With the largest area in Africa and a large population, Algeria has been a potential market for Vietnamese goods. However, to be able to really promote exports to this market, Vietnamese enterprises need to overcome difficulties of remote geographical distance, high transportation costs and language barriers.
Modest import and export
According to Mr. Hoang Minh Chien, Deputy Director of the Department of Trade Promotion (Ministry of Industry and Trade), in recent years, Algeria has advocated diversifying the economy, boosting exports, and limiting imports. However, this market still has demand for imports of Vietnam's strong products such as coffee, pepper, cashew nuts, and freshwater aquatic products, as these are products that Algeria cannot produce.
Leaders of the Trade Promotion Agency acknowledged that despite being a potential market, bilateral trade is still quite modest. According to statistics from the Ministry of Industry and Trade, in 2021, Vietnam's export value to this market will only reach US$151.1 million. Export value to Algeria in the first five months of 2022 reached USD 65.2 million, up 17.6% over the same period in 2021.
In the structure of exports to Algeria, coffee accounts for 65% of the total export value. Algeria is considered a market with plenty of potential for Vietnamese coffee in the future; followed by rice. Every year, Algeria imports about 100,000 tons of rice, mainly 5% broken and parboiled rice, serving Asians living and working in Algeria. Rice is a subsidized commodity, so the import tax is quite low compared to the common ground, only 16%.
"Seafood is also in the ‘top’ of the top 5 export items with the largest turnover of Vietnam to Algeria. In addition, spices such as pepper, cinnamon, and cashew nuts are also agricultural products in high demand in Algeria,” said Mr. Hoang Minh Chien.
Regarding trade issues and opportunities to promote business cooperation between Vietnamese and Algerian enterprises, Mr. Hoang Duc Nhuan, Commercial Counselor, Vietnam Trade Office in Algeria also said that bilateral exchanges are still modest and do not reflect the true potential. During the 2016-2021 period, Vietnam's exports to Algeria decreased significantly due to the Covid-19 pandemic. Vietnam mainly exports coffee, cashew, aluminum, iron, chemicals, seafood, cinnamon, clothing, and pepper to Algeria. In the opposite direction, goods imported from this market mainly include legs of chicken, medicine, animal feed, vegetables, raw materials for footwear production, and wood and wood products.
Study more about tax policy
Focusing on the prospect of promoting Vietnam-Algeria trade in the future, Mr. Hoang Duc Nhuan said Vietnamese enterprises are increasingly interested in Algeria's economic and trade potential and the number of transactions is increasing. Vietnamese enterprises have thought about investing in Algeria.
The structure of export goods between the two countries is not competitive but complementary. Vietnam has nearly 100 million people, and Algeria has 44 million people, both have strategic economic positions and are "gateways" to enter the region, so the potential for cooperation is great.
“The two countries have great potential for cooperation in the fields of construction and processing of agricultural and aquatic products, consumer goods and tourism. Potential commodities for trade are agricultural products, packaging, coffee, pepper, tea, machinery and equipment, crude oil, gas, and minerals,” Mr. Hoang Duc Nhuan said .
Besides the potential, according to the Commercial Counselor, Vietnam Trade Office in Algeria, promoting bilateral economic development cooperation also faces certain difficulties. The geographical distance between the two countries is quite far, more than 10,000 km, meaning transportation costs are high. In addition, customs duties in Algeria are high, totaling up to 83%. Algerian investors are less interested in the Vietnamese market due to a lack of information. Enterprises of the two countries mainly use the export method through intermediary enterprises.
“The language barrier is also a significant difficulty. Algerian enterprises mainly use French while Vietnamese enterprises use English," said Mr. Hoang Duc Nhuan.
He proposed to help businesses of the two countries find reliable partners, and overcome obstacles. In the future, the Governments of the two countries need to improve the legal framework, establish the Vietnam-Algeria Business Council, consolidate and enhance the role of ministries and branches; increase public awareness of cooperation potential through the organization of forums and seminars; Trade promotion activities.
From a business perspective, Mr. Hoang Duc Nhuan recommended that businesses strengthen contact with diplomatic agencies, ministries, sectors and trade promotion organizations to find business opportunities; at the same time actively participate in trade promotion activities such as fairs and exhibitions, prioritizing contact and direct trade with Algerian enterprises; interested in customs and rules of commercial transactions, establishing affiliate partnerships, and investing.
“When exporting goods to the Algerian market, businesses need to learn carefully about the market as well as the policies on tariffs, labor laws, payment methods, disputes, non-payment and withdrawal of debt,”, Mr. Hoang Minh Chien said.
Source: VCN
Keywords: Vietnamese goods, export, Algeria, geographical distance, high transportation costs, language barriers, tax policy
