Ample room for Vietnam and Peru to boost trade ties

Bilateral trade on the rise

Statistics unveiled by the General Department of Vietnam Customs show, two-way trade between Vietnam and Peru reached US$486 million in 2023, including US$439 million worth of Vietnamese exports. The first nine months this year saw bilateral trade hit US$389.69 million, with Vietnamese exports at US$336.99 million. Peru is now Vietnam’s sixth largest trade partner in Latin America.

Footwear is one of Vietnam's major export items to Peru

Vietnam’s main exports to Peru include phones and electronic components, computers and electronic products, footwear, clinker and cement, raw plastics, textiles, and seafood, while Peru’s main exports are fish meal, antimony ore, and minerals.

Despite challenges posed by global economic volatility, Vietnam and Peru still have significant room to increase trade in the coming years, as both are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The Vietnam-Peru Intergovernmental Committee that meets every two years is an effective cooperation mechanism to promote bilateral and multilateral economic relations, leverage the CPTPP, and boost investment projects in both countries.

According to the European-American Markets Department, Peru is considered a dynamic economy with relatively open foreign trade policies in Latin America. It is a member of most international and regional institutions, including the World Trade Organisation, Asia-Pacific Economic Cooperation, the Pacific Alliance, and Southern Common Market Mercosur. It has signed 22 free trade agreements (FTAs) with 58 countries, making it one of the most FTA-engaged countries in the region.

Moreover, Peru’s market is suitable for Vietnamese businesses in terms of market scale and approach. Most of its export-import companies are small and medium-sized enterprises, making Vietnamese products highly competitive and relatively easy to penetrate the market. Peru could also serve as a gateway for Vietnamese goods to enter neighbouring markets like Ecuador, Colombia, Bolivia, and Brazil.

In addition, Peru is developing the Chancay mega-port located north of Lima on the Pacific coast, a highly strategic position for international trade connectivity. The port is expected to reduce transport time to Latin America by 30%, even up to 50%, and save logistics costs by up to 20% compared to traditional routes.

Leveraging advantages

However, geographical distance and language barriers are significant challenges to trade between the two countries. Although bilateral trade is increasing, it remains relatively low and is mostly conducted through intermediaries. Peru is also an open market with numerous FTAs with Vietnamese competitors such as China and Thailand, making it a relatively competitive market.

The Vietnamese Trade Office in Brazil and Peru suggests that to increase exports to Peru, businesses strengthen product promotion at fairs and exhibitions and promote Vietnamese products and culture through Peruvian media channels. Additionally, both sides should focus on developing logistics to enhance Vietnam’s logistics capacity, thus facilitating exports.

At a recent meeting with Eric Anderson, Secretary-General of the Peruvian Ministry of Foreign Affairs, Vietnamese Deputy Minister of Industry and Trade Nguyen Hoang Long affirmed Vietnam’s appreciation for Peru and its status as a key partner in Latin America. He emphasized the importance of the CPTPP coming into effect in Peru at the end of 2021, marking the first FTA between the two countries and creating new momentum for bilateral trade and investment cooperation.

To further strengthen trade cooperation, Long proposed that Peru actively promote exchange activities, explore potential negotiations, and sign cooperation agreements in mutually beneficial areas. He also suggested increasing information dissemination to help businesses in both countries capitalize on CPTPP opportunities and enhance trade promotion to encourage business engagement.

The Deputy Minister also proposed exploring potential cooperation in Peru’s mining, organic agriculture, food processing, and tourism industries, as well as developing green technology, digital economy, and e-commerce industries. Both countries should strengthen coordination and mutual support in international organizations and multilateral forums such as the United Nations, Organization for Economic Cooperation and Development, and Forum for East Asia-Latin America Cooperation, alongside APEC and CPTPP.

To boost exports to Peru, the Ministry of Industry and Trade (MoIT) advises Vietnamese businesses to thoroughly research consumer needs and preferences to align products with market demands. They should also participate proactively in trade promotion events and exhibitions in Peru and to leverage online media channels to promote brands to local consumers.

The MoIT encourages businesses to utilize CPTPP benefits, understand agreement commitments, especially tax incentives and product origin standards, and adhere to quality standards and labeling requirements to avoid delays or rejections at import ports.

Moreover, businesses need to develop a long-term, adaptable export strategy to navigate market fluctuations, including commodity prices and Peru’s political situation. The MoIT will continue to support businesses by connecting with Peruvian government agencies through diplomatic and trade channels to address any export-related issues. Businesses should also proactively report challenges and seek assistance from the MoIT for timely support.