Luxembourg PM’s visit hoped to deepen bilateral friendship, cooperation

Prime Minister Pham Minh Chinh (L) meets with his Luxembourg counterpart Xavier Bettel on December 9, 2022 during his official visit to the European country. (Photo: VNA)

The visit, spanning from May 3-5, will open a series of activities to mark the 50th anniversary of the Vietnam-Luxembourg diplomatic relations (1973-2023).

Vietnam and Luxembourg have shared a sound partnership over the past half a century, with regular exchanges of high-level delegations.

Most recently, in December 2022, Prime Minister Pham Minh Chinh made a fruitful official visit to Luxembourg, bringing the bilateral partnership to a new development period in a comprehensive, practical, and effective manner. During the visit, leaders of the two sides agreed to set up a strategic partnership in green finance at an early date. Luxembourg agreed to support the development of a new financial center in Ho Chi Minh City and strengthen cooperation with Vietnam in trade, investment, education training, science-technology, and the stock market.

They also concurred to increase the exchange of delegations at all levels, especially high level in 2023, while jointly organizing activities to celebrate the 50th anniversary of their diplomatic relations.

The sound bilateral political relationship has motivated the economic and trade cooperation between the two countries. As of March 2023, Luxembourg had invested in 64 projects worth 2.6 billion USD in Vietnam, ranking third among 24 EU countries and 17th out of 139 countries and territories investing in Vietnam. The projects are mostly in the fields of communications, construction and real estate in Hanoi, HCM City and Ba Ria-Vung Tau province.

Two-way trade has increased through years from 96 million USD in 2019 to 110.7 million USD in 2020, and 181.6 million USD in 2021 after the Vietnam-EU Free Trade Agreement took effect. Last year, the figure hit 187.1 million USD, up 69% over 2020, with Vietnam’s exports worth 130.14 million USD.

On the occasion of PM Chinh’s official visit to Luxembourg last year, the two sides signed a Memorandum of Understanding on cooperation in promoting, strengthening and developing trade relations and business dialogue between the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade and the Luxembourg Chamber of Commerce.

In the field of development cooperation, after officially providing aid to Vietnam in 1993, Luxembourg has committed to continuing development aid to Vietnam and became an official member of the Vietnam Consultative Group since 1998.

Vietnam and Luxembourg signed three cooperation programmes for the 2002-2005, 2006-2010, and 2011-2015 periods, worth 35 million EUR, 50 million EUR, and 42 million EUR, respectively, focusing on Vietnam’s demands and development goals for particular periods. Luxembourg decided not to sign such programmes from 2015 onwards, as Vietnam became a middle-income country. However, experts from Lux-Dev, the aid and development agency of the government of Luxembourg, have continued to assist Vietnam in finalising Luxembourg-funded projects.

The mechanism of Vietnam – Luxembourg Partnership Committee also ended in 2017 following Vietnam’s middle-income status. Its last meeting was held in January 2017 in Hanoi.

Finance, green finance and banking have been the key pillars in partnership between the two countries.

In 2000, authorized by the PM, the leader of the State Bank of Vietnam (SBV) signed a Protocol with the Prime Minister of Luxembourg, under which the two sides agreed to expand cooperation in the banking and finance sectors, especially in financial technology training and transfer.

Thanks to the protocol, hundreds of training courses have been held for officials from the SBV as well as management officials from commercial and State-owned banks of Vietnam.

Meanwhile, the partnership among Vietnamese commercial banks and Luxembourg partners is positive. By the end of 2022, Vietnamese commercial banks had established more than 20 correspondent banking relationships with Luxembourg commercial banks with a total revenue of payment and money transfer through this system reaching nearly 800 million USD. Through this correspondent banking system, Vietnamese organizations have supported payment and money transfer activities of the two countries’ investors and businesses.

Regarding securities cooperation, within the framework of the Vietnam – Luxembourg oriented cooperation programme for the 2006 – 2010 period, the Government of Luxembourg supported the Vietnamese Ministry of Finance’s State Securities Commission through a project to develop the capital market in Vietnam, which was the first bilateral development cooperation project between Vietnam and Luxembourg.

Following the success of the project, the Government of Luxembourg continued to support Vietnam in the financial and securities sector through another project to strengthen the capacity in the financial sector. The objective of the project is to assist the development of Vietnam’s stock market in accordance with the Securities Market Development Strategy for the 2011 – 2020 period.

Currently, the two sides are implementing an cooperation agreement between the Vietnam Stock Exchange and the Luxembourg Stock Exchange, which was signed in December 2022 on the occasion of Prime Minister Pham Minh Chinh’s visit.

The two countries are also working together towards the establishment of bilateral strategic partnership in green finance, aiming for sustainable and inclusive development, and implementing circular economy towards green growth.

Besides, both sides have agreed to expand their collaboration in other fields such as climate change response, environment, culture, and education and training.

At the same time, Vietnam and Luxembourg have maintained meetings and contacts at multilateral forums such as ASEM and within the framework of ASEAN-EU relations and the United Nations. Both countries are members of the UN Human Rights Council.

Following the success of PM Chinh’s visit last year, the official visit by PM Xavier Bettel is expected to provide a chance for both sides to reaffirm the shared determination to bring their ties to a new height.