Ample Opportunities for Trade and Investment Cooperation between Vietnam and Australia

Vietnam and Australia established diplomatic relations in 1973. After more than half a century, the two countries have developed a deep and extensive cooperation in various important areas. Since the formation of the Strategic Partnership in 2018, the cooperation has entered a more substantial phase, with significant achievements.

In recent years, the bilateral trade between Australia and Vietnam has grown significantly due to the implementation of several multilateral trade agreements. In 2022, the trade turnover between the two countries reached USD 15.7 billion, a 26.9% increase compared to 2021. According to the General Department of Vietnam Customs, the two-way import and export turnover of products in 2023 reached almost USD 14 billion, a 12% decrease from 2022. Vietnam’s export turnover to Australia was USD 5.2 billion, a 5.3% decrease from the same period in 2022. Vietnam’s import turnover from Australia was USD 8.5 billion, a 15.7% decrease from the same period in 2022. Vietnam’s trade deficit with Australia was USD 3.3 billion, a 28.1% decrease from the same period in 2022.

Australia is Vietnam’s tenth-largest trading partner in 2023, according to the Asia-Africa Market Department under the Vietnamese Ministry of Industry and Trade. Similarly, Vietnam is Australia’s tenth-largest commercial partner.

Australia is an important market for several Vietnamese industries and energy sectors, providing essential raw materials such as coal, which accounted for 45.77% of Vietnam’s total import turnover in this category in 2023, and ores and minerals (44.78%).

In terms of investment, by the end of January 2024, Australia was the 20th largest foreign direct investment (FDI) investor in Vietnam, with 630 projects totaling more than USD 2 billion.

The Head of the Vietnam Trade Office in Australia, Nguyen Phu Hoa, stated that bilateral trade between Vietnam and Australia has recovered and grown significantly in January 2024. The total trade turnover of goods between the two countries in January 2024 was USD 1.25 billion, a 43.4% increase compared to the same period in 2023.

Vietnam exports a variety of products to Australia, including phone devices and components, equipment, electronic components, computers, crude oil, clothing and textiles, footwear, sandals, and seafood. On the other hand, Vietnam primarily imports coal, iron ore, cotton, wheat, metals, vegetables, and fruits from Australia.

Illustrative photo: Australia is an important input material supply market for several of Vietnam’s industries and energy sectors (Source: Chinh Phu Online Newspaper)

In January 2024, Vietnam’s exports to Australia, such as coffee (+483.3%), iron and steel (+386.7%), paper and paper goods (+165.9%), and rice (+84.9%), experienced significant growth.

The governments of both countries have recognized the importance of economic and trade cooperation, as reflected in the Strategic Partnership Action Program for the 2020-2023 period. Based on three multilateral free trade agreements, namely AANZFTA, CPTPP, and RCEP, the Vietnam-Australia Enhanced Economic Engagement Strategy (EEES) was announced in November 2021. This strategy includes specific measures and a clear deadline until 2025. Vietnamese representative agencies in Australia have played an important role in facilitating commercial and trade exchanges between the two countries.

The economies of Vietnam and Australia have great complementarity. Vietnam excels in electronics, machinery, textiles, and footwear, while Australia has abundant resources and high-quality fuel.

“Vietnam’s products, such as seafood, pepper, textiles, and footwear, are diverse and have been recognized for their brands and quality. In recent years, many items have shown significant turnover growth and have high potential to enhance exports to Australia, including confectionery and cereal products (+89%), rice (+19.1%), clinker and cement (+119.7%),” said Hoa.

In 2024, the Vietnam Trade Office in Australia will continue to proactively capture and update market information, as well as implement promotional activities to assist businesses in fully utilizing free trade agreements. The office will also work with Australian partners, particularly the Australian Trade and Investment Commission (Austrade), to build bilateral cooperation mechanisms and contribute to the consolidation and promotion of trade cooperation.

The Trade Office recommends domestic export businesses conduct thorough market research, focus on understanding consumer demands and tastes, and comply with the host country’s rules for their products. It also emphasizes the importance of product packaging, quality control, and attention to customs procedures to ensure timely delivery. In the agricultural sector, the Trade Office suggests strengthening quality control, investing in technology and human resources, and embracing digital change.

Illustrative photo: Vietnam’s coffee exports to Australia grew strongly in January 2024 (Source: VNA).

With the support of the Vietnam Trade Office and other representative agencies, as well as the efforts and initiatives of domestic export enterprises, economic cooperation between Vietnam and Australia will continue to make significant progress in 2024.