Free trade area agreement with Vietnam being drafted

Ahead of his visit to Vietnam Russian Prime Minister Dmitry Medvedev gave an interview to the local media. Answering journalists' questions, the head of the Russian government disclosed details of cooperation between the two countries in the development of the Vietnamese shelf, in science and high technologies, and stated the need to search for new promising forms of cooperation.
Mr. Medvedev, thanks for agreeing to be interviewed. Russia has regularly said it could act as a link between the East and the West. There is huge potential in this concept. Vietnam wants to sign a free trade area agreement with the members of the Eurasian Economic Union. What tactical moves are you planning to strengthen Russia’s role in the Asia-Pacific region? What can ASEAN do in this respect?
It’s true that we have said more than once that we are willing to cooperate with the Asia-Pacific and ASEAN countries, including Vietnam, and we have also recently taken steps to this end. To begin with, we regularly visit the regional countries, meaning Russian officials and business people, not to mention tourists. We maintain regular contact with our partners in Vietnam. I’ve recently been to Vietnam, in 2012, and we are now preparing for a very important visit.
In recent years, we have largely reoriented our policies towards active cooperation with the Asia-Pacific countries. But reorientation alone is not enough. It must be backed with practical effort, such as agreements, participation in various events and ASEAN summits, relations between regional countries and our new integration alliance – the Eurasian Economic Union, which includes the drafting of a free trade area agreement with Vietnam, and other practical actions. I’m talking about an entire range of possibilities and actions, from contacts at the top level summit to lower-level ties between people, including business people.
We have many ideas on strengthening relations with our strategic partner, Vietnam. One of them is a free trade area agreement. It will likely be the first such agreement to be signed between the Eurasian Economic Union and an individual country. This would give Vietnam access to a huge market, which includes not only Russia but also its partners, who together have over 40 million people.
What’s the promise of this agreement? It opens new cooperation vistas. I have just discussed the issue with the Economic Development Minister, and he told me that our talks with Vietnam have entered the final stage. We’ve moved forward on many issues and intend to conclude these talks in the near future.
However, we still need to discuss a number of important issues, because the planned agreement would not only open the Vietnamese market to Russian commodities, but would also give our Vietnamese partners access to the Russian market. This is important, but we want more, because we are trading with Vietnam as it is, and our mutual trade and cooperation have reached a high point. What we want is to create conditions for mutual investment. Russia is ready for this. Therefore, we need to work some more on the investment aspect of the agreement, including industrial processing, to enable our companies to succeed in Vietnam’s economic conditions.
There are also issues related to services. I’m not going to provide details now, but I can assure you that this document is almost ready, and if we invest a little more effort – I’m going to talk about this with my partners and colleagues in Vietnam – we’ll be able to finish these talks quite soon.
In short, I hope that the upcoming talks and my visit to friendly Vietnam will yield the desired results.
How has Russian-Vietnamese cooperation been progressing in offshore development on Vietnam’s continental shelf?
It has been progressing very well. We have a good history of relations in offshore development. And we have our flagship company, Vietsovpetro, which has been in business since the Soviet Union signed those agreements. A lot has been done during these years: we have produced hundreds of millions of tons of oil and billions of cubic meters of associated gas. These are large, world-scale amounts.
This illustrates our mutually beneficial cooperation. It is for this reason that Russia’s Zarubezhneft and Vietnam’s PetroVietnam have come to terms on continuing this cooperation until 2030. The prospects look good.
But this doesn’t mean that we should be satisfied with what has already been achieved. This is why both Zarubezhneft and other major public and public-private Russian companies, such as Rosneft and Gazprom, have partners of their own in Vietnam and each has been negotiating cooperation agreements.
Rosneft has projects for a set of offshore blocks that can be offered for development. Talks are ongoing and I hope they’ll have a positive outcome. At the same time, Gazprom has been engaged in negotiations since 2009. The degree of maturity on that contract is much higher. Hopefully the Gazprom-Vietnam project will be up and running at full capacity by 2016. We think a lot of this partnership and believe it’s beneficial and profitable for both Vietnam and Russia. We intend to continue this cooperation. We have a number of Russian projects that we have invited our Vietnamese friends to join in. To be clear, we invite foreign partners to take part in exploration and production in the Russian Federation only rarely. The system is working smoothly as it is. This option has been devised especially for our Vietnamese partners.
And the last thing: considering that we have been working together for a long time, it is essential to look for new, promising forms of cooperation. I’m referring to refining (rather than extraction alone) and the use of various incentives to encourage cooperation both on Vietnam’s continental shelf and in the Russian Federation. We should use various incentivising mechanisms, including taxes, because the reserves have been depleted where we have been working and it’s necessary either to drill deeper wells or to look for new fields, which, naturally, calls for additional investment.
Russia is a leader in the area of research and technology. What role will the knowledge-based economy play in the regional and global economies of the future? And what prospects are there for Russian-Vietnamese cooperation in research and high technology?
Thanks for assessing Russia as a leading country. It’s always nice to hear this from our partners and friends. Yes, we pay a lot of attention to this, and we believe that the future belongs to a knowledge-based economy, or more nicely put as the new economy, based on the use of science and high technology. This is why Russia is doing its best not to cut investment in research programs, technology parks, and research clusters, even in the current complicated economic situation. We will continue along this path, and I’d like to emphasise this, despite the whole list of unfavourable economic factors. Why are we doing this? The world rightly believes that the future of any economy largely depends on the technology it is using, its equipment and machinery, and its technological solutions. This is a global trend, and the direction that the world is headed. I know that our Vietnamese friends share this view. I learned this during my visit to various facilities in Vietnam, including a university, where I saw huge interest in research and scientific cooperation. This is good considering our cooperation in education and research goes back decades.
I’ll never forget a meeting with some Vietnamese comrades who had studied in the Soviet Union or Russia. It was a memorable day. What was important is not just our friendship, but also the fact that our Vietnamese friends had gained their knowledge and experience in the Soviet Union or Russia, and are now applying them in ways beneficial to Vietnam and our friendly relations. Not surprisingly, we are ready for any form of cooperation with our Vietnamese friends.
Take the Ninh Thuan 1 Nuclear Power Plant, which is a good example of the use of high technology. Russia is a world leader in the nuclear industry and nuclear power. But operating such facilities takes more than money and building such a complicated facility is only the beginning, because you need qualified personnel to operate it safely and securely. This is why we are training Vietnamese personnel in Russia, including at the MEPhI National Research Nuclear University, who will work either at this nuclear power plant or contribute to the development of high technologies, including nuclear technology, in Vietnam. I see this as a shining example of our cooperation, but not the only one. I hope to see many more examples like this in the future.
You have visited Vietnam several times and you just said that you were very impressed by the meeting with the graduates of Soviet and Russian universities. Can you share your Vietnam-related impressions on the occasion of your upcoming visit to that country?
With pleasure! It’s always good to visit your country because I can see it developing and changing. I first went to Vietnam as a member of an official delegation some 12 or 13 years ago and it was quite clear at that time that the Vietnamese economy was developing at a rapid pace. I was interested. I have been following your successes closely and I’d like to say that they are most impressive. Very impressive! You can see progress in industry and agriculture, lifestyles and living standards. And the latter is possibly the most important thing because our countries – I mean Vietnam and the Soviet Union – were not the richest countries in the world 20 or 30 years ago. Today these successes are in evidence, and we are very happy about that.
But there is another thing. Alongside the modern, fast developing and energetic Vietnam that is emerging as one of the leaders in the Asia-Pacific region, there is an ancient Vietnam that has a special history and culture of its own and I won’t hide the fact that these are of great interest to us as well. I’m always interested in seeing monuments of culture and history and typical Vietnamese scenes. If I have a chance I like to photograph them. I hope I’ll have this opportunity during my upcoming visit.
And lastly, there is one more thing I cannot fail to mention. We really have very cordial relations. We don’t simply say this as a matter of course, it’s a reality. This is a historical fact. I shared my impressions of how I became acquainted with our Vietnamese comrades who worked in Leningrad, including at the institute where my father was a teacher. Practically nothing has changed since then. Each meeting of this kind is a meeting of very good friends that generates a lot of emotions. I’m sure it will be this way now as well.
There are important holidays ahead. Vietnam will celebrate 40 years of the liberation of South Vietnam and the country’s reunification on 30 April, and Russia will mark the 70th anniversary of the great Victory in early May. Why are these dates so important? What do you hope for people on these dates?
They are hugely important. In your case, Vietnam’s reunification was the first step towards its subsequent development. It is a highly valued national holiday, and we took this into account when preparing the agenda of our visit to Vietnam. We’ll go to southern Vietnam for the first time, which will be an interesting and important trip. I see this as a symbolic event because we remember how it was. Even I remember this. It was a long time ago, yet I remember the Vietnamese people’s heroic struggle, our assistance and support in their struggle, and the ultimate result. Please accept my sincere congratulations on the upcoming holiday.
As for Victory Day, it is an international holiday. It was a common victory over a global evil, Nazism, which was brought about by many countries and nations. We are preparing for the 70th anniversary of Victory very thoroughly. I’d like to stress that this is not only a Russian but an international holiday because it was a world war, when death reaped a terrible harvest, killing millions. We must do our best to prevent a repetition of those terrible events, which is why such celebrations are very important for the upbringing of future generations. We are happy to see our Vietnamese friends at such events. Let’s celebrate them together.
Mr. Prime Minister, until recently Russia was among the top ten sources of tourists in Vietnam and the leader by the growth rate of tourists. But the number of Russian tourists plummeted by 40 percent in 2015 for obvious reasons. How can we reverse this trend?
Believe me, the situation will improve. The current decline is due to economic difficulties and problems with the value of the rouble. There are objective reasons for the decline of our people’s purchasing power, but let’s consider the tourist issue from a different angle. In 2014, the number of Russian tourists increased by over 30 percent. Even though it has decreased this year, it wasn’t a plunge but a return to the 2013 level. There are many Russian tourists in Vietnam, even if not as many as from other countries, but still, the number is about 400,000 a year. It’s clear that the economic component is very important here (I hope this problem will be resolved soon along with economic stabilisation). As for tourist attractions, Russians love to spend their vacations in Vietnam. Vietnam is an interesting country with an ancient culture and good holiday destinations, so I have no doubts about this. But I feel that this should be a two-way process. Note that approximately 75,000 to 80,000 Vietnamese tourists travel to Russia every year – I’m not talking about those who come to Russia in search of jobs: there are many more of those. I’m only talking about tourists. I think we should invest more effort in this area, considering that Vietnam has a large population. Russia is a large country with many attractions, and we’re always glad to welcome tourists. I think we have a solid opportunity to develop the tourist exchange between our countries.
Is it possible, or are there any practical plans, that Russia and Vietnam will use national currencies for mutual settlements?
Certainly. First, there are no obstacles to making settlements in rubles and dongs. None from the legal point of view. But we need an economic reason for this. We agreed on the possibility of using our national currencies for mutual settlements nearly ten years ago and even created a Russian-Vietnamese bank. But using national currencies is only suitable when the volume of mutual trade is high and you need to accumulate resources in rubles or dongs. So far, these settlements only account for about 1.5 percent of trade, with all the other settlements made in US dollars, which is not always advantageous because the dollar is a foreign currency in Russia and Vietnam, and we need to buy dollars for subsequent settlements, making us heavily dependent on the exchange rate. In this sense, it could be more profitable to make mutual settlements in our national currencies, namely in trade and investment. We are currently promoting this in mutual settlements with other partner countries. I think there is a good opportunity to do this also in relations with Vietnam. I will definitely raise this issue at the upcoming talks with my Vietnamese partners.
In conclusion, I’d like to say that we hope for good results from this visit. We will spend a lot of time there and visit many places. I view this as both an indication of our special relations, and an investment in their continued development and strengthening.
Source: Itar-Tass