Vietnam, Hungary increase direct trade promotion

Hungary was one of the first countries to establish diplomatic relations with Vietnam. Trade between the two countries has grown continuously in recent years. Vietnam is a traditional trading partner of Hungary in Southeast Asia. In 2020, thanks to the EVFTA, bilateral trade for the first time in history reached approximately US$1.3 billion, a 73.88 percent increase compared with 2019. In the first eight months of 2023, however, trade between the two countries reached US$631.75 million, down 21.5 percent (exports reached US$277.13 million, down 29.8 percent; imports reached US$354.62 million, down 13.5 percent).

In the first eight months of 2023, except computers, electronic products and components, phones and components, the export of other Vietnamese products to Hungary increased. By August 20, 2023, Hungary had had 22 foreign direct investment (FDI) projects in Vietnam with the total registered capital of US$72.28 million, ranking 51st among 143 countries and territories investing in Vietnam.

Trade between Vietnam and Hungary has grown positively thanks to the EVFTA - photo: VNA

According to the Vietnamese trade office in Hungary, despite low export value, Vietnamese farm products such as cashew, pepper and coffee account for over 10 percent of the total value of these products imported by Hungary. “These products have carved out their niches in the Hungarian market, promising new export opportunities,” the Vietnamese trade office in Hungary said.

However, according to the office, the EU is Hungary’s largest trading partner, in terms of both import and export, accounting for more than 75 percent of the country’s total import-export value. The Hungarian market is dominated by multinational firms, large groups, international distributors and retailers, while most of Hungarian companies are small and medium in size. Therefore, Hungarian companies purchase Vietnamese goods from major European distributors for sale in Hungary. Due to their small size and weak financial capacity, most Hungarian companies cannot afford direct imports from Vietnam.

Geographical inconvenience is a major hindrance to Vietnam’s exports to Hungary. Because Hungary does not have seaports, Vietnam has to export goods to this market via some other European countries such as Germany, the Netherlands and Italy. Therefore, Hungarian companies have to pay high import costs. Moreover, Hungary applies a very high value added tax (VAT) rate (27 percent); therefore, many Hungarian importers get customs clearance procedures done in EU countries having seaports or those applying lower VAT rates, then distribute imported goods in Hungary.

The Vietnamese trade office in Hungary said that the country does not host major international fairs and exhibitions; therefore, to boost exports to this market, Vietnam should send business delegations to Hungary for market survey and direct meetings with local partners to seek business cooperation and investment opportunities. Participation in business workshops will also help domestic companies promote Vietnamese goods in Hungary. The office will take the initiative in seeking local importers and distributors and introduce them to Vietnamese exporters, and vice versa.