Pham Quoc Tru is the Viet Nam Ambassador in Algiers. In that interview, he reviews the trade relations between his country and Algeria, which he says, are below both countries potentialities. Such long-standing friendly countries with very good relations are still unable to develop a sustainable and smooth cooperation.
OGB : Are there any projects on energies between our two countries?
There is an oil project between Algeria and Viet Nam. Algeria being a larger oil producer than Vietnam in the world, this is rather a small project. Initially that represented 20% of our incomes. Currently it is around 4 to 5% of our PIB. We export over 200 billion of products in the world but oil does only amount to 10 billion.
What type of goods do you export and how is the rest shared?
We export a large quantity of clothes and shoes and textile. This represents more than 20 billion dollars per year. We also export agricultural products including aquatic ones.
What could you offer Algeria?
We have often expressed our will to cooperate, especially in the field of aqua culture for which we are ready to do so. However the problem is the
materialisation of such a will hence there is no project as yet. For this to happen there is a need for submitting projects which the Algerian part has not done so far. Algeria is still negotiating its integration to WTO. This has been the case for 10 years and still not achieved. I can confirm that the Algerian part has expressed its interest in sharing experiences with Viet NaM. We have been addressing this in our meetings. We do want
to share our experience with our Algerian friends. The problem is saying it is not enough, it has to be done. We do wish the algerian part to make offers and let us know what are the problems encountered and what could be shared with Viet NaM. Algeria could invite experts from Viet Nam to come or send executives to Viet Nam in order to discuss, work and build together towards realising a project. Up to now nothing has been done.
According to you what are the reasons for this?
There are many reasons. Up to now Algeria has been facing some problems. These are related to industry, oil exploitation, the sale and the oil production which represent a too big share.
The exploitation of oil is easy. This was enough in the years preceding the fall of oil. The oil revenue represents more than 97% of the income in Algeria. Time was taken. In parallel, the industry and production in other areas have not been developed. Oil sales were sufficient. Today, the revenue has drastically dropped and if it goes on in a few years it will dry out.
Algeria has started changing strategies. Efforts have been made to increase domestic production in various fields and the will to open up to investments is expressed but this is not enough.
Prior to my venue I have seen a few Vietnamese investors and I did talk about the potential for investment here. Some firms did express a wish to come and explore the market. We have regularly passed on information on the Algerian market but until now no one asked to come. There are several reasons for this. Many think that the business climate is still not favourable. and other reasons such as the problem related to money transfer. For example some Vietnamese construction workers employed by Algerian enterprises have been paid in Dinars and are facing difficulties in sending money back to their families because of the currency exchange and transfer which is done through European or Gulf countries banks hence costing them too much.
What is the Vietnamese population in Algeria?
There are 3000 Vietnamese labour workers . They are often employed by Chinese companies. Chinese firms have a system which enable them
to employ which is not the case with algerian companies. The Chinese have a know how. They have a complicated system and can solve everything. Vietnamese investors could work in various fields here such as in construction which would put Vietnamese firms in competition with the Chinese ones however hard this might be. Vietnamese are very strong in the
fields of agriculture, aquaculture and electronic industry. We export a great number of mobile phones and Vietnam is also competitive in telecommunication.
Viet Nam is among the 20 biggest groups in the world investing in about ten countries of which six or seven african countries. Vietnam wanted
to penetrate the Algerian market but it was faced with the problem of the licence. I have heard that a group had approached the Algerian managers for a possibility to enter the Algerian market but without success.
There was once this idea of a BusinessCouncil? We did offer the idea of setting up a Business Council between the two countries. I had myself the chance to meet a number of Algerian companies and this was followed up by my reports to the Capital but up to now this has not been addressed by both governments. Our expectations were high while awaiting for the eleventh session of the mixed commission which was due to take place last April . However the meeting was cancelled in the last minute by the Algerian party for the non availability of the Minister of Energy and Mining industry, Mr Bouchouareb. We were informed 5 days before by the Foreign Affairs Ministry that the Minister was assigned to be sent abroad by the President of the Republic. Needless to say that we were fully prepared and were expecting about twenty government officials and around thirty Vietnamese firms. We had to cancel everything. September was mentioned for holding the session but despite two reminders from our Embassy to the Algerian part to confirm no reply has been made. So September is unlikely. We are in a period of change in Algeria, the creation of a new government.
What is the volume of exchanges between the two countries?
We export for 40 billion to the United States. With Algeria we are at $270 million. So it’s minimal.
We first export coffee to Algeria and that represents almost one-third of the exports.There are also mobile phones and electronic parts. Then comes the textile, shoes , rice as well as pears. Viet Nam is the first world producer of pears. We have exported a lot of pears to Algeria. From Algeria , we import a volume of 2 to 3 million dollars per year.
There are raw materials for animal food, some oil products and a few dates and olive oil.
Viet Nam is an emerging market with a population of nearly a 100 consumers, it is not small. It is a pity for Algeria that is not ready for exports except for oil and gas.
Are there agreements between the two countries?
The two countries have signed three agreements. A trade agreement that gives the general principles but does not contribute much to trade between the two countries. The barriers to trade between the two countries still remain, for example the cost of right of customs which is very high. A Vietnamese product must pay a customs fee of more than 50% which leads to the necessary increase in the product cost. Viet Nam has subscribed to WTO and we benefit from a right of customs much lower for member states.More so for industrialised countries where customs costs for industrial goods are less than 10%. Whereas to enter the algerian market we have to pay a right of customs of 50%. Customs processes are also complicated and take so much time.
I have heard complaints from Vietnamese firms. The containers are sometimes blocked for three months in the port and by the time all the procedures are completed, the costs are much higher than the value of the container. Recently, we have received many complaints from exportingVietnamese companies. Containers of fish have already been for two months at the port of Oran. The Algerian client has not paid for them to be released and the implementation of the new Algerian government regulation stipulates that if the fish contains anything that is not supposed to be in it then it will not be allowed in. The problem is that the containers had already been sent before the new regulation was passed..It is really amazing. The Vietnamese firms dare not carry on doing business with Algerian counterparts.
Recently, again, we have received complaints from three Vietnamese companies trading pears. As the containers of pears arrived at the port, the Algerian company had signed a contract with the Vietnamese exporter. The algerian buyer had made a deposit of more than $40 000 , the value of the container would amount to more than $160 000. According to the contract, to receive the container the company must pay the remainder to the bank to release the container, but I do not know why, the Algerian company was able to remove the container and claimed that the quality of the pears was not good. They took photos pretending the pears were blended with stones and refused to pay. What is puzzling is the fact that the Algerian firm has been able to open the container despite the law which states the opposite in case of non payment. In this case the firm not only had refused to take the container but had asked the Vietnamese company to take it back. While the contract was concluded, the price of the pear had decreased by 30% during the journey. Hence the drop in the cost of pears in the market explains why the Algerian client refused to take the container. The Vietnamese salesman came and tried to solve the problem by offering to reduce the costs as taking back the container would be counter productive but the Algerian client still refused the deal. According to the Algerian law the container not collected after three months would be confiscated by the government and subsequently sold by auction. I think that would enable the Algerian buyer to pay a very low price for the goods. Such business cases are discouraging the Vietnamese to do business with Algerian operators. Recently, we had 5 to 6 complaints of the kind. Moreover the new restrictive measures for imports have seriously affected our exports. The latest new restrictive measures taken in July 2016 by the government have reduced by 40%, nearly by half, our exchanges compared with last month. In 2016, the two Prime ministers of both countries have agreed to increase the volume of bilateral trade to reach one billion dollars by 2020. There are three years left and we are far from the objectives.