Vietnam, UAE expected to upgrade relations, sign comprehensive economic partnership agreement

UAE is one of Vietnam's most important partners in the Middle East and Africa - Illustrative photo

Economic cooperation stands out in Vietnam-UAE relations

The United Arab Emirates (UAE) is the second-largest economy among the six Gulf Cooperation Council (GCC) countries, a leading financial-trade center in the Middle East, and the fourth-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC). The UAE’s key industry is oil extraction and processing, with an output of over 3 million barrels per day. Other significant industries include livestock and date cultivation.

In recent years, the UAE has successfully implemented a policy to reduce its dependence on oil (currently, oil accounts for 30% of the country’s gross domestic product or GDP, and the UAE set a goal to reduce the rate to 20% by 2030). The country has diversified its economy, focusing on industrial development, high technology, digital transformation, green transition, innovation, tourism, finance, and trade.

Since Vietnam and the UAE established their diplomatic relations on August 1, 1993, the bilateral cooperation has progressed with concrete results. Politically, the two countries regularly exchanged delegations at various levels. The Intergovernmental Committee between the two countries was established in February 2009, and so far, five meetings have been held. Additionally, the Political Consultation Mechanism between the two Ministries of Foreign Affairs was established in 2009. Both sides actively coordinated and supported each other in international forums, such as the United Nations.

Vietnam-UAE relations have been strengthened by high-level visits. Highlights include the visit by Vietnamese Minister of Industry and Trade Nguyen Hong Dien to the UAE in April 2023; Vice President Vo Thi Anh Xuan’s visit to the UAE in May 2023; the official visit to Vietnam by UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan in June 2023; Prime Minister Pham Minh Chinh’s participation in the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) along with bilateral engagements in the UAE in December 2023; and the visit of UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi to Vietnam in August 2024.

These visits have deepened bilateral relations and opened up numerous opportunities for cooperation in various fields. Notably, during these visits, senior leaders of both countries affirmed that economic cooperation is a vital pillar and a highlight in the overall Vietnam-UAE cooperation.

“Vietnam always considers the UAE as one of its most important partners in the Middle East and Africa. Vietnam highly values the UAE’s role and position as a leading economic, trade, finance, tourism, and logistics center in the Middle East and globally,” said Vietnamese Minister of Industry and Trade Nguyen Hong Dien, noting that since early 2024, both sides have recorded fruitful results in trade and investment cooperation.

In 2023, the UAE was Vietnam’s largest export market and the second-largest trading partner (after Kuwait) in West Asia. From 2019 to 2023, the total trade value between the two countries averaged about US$4.8 billion per year. Vietnam consistently enjoys a large trade surplus with the UAE (over US$3 billion per year).

In the first three quarters of 2024, the bilateral trade totaled nearly US$5 billion, up 38% year-on-year, including Vietnam’s exports worth US$4.3 billion, up 7.5%, and the country’s imports worth over US$650 million, up 10%.

As of the 3rd quarter of 2024, the total bilateral trade between Vietnam - UAE reached nearly US$5 billion - Illustrative photo

Major Vietnamese exports to the UAE include mobile phones and components; machinery, equipment, tools, and other spare parts; computers, electronic products and components; footwear, textiles; cashews, pepper; vehicles and parts; fruits and vegetables; and seafood. Vietnam imports from the UAE petroleum, liquefied gas, plastic materials, other base metals, livestock feed and raw materials, among others.

As of June 2024, the UAE had 41 foreign direct investment (FDI) projects in Vietnam, with total registered capital of US$71.6 million. Vietnam can attract more investment from the UAE as this country holds some of the largest FDI funds globally. Notably, the Abu Dhabi Investment Authority manages US$853 billion, making it the fourth-largest investment fund in the world; Dubai Investment Corporation oversees US$320.8 billion, ranking 12th globally; and Mubadala Investment Company manages US$276 billion, placing it 13th worldwide.

CEPA, foundation for partnership elevation

According to the Dubai Chambers, there is significant potential for economic and trade cooperation between Vietnam and the UAE, as the two economies have complementary strengths. The two countries began negotiations on the Vietnam-UAE Comprehensive Economic Partnership Agreement (CEPA) in June 2023, and they expect to finalize and sign the CEPA during Prime Minister Pham Minh Chinh’s ongoing visit to the UAE.

In recent discussions, the leaders of both countries agreed to expedite negotiations for the signing of the CEPA. The agreement is expected to facilitate the direct export of Vietnamese goods to the UAE and to enable Vietnamese products to penetrate Middle Eastern markets through the UAE.

Vietnamese Minister of Industry and Trade Nguyen Hong Dien held talks with UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi on the final contents of the Comprehensive Economic Partnership Agreement (CEPA) negotiations on July 30, 2024 - photo: Can Dung

On August 26, 2024, Minister Nguyen Hong Dien met with Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi. The two leaders agreed to promote the signing of cooperation documents and agreements to soon complete negotiations and sign the CEPA agreement

Most recently, during the August 26 meeting with UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi, Vietnamese Minister of Industry and Trade Nguyen Hong Dien emphasized the importance of the CEPA in promoting Vietnam-UAE cooperation in trade, industry, energy, and logistics. Minister Dien urged technical teams of the two sides to coordinate to complete negotiations for the agreement to be signed.

Agreeing with Minister Dien's viewpoint, Minister of State Thani bin Ahmed Al Zeyoudi expressed hope that the ministries and sectors of both countries would work together to promote the signing of other cooperation documents and agreements on the occasion of upcoming high-level exchanges between Vietnamese and UAE leaders. These could include Memorandums of Understanding (MoUs) between Chambers of Commerce and Industry, an MoU on establishing a data center, and more.

Vietnamese Ambassador to the UAE Nguyen Thanh Diep noted that the CEPA is the first Free Trade Agreement (FTA) Vietnam has negotiated with an Arab country in the Middle East-Africa region. The CEPA represents a significant milestone in Vietnam-UAE relations, paving the way for a new phase of strategic bilateral cooperation across multiple fields.

The CEPA will serve as a legal foundation, establishing a new platform to further enhance economic cooperation between the two countries by reducing or eliminating tariffs on numerous goods and services. It will facilitate market access, boost FDI flows, and open up new opportunities in key sectors for the business communities of both nations.

It is forecast that the CEPA will contribute significantly to boosting bilateral cooperation in areas such as trade, investment, economics, industry, energy, logistics, agriculture, infrastructure, high technology, digital transformation, green transition, innovation, and labor.

Despite the large cooperation potential between the two countries, the Vietnam Trade Office in the UAE said the UAE is a very competitive market, which is also the biggest challenge for Vietnamese enterprises. In addition, they have to compete directly with enterprises from countries that have signed CEPA with the UAE, such as India, Indonesia, Israel and Turkey.

To further promote the export of Vietnamese goods to the UAE, Vietnamese enterprises need to apply advanced science and technology in production, change management methods, minimize intermediate costs, in order to reduce product prices, and increase the competitiveness of Vietnamese products.

Furthermore, as the UAE is an Islamic country, Vietnamese businesses also need to learn about the culture and consumption demand of Muslims, build a Halal certification system for food, beverage, cosmetics, Islamic fashion products, etc. when exporting to the UAE.

Prime Minister Pham Minh Chinh and his spouse, and a high-ranking delegation of Vietnam are on an official visit to the UAE, Qatar, and attend the 8th Edition of the Future Investment Initiative, and a working trip to Saudi Arabia from October 27 to November 1, 2024. At noon on October 27 (local time, afternoon of the same day Hanoi time), the high-ranking Vietnamese delegation arrived in the capital Abu Dhabi, beginning an official visit to the UAE at the invitation of UAE President Mohamed bin Zayed Al Nahyan.

With the foundation of good relations over the past 30 years, Prime Minister Pham Minh Chinh's official visit to the UAE aims to continue implementing the foreign policy of the 13th National Party Congress, the policy of multilateralization, diversification, proactive and active international integration, with priorities given to diversifications of markets, partners and supply chains, contributing to further consolidating the peaceful and cooperative environment, ensuring maximum attraction of resources for national development.

The visit will contribute to strengthening political trust and creating new breakthrough momentum for Vietnam's cooperation with the UAE in many fields, from economics, trade, investment, to new areas of cooperation such as innovation, science, technology, and energy.