New Zealand’s Jacinda Ardern in Vietnam to Talk Stronger Trade Ties

“We’ve chosen Vietnam for good reason. There are over $2 billion worth of trade opportunities already for New Zealand in Vietnam and it’s an area of considerable opportunity.” – Jacinda Ardern, November 14, 2022

Prime Minister of New Zealand Jacinda Ardern is in Vietnam this week leading a trade delegation to further strengthen ties with the emerging Southeast Asian market.

Ardern will be travelling with Minister for Trade and Export Growth Damien O’Connor and a delegation of Kiwi business leaders.

Trade is expected to feature prominently on the agenda with Vietnam and New Zealand targeting US$2 billion in two-way trade each year by 2024.

This comes on the back of a years long investment in the NZ-VN relationship from both parties, a relationship that has proffered vast benefits for both countries.

New Zealand FDI projects in Vietnam

In 2021, New Zealand had 42 FDI projects in Vietnam with a total registered investment of around US$209.5 million. This was up from 32 projects in 2019.

This investment was in a broad range of sectors, including real estate, education, manufacturing and processing, and could be set to expand even further.

Among Ardern’s trade delegation are representatives from at least 18 businesses in industries covering consulting, aviation, and manufacturing.

These include Asia NZ Foundation, Aware Group, Berryco, Boring Oat Milk, Callaghan Innovation, Creative HQ, ecostore, Gentrack Limited, Kiwigarden, Little Beauties, Miraka, New Zealand International Commercial Pilot Academy Limited (NZICPA), Plant and Food Research, SIEBA, T&G Global, TMC Ltd, University of Auckland, and Zespri.

Trade relations between Vietnam and New Zealand

Trade between New Zealand and Vietnam is governed by three key regional agreements:

• The Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)
• ASEAN – Australia – New Zealand (AANZFTA)
• Regional Comprehensive Economic Partnership (RCEP)
• Furthermore, Vietnam and New Zealand have both signed up to the Indo-Pacific Economic Framework (IPEF). Details of where this agreement may lead are still unclear but generally it shows a like-minded approach to international trade.

New Zealand’s exports to Vietnam

By year end June 2022, New Zealand’s exports to Vietnam had reached NZ$1.03 billion (US$624 million) up from ÚS$546 million in 2020.

Dairy

With its cool climate and fresh air, New Zealand is known for producing some of the world’s best dairy products.

Vietnam on the other hand has a burgeoning middle class, with a thirst for milk, but an industry only capable of producing between 40-50 percent of the country’s demand.

These two factors combined have led to a huge boost for New Zealand’s dairy exports. In 2021 dairy, eggs, honey, and edible products accounted for over half of New Zealand’s exports to Vietnam (US$485 million).

Education

New Zealand boasts of a world class education system and welcomes international students from around the world.

In 2019, 5,000 of those international students were Vietnamese nationals. This number, however, dropped to 2,000 during COVID, a reality Ardern hopes to change with her visit to Vietnam: “We are looking to reignite and grow that market again post-Covid,” she said.

Forestry products

New Zealand’s bountiful natural resources have also been at the heart of trade between New Zealand and Vietnam.

In 2021, wood exports from New Zealand to Vietnam totalled just over US$107 million, or a little over 10 percent of NZ’s total exports to the Southeast Asian nation.

Vietnam’s exports to New Zealand
By year end June 2022, Vietnam’s exports to New Zealand totalled NZ$1.36 billion (US$824 million), the bulk of which was electronics and electrical equipment, but this figure also incorporates footwear and travel services too.

Electronic machinery

Vietnam’s relatively low-cost labor in contrast to New Zealand has formed the backbone of its exports to the much smaller Pacific nation.

As an electronics goods manufacturing powerhouse, Vietnam exported to New Zealand over US$230 million worth of electronics and electrical equipment in 2020.

Footwear

Footwear is Vietnam’s third largest export sector. Vietnam exports around 1 billion pairs of shoes every year, including to New Zealand which received around US$40 million worth of Vietnamese shoes in 2020.

Travel services

Vietnam’s unique culture and recent push toward a more open tourism industry has seen the sector boom (with the exception of the COVID-19 period).

Vietnam has proven an attractive destination for travel-loving Kiwis with an estimated 28,000 New Zealanders visiting Vietnam in 2019.

Opportunities for New Zealand in Vietnam

New Zealand’s Ministry of Foreign Affairs and Trade (MFAT) suggests food, commodities, and technology are all key growth areas for New Zealand businesses in Vietnam.

MFAT points out that Vietnamese supermarket chains are developing rapidly, and this creates “valuable product-to-market mechanisms for exporters” that can help to bring New Zealand goods to consumers faster.

This could be particularly beneficial for Kiwi exporters of perishable goods.

Furthermore, MFAT says commodities like timber and aluminium can play a key role in Vietnam’s development. These resources are in high demand in the manufacturing industry. As Vietnam’s manufacturing sector continues to grow, the demand for these imports should too.

MFAT also highlights technology as a sector that could provide opportunities for New Zealand.

“Technology and innovation are other areas of opportunity and growth potential, particularly in fields such as high-tech and low-emissions agriculture, sustainable food production, water and natural resource management, digital transformation, marine science and technology, and innovation and technology to address environmental degradation and the threat of climate change,” it says.

The New Zealand prime minister will be in Vietnam until November 17.

Source: Vietnam Briefing