Context

Today, international economic cooperation between countries faces significant challenges. The trade volume between Russia and Vietnam, as well as between Russia and ASEAN, constitutes less than 1% of bilateral trade. The sanctions imposed on Russia by Western nations continue to greatly affect trade with BRICS and ASEAN. Russia is also experiencing geopolitical tensions due to its military conflict with Ukraine, which hampers its collaborative resources with other countries and presents numerous unfavorable factors that cannot be resolved quickly. The exclusion of Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has created significant difficulties for businesses exporting goods to Russia, limiting payment options from Russian clients. Additionally, Western sanctions have impacted logistics operations, making it difficult to transport goods into Russia.

Impact of Sanctions on the Russian Economy

Firstly, discussions reveal the economic impact of sanctions on Russia, including a severe decline in revenue from oil and gas exports, alongside labor shortages and inflation. The Russian ruble has depreciated against the USD and EUR, resulting in decreased purchasing power and increased import costs. To date, Russia has implemented various policies to mitigate the risks from US and allied sanctions. In the economic sphere, Russia has adopted measures to lessen the impact of sanctions, such as strict capital controls, increasing interest rates, implementing new taxes, and transitioning to the currencies of friendly nations. Western sanctions on Russia are expected to remain effective and worsen over time.

Declining Trade Volume Between Russia – Vietnam and Russia – ASEAN

Statistics show that the value of trade between Vietnam and Russia reached USD 7.1 billion in 2021, but dropped to approximately USD 3.6 billion in 2022. In 2023, the total bilateral trade volume between Vietnam and the Russian Federation remained at USD 3.6 billion, a mere 2.3% increase compared to 2022. This is a very low growth rate since the signing of the Free Trade Agreement (FTA) between Vietnam and the Eurasian Economic Union. However, in Q1 of 2024, trade between the two countries rebounded strongly, reaching USD 1.1 billion, a 52% increase compared to the same period in 2023.

Vietnam primarily exports to Russia items such as phones and components, computers, electronics, agricultural products, seafood, textiles, and leather goods. Conversely, Vietnam imports from Russia steel, coal, fertilizers, petroleum products, chemicals, plastics, wood and wood products, wheat, and meat.

Significant Potential in Vietnam – Russia Trade

The Free Trade Agreement between the Eurasian Economic Union (EAEU) and Vietnam has increased foreign direct investment (FDI) flows between Russia and Vietnam. Various investment indicators suggest that the investment relationship between Russia and Vietnam has not yet met expectations, despite an increase from 2016 to 2018 after the FTA was signed. These indicators show that while investment cooperation has potential, it remains weak due to issues such as COVID-19 and Western economic sanctions.

Positive Trends in Russia - ASEAN Relations

According to AseanStats, the total trade volume between the Russian Federation and ASEAN reached USD 15.9 billion in 2023, a 3.5% increase compared to 2022. ASEAN tourism has also seen a significant recovery, attracting 101.9 million visitors in 2023, an increase of 136.2% compared to 2022. In 2022, ASEAN welcomed 43.1 million tourists, including 620,000 Russian visitors. It is estimated that around 2 million Russians will travel to ASEAN countries in 2023, with popular destinations being Thailand, Indonesia, and Vietnam.

Although there has been notable growth recently, economic and trade cooperation between ASEAN countries and the Russian Federation still has considerable growth potential. The 30th ASEAN Economic Ministers' Retreat was held from March 8-9, 2024, in Laos. At this meeting, ministers from member countries agreed on the theme "ASEAN: Promoting Connectivity and Resilience," focusing on three main orientations: recovering and connecting economies; creating an inclusive and sustainable future; and transitioning towards a digital future. The meeting also identified annual priorities for 2024 in the economic channel, focusing on areas such as goods trade, trade facilitation, customs, services trade, movement of people, investment, finance, competition, intellectual property, e-commerce, and micro, small, and medium enterprises. Implementing these solutions alongside Russia's eastward policy will undoubtedly enhance ASEAN-Russia cooperation.

Recommendations and Proposals

• Enhance trade and investment promotion
• Review trade and investment barriers between the two countries
• Establish a Vietnam-Russia artificial intelligence center
• Strengthen Vietnam-Russia academic exchanges.