VIFTA: Upcoming opportunities for businesses

Mr. Gal Saf, Counselor, Head of the Economic and Trade Office, Israeli Embassy in Vietnam

How do you assess the current situation of economic, trade and investment cooperation between the two countries? What are the strengths, weaknesses and challenges that face both sides?

I’m grateful for the opportunity to discuss the economic relationship between Vietnam and Israel today. Over the past decade, this relationship has been stable and has shown consistent growth, with bilateral trade reaching nearly US$1.5 billion in 2022. Despite challenges posed by the COVID-19 pandemic, we have observed that the economic relationship between our two countries, as well as the overall bilateral relationship, are only getting stronger.

Israel is renowned for its innovations and technology, while Vietnam has successfully transitioned from agriculture to industry and is emerging as a center for advanced innovations and technologies. Both countries complement each other rather than compete, with mutual advantages and unique economic opportunities in each market. Companies from both sides are increasingly interested in tapping into the value of each other's market and creating synergies for mutual benefit in sectors such as agricultural technology, cyber security, water management, energy, medical devices, and more. The advantages of both markets contribute to the growth and success of companies from both countries, and there is a growing interest in learning more and understanding the potential of each other's market. As we commemorate the 30th anniversary of diplomatic relations between Israel and Vietnam, we are optimistic about the continued growth and collaboration in our economic relationship.

Vietnam exported more than US$3.92 billion worth of textiles and garments to Israel in the first quarter of 2023

Could you share your contributions to the 12 rounds of VIFTA negotiations within seven years? What do you expect after the conclusion of negotiations?

As part of the Israeli trade mission to Vietnam, our organization, under the leadership of the Israeli Minister of Economy and Industry, has been actively engaged in facilitating and focusing the negotiations between our two countries. Although I have not been personally present during the past seven years of negotiations, our dedicated commercial team has received numerous requests from Vietnamese and Israeli companies on various business issues. We have been committed to providing support and assistance, leveraging our expertise in logistics and other relevant matters, to ensure the success of the negotiations and further strengthen the economic relationship between Israel and Vietnam.

We are proud to witness the progress made in the VIFTA and other business terms between our countries. The conclusion of the VIFTA negotiations comes at a perfect timing as we celebrate the 30th anniversary of diplomatic relations between Israel and Vietnam. This is a significant accomplishment that will not only boost bilateral trade, but also strengthen our economic relationship and foster collaboration in various areas such as knowledge sharing and operational bases for companies in both regions. I am excited to witness the next steps in our warm and growing partnership.

What opportunities do you think the VIFTA will present businesses of both sides after it is signed? What will be the major business domains for deeper and further cooperation between the two countries?

The signing of the VIFTA is expected to open up significant opportunities for businesses in both countries, enhancing economic development and cooperation. Israeli companies will find it easier to establish factories or collaborate with local factories in Vietnam, while Vietnamese companies can establish R&D centers or collaborate with R&D organizations in Israel. With streamlined investment processes and increased market access, Vietnam's population of 101 million people can serve as a gateway to the larger ASEAN market for Israeli businesses.

The specific sectors for deeper cooperation between Israel and Vietnam include cellphones, textiles, agriculture, chemicals, equipment, machinery, software, services, and medical devices. While it is difficult to determine which sector will benefit the most, as it will depend on market dynamics, the overall impact of VIFTA is expected to foster increased bilateral trade and investment. With easier access to other markets that have FTAs with Vietnam, Israeli companies are expected to enhance their competitiveness.

There are opportunities for Vietnamese farm produce to penetrate the Israeli market

What advices and messages do you have for businesses in both countries to promote economic cooperation? Could you share the expected timing for signing the VIFTA?

Both Israel and Vietnam should be persistent and patient to promote economic cooperation. Both markets have their unique business cultures, and it takes time to understand and adapt to them. It's important to realize that each country's market is different and cannot be compared to other markets, and local partners can add significant value at the beginning of the business journey. Being career-focused and persistent while being patient with the learning process can lead to great success in the long run. Taking the time to understand the local market and utilizing local partners as much as possible in the initial stages can be a valuable strategy for businesses in both countries.

We are working closely with the Ministry of Economy and Industry of Israel and the Ministry of Industry and Trade of Vietnam. It's challenging to provide an exact timeline for the signing of the VIFTA. However, our general expectation is that the agreement will be signed in 2023 and come into force in 2024, pending the necessary steps and approvals. We are committed to working diligently towards the successful signing and implementation of the FTA between our two countries.

Thank you very much!