Economic trade and investment relations Viet Nam - Thailand and environmental impacts

125 ECONOMIC TRADE AND INVESTMENT RELATIONS VIETNAM - THAILAND AND ENVIRONMENTAL IMPACTS. Le Ngoc Thong, NEU thongleh@yahoo.com Summary: By analytical methods - synthetic, real research, the article confirms: Vietnam and Thailand are two countries in Southeast Asia that have long-standing economic exchanges in history to date with international integration. Based on the analysis of the realities of trade and investment, the paper provides an overview of the achievements and the existence of trade and investment relations between Vietnam and Thailand over the past years. It then proposed some solutions to strengthen good relations between Vietnam and Thailand in the field of trade and investment in the context of international economic integration: The two countries must have a comprehensive and comprehensive two-way, comprehensive and coordinated government agreement on two-way trade in the new context; It is necessary to combine trade and investment with the advantages of each country according to the regulations of ASEAN; Key word: Economic relations, Thailand, Trade and investment, Vietnam Posts complete A. Introduction Implementing the foreign policy of independence, autonomy, openness and active international integration, currently, Vietnam has established diplomatic relations with 180 countries. On this basis, the trade and investment economic cooperation between Vietnam and Thailand has been constantly strengthened and developed, achieve great achievements and limitations to overcome. B. Contents 1. A study of actual situations of Vietnam-Thailand economic and trade relations 1.1. Foundation for the relations It is the similarity between the two countries in many aspects; economic policy; integration conditions; Table 1. The correlation between Vietnam and Thailand No. Criteria Quantity Vietnam 1 Area km2 513.115 331.699 2 Population million 68 96 3 Population density person/km 2 120 308 4 Percentage of Literacy 86% 5 Percentage of Buddhists 90% Population 6 GDP 406,84 billion USD 200,493 7 Economic structure Agriculture Industry Service Agriculture Industry Service 8.4% 39.2% 52.4% 17.4% 38.8% 43.7% (Source: built by the author) 126 The two countries established diplomatic relations in 1976 and prospered in 1978. The relations was gradually improved and developed the most when Vietnam joined ASEAN. The two countries have upgraded relations to ―Strategic Partners‖ by 2013. Many bilateral cooperation mechanisms have been adopted and implemented by the two countries. 1.2. Actual situation of economic trade and investment relations between the two countries 1.2.1. Economic trade relations between the two countries 1.2.1.1. The period before 1990 Since 1976, the trade relations between the two countries has developed, based on the Agreement on Trade, Economic and Technical Cooperation (1 in 1978). Here, the political factor of slowing of trade relations between the two countries. Thailand has isolated Vietnam to maintain its cooperative relations with the West and ASEAN. But the trade relations between the two countries are not interrupted. Table 2. Import-export turnover between Vietnam and Thailand during the 1986 - 1990 period (million USD) Year 1986 1987 1988 1989 1990 Total turnover 4,7 7,5 13,0 63,6 114,7 Growth (%) 59,6 73,3 389,2 80,3 (Source: “Economic Relations between Vietnam and Thailand: 20 years of development”- Ha Huy Thanh - Journal of Economic Research No.224 in January 1997) Since 1987, Vietnam has had a great turning point in domestic and foreign affairs. Trade between the two countries increased at the pace of transition to a market economy and the opening level of the economy. When Vietnam really moved to the market mechanism (1989), trade relations between the two countries have jumped, the trade growth in 1989 increased 389.2% compared with 1988. 1.2.1.2. Trade relations from 1990 to present Since 1992, there have been favorable conditions for the development of trade relations between the two countries. Trade turnover between the two countries has increased rapidly. Table 3. Two-way trade turnover (1990 – now) No. Year Total two-way trade turnover (billion USD) Ghi chú 1 2009 5,78 2 2013 9,41 3 2015 11,5 4 2016 12,5 5 4/2017 4,3 6 2020 20 dự kiến (Source: tang/53961.html - 15-08-2017) 127 Products are diverse, rich types, to meet consumer demand and production Table 4. Major goods imported from Thailand in the first 7 months in 2017 Goods/Products 7months in 2017 7months in 2016 % of compare Total turnover (USD) 5.637.505.885 4.613.059.696 +22,21 Electrical appliances and components 590.809.009 629.099.053 -6,09 Vegetables 516.823.265 162.893.699 +217,28 Machinery, equipment, tools, spare parts 506.267.997 451.506.538 +12,13 Automobiles in complete units all types 393.659.348 343.189.464 +14,71 Plastic materials 347.800.700 299.285.368 +16,21 Computers, electronic products and components 305.445.675 211.031.745 +44,74 Car components and accessories 303.245.760 372.714.405 -18,64 (Source: nam-thai-lan-tang-gan-24-678227.html) Chart 1. Import-export turnover of Vietnam - Thailand (1995 – 2011) (Source: General Statistics Office) Thus, the import-export turnover between Vietnam and Thailand from 1995 up to now generally tends to increase. In 2011, the total import-export turnover has increased about 15 times compared with 1995, with the average growth rate of 19.7%/year. Vietnam exported mainly fuel and minerals, Table 5. Exports of Vietnam in the 1990-1994 period No Goods/Products Proportion % Remarks 1 Wood, rattan 70 2 Raw skin and leather 5,4 3 Scrap 5,7 4 Frozen Seafood 4,0 5 Other products 14,9 Total 100 -6000 -4000 -2000 0 2000 4000 6000 8000 10000 199519971999200120032005200720092011 Việt Nam xuất khẩu sang Thái Lan Việt Nam nhập khẩu từ Thái Lan Tổng kim ngạch XNK Việt Nam - Thái Lan Xuất khẩu ròng từ Việt Nam sang Thái Lan 128 On export value norms in the following table Table 6. Value structure of Vietnamese goods exported to Thailand in 2011 Value (USD) Proportion (%) Total turnover 1.792.249.016 100 Seafood 106.042.940 5,91 Vegetables 14.477.386 0,80 Cashew 26.384.649 1,47 Coffee 34.416.720 1,92 Pepper 7.317.917 0,40 Confectionery and cereal products 15.820.654 0,88 Coal 31.882.420 1,77 Crude oil 42.497.093 2,37 Petrol of all kinds 51.609.082 2,87 (Source: General Department of Vietnam Customs) The structure of exported products from Vietnam to Thailand has made more positive changes; from exporting raw products to diversifying products. 1.2.2. Actual situations of Investment 1.2.2.1. Thailand‘s investment in Vietnam. Thailand ranked 10/116 countries and territories investing in Vietnam with 458 direct investment projects in force, with a total registered capital of nearly USD 8.2 billion, mainly in the fields of processing, manufacturing, trade and agriculture, forestry and fishery in 41 provinces and cities. Major investors: Long Son Petrochemical Company Limited, CP Vietnam Livestocks Company Limited and Vina Kraft Paper Company Limited. Table 7. Direct investment of Thailand into Vietnam In the 1995 – 1999 period (million USD) Year 1995 1996 1997 1998 1999 Projects Volume 13 14 11 2 1 Total investment 135,7 190 271 0,85 2,0 (Source: Ministry of Planning and Investment - Nguyen Tuong Lai, the relations between Vietnam and Thailand in the 1990s, Social Science Publishing House, 2001) The investment volume of Thai into Vietnam tended to increase. In 1998, due to the impact of the financial crisis, the project volume is decreased rapidly. Table 8. Direct investment of Thailand by field (Million USD) Investment Fields Project volume Registere d capital Proportion (%) 1 Industrial production and processing and mining of gem. 43 487, 3 46, 7 2 Hotel, Tourism 17 256, 2 24, 5 3 Bank services. 7 95 9, 1 4 Other fields. 11 204, 5 19, 6 Grand Total 78 1.043 100 (Source: CATBD Department of Commerce). 129 Thailand has not yet invested in hi-tech industries with large amounts of capital. Due to: Thailand's economy is also in need of large development investment, for the modern industries; technical technology skills, management ability... between Vietnam and Thailand is not much difference; Vietnam's investment environment has a lots of restrictions. Table 7. Thailand investment into Vietnam in the 2004 – 2011 period Year 2004 2006 2007 2008 2009 2010 2011 Accumulated projects volume 112 125 160 169 215 240 271 Total investment (billion USD) 1,376 1,5 1,56 1,66 2,96 5,84 5,8 (Source: accoridng to www.mofa.gov.vn in 2009; and Annual abstract of statistics) At this period, Thailand's investment into Vietnam increased both in terms of project size and total investment. Thailand ranked 10 th position in more than 90 countries and regions investing in Vietnam and was the third in ASEAN countries (after Singapore and Malaysia). In 2011, Thailand had 32 projects with a total registered capital of USD 159.68 million. (Source: VCCI - Thailand market profile) Chart 2. Proportion of FDI into Vietnam (1990 - 2010) (Source: Thailand is the first leader in FDI investing into Vietnam in many fields with the forms of: 100% foreign capital; Venture; BOT, BTO, BT. By investors: Siam Cement Group; CP Group; S Khon Kaen; Royal Company; Berli Jucker Public Company (BJC) 1.2.2.2. Investment from Vietnam into Thailand. This process has not developed, until 03/2008, investment capital of 305.2 thousand USD, for: joint venture production and trading lubricants between Cuu Long Trade and Transport Company Limited and Inter Lube Trading Co.Ltd Company, Thailand produces and trades lubricants, capital of 150.000 USD; Project of Electronic and Information Joint Stock Company: 100% Vietnamese capital project of EIS Information Technology Joint Stock Company with the objective of designing and supplying informatics software with capital of 155.200 USD. (Source: Vietnam-Thailand cooperation Report – 03/2008) 130 In addition, the two countries cooperated in the fields of national security, transportation, agriculture, culture and tourism; Strengthen cooperation in the field of environmental crime; v.v... 2. Comments and evaluates Under the specific conditions of the two countries and international schools, the trade and investment cooperation relations between Vietnam and Thailand has many achievements and limitations. 2.1. About economic and trade cooperation 2.1.1. Achievements: Constantly increasing with faster and faster speed, reflects the relationship of the two countries are growing strongly. Vietnam has gradually reduced the export share of raw materials and increasingly diversified the list of export products. This result is due to the positive impact of the opening policy and international economic integration of the two parties; Enterprises in the two countries have made changes in their market search activities; The role of the State is to support the removal of difficulties in policies and support for export promotion of both countries. 2.1.2. Limitations (1) Vietnam is constantly trade deficit. Vietnam is still a supplier of raw materials (even in small scale) to Thailand and a potential market for Thailand‘s enterprises. Vietnam's export products to the Thailand market are facing a lot of difficulties, and has to compete with Thailand goods in the domestic market. Due to the similarity of the import and export structure of the two countries, Vietnam's goods are difficult to penetrate into Thailand at traditional channels. Meanwhile, the strength of its distribution system lies in the modern canal. The Thailand market is quite far ahead of Vietnam, with Thai people's awareness of the brand being very high; Vietnamese brand name is difficult to take place. (2) Thailand goods dominate the Thailand market, overwhelming Vietnam goods. Distributors of Thailand goods are supported by suppliers to develop distribution systems, focusing on developing rural markets. Thailand enterprises are supported by the Government. In addition, Thailand's ―pedestal‖ is the tourism industry. 2.2. On investment relations 2.2.1. Achievements The investment relations between Vietnam and Thailand is on the rise. Due to the need to transfer capital from Thailand abroad to reduce risks, seek new opportunities. The birth of the ASEAN Economic Community is an opportunity for Thailand to penetrate deep into Southeast Asia. Vietnam's advantage is in cost and freight 2.2.2. Limitations The investment relations between Vietnam and Thailand is not commensurate with the potential of both countries. Vietnam mainly acts as an investment receiving country from Thailand. The main focus is on processing agricultural and marine products, producing construction materials, exploiting gems; hotel and tourism; banking services... Few 131 projects on heavy industry production or infrastructure upgrading. Technology transfer in the style of ―flying saucer‖ from Thailand to Vietnam. As a result, the economy of Thailand itself is in great need of investment, especially for modern industries; technical technology, management ability...; Vietnam's investment environment is still limited. 2.3. Discussing the environmental impact from the Viet-Thai commercial relationship The impact is expressed on three aspects: from goods; from technology and from trade structure 2.3.1. Environmental impact from goods: New products and equipment are more advanced than environmental protection, enhancing environmentally friendly goods. Turbulence and trade will affect the atmosphere and atmosphere, causing environmental incidents. From trade affects the over-exploitation of resources 2.3.2. Environmental impact from technology: in competition, improved technology, reduced waste to the environment. In contrast, importing new goods can pollute the environment 2.3.2. Environmental Impact from Trade Structure: Trade relations can change the structure of the national economy. The increase in production is based on natural resources or the production itself, potentially damaging to the environment. 2.4. Discuss the environmental impact of trade liberalization Trade liberalization will increase both negative and positive impacts on the environment. The GATT says that commodity elasticities are based on income; liberalization of trade offers the opportunity to select green products; The state can increase the environmental standards. Trade liberalization eliminates subsidies, which will have a positive impact on environmental protection. For example CAP agricultural policy. On the contrary, it is the negative impact of trade liberalization on the environment: maximizing resources, polluting the environment; Focusing on economic objectives, exhausting natural resources, causing environmental damage; changes in ownership and use of land threaten the environment. Challenges for Vietnam: Increased pollution from FTAs; from FDI, Vietnam imports with high levels of pollution; export oriented, is the premise chon guy "muscle disease Netherlands"; counterfeit goods, low quality goods also contribute to environmental damage; power industry and industrial parks contribute badly to the environment 2.5. Discussion on the enhancement solution That should be the overall solution from the State to business and the whole society in two directions, in the following directions: (1) Improving the legal framework and reforming administrative procedures. The Vietnamese side needs to revise the legal system to adjust regulations that are no longer appropriate or transparent, towards consistency in tax policy. Accompanying the urgent and drastic reform of administrative procedures in Vietnam, creating psychological confidence for businesses, encouraging them to accept long-term investment. (2) Upgrading infrastructure and handling environmental impact. Infrastructure currently does not meet the requirements of the modern business environment: upgrading seaports, airports, road transport systems; Completing the information system, 132 communication, Internet connection, Incorporation of environmental targets into the planning work from the central to local level; Transition of environmental management from imperative to economic solution; Strengthen control of species and quality of inclusion on environmental and socio-economic criteria. (3) Develop key export products and appropriate investment orientation. Agricultural products likely to be exported to Thailand (coffee, vegetables, fruits, etc.) should be encouraged to invest in specialized production areas using advanced techniques and post-harvest technologies to improve design, quality and reduce costs. (4). Strengthen export promotion and human resource development Information should be enhanced for businesses through direct market surveys or through various forms of marketing. The understanding and mutual trust between the business community of the two countries is a very important factor to promote trade between the two countries. (5) Focus on Thailand market research, In the spirit of: (i) grasping the needs of Thai consumers; (ii) lower production costs; (iii) Strictly commits to time and product quality. C. Conclusion The leaders and people of the two countries jointly cultivated, consistent with the trend of regional and global development in the context of internationalization - integration, friendship and comprehensive cooperation of Vietnam - Thailand will grow. Basically, the two countries must come up with a two-dimensional, two-way trade agreement for trade and investment in the new context. At the same time, combine trade and investment with the advantages of each country in accordance with the provisions of ASEAN and related international conventions. References 1. Thailand Economy and Prospects to 2000, Journal of Figures and Facts, 1995, No. 9, pgs. 23-25 2. Nguyen Thi Trang. 20 years of relations between Vietnam and Thailand.- Weekly news, dated 6/2/1996. 3. Nguyen Thu Trang. Vietnam - Thailand opens a new co-operation period. International Journal, No. 13/1998 4. Nguyen Tuong Lai, the relations between Vietnam and Thailand in the 1990s, Hanoi Social Science Publishing House, 2001. 5. Documents on economic relations of the Ministry of Commerce