home of free and confident people, whose economic prosperity, social cohesion and national security is safeguarded by the membership in the European Union, the North Atlantic Treaty Organization, and obviously, by the Czechs themselves.

The Czech Republic is a developed export-oriented social market economy based in services, manufacturing, and innovation, that maintains a high-income welfare state and the European social model. The Czech Republic participates in the European Single Market as a member of the European Union, and is therefore a part of the economy of the European Union, but uses its own currency, the Czech koruna, instead of the euro. It is a member of the OECD. The Czech Republic has the lowest unemployment rate in the EU and the second lowest poverty rate among OECD members, described by many economic analysts as “one of the Europe’s most flourishing economies“. The Czech GDP per capita at purchasing power parity is $43,299 and $23,493 at nominal value. Czech Republic ranks 24th in both the Index of Economic Freedom (ranked behind Norway) and the Global Innovation Index (ranked behind Australia), 29th in the Global Competitiveness Report and 30th in the ease of doing business index. The Czech Republic has a highly diverse economy that ranks 9th in the Economic Complexity Index.

Trade between the Czech Republic and Vietnam has been growing tremendously in recent years. Already in 2018 mutual trade turnover exceeded USD 1 billion (see table below). However, there is a significant trade deficit on the side of the Czech Republic, which is deepening every year.

The Czech Republic exports to Vietnam mostly machinery and equipment for the growing Vietnamese industry. The Czech Republic is also an important supplier of sophisticated defense technologies for Vietnamese armed forces. From the traditional Czech exports product are worth mentioning also Czech crystal and beer, which very successful on the Vietnamese market.

The Vietnamese exports to the Czech Republic consist mainly of footwear, mobile phones, electronics,clothing, rubber and other agricultural products such as leather coffee, fish and tropical fruits.