Expanding opportunities to export many key commodity groups to Israel

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FTAs have helped Vietnamese agricultural products penetrate deeply into the markets. Photo: N.Hien

Agriculture and fisheries continue to be strengths

According to the Ministry of Industry and Trade, currently, Israel is the fifth-largest trading partner and the third-largest export market of Vietnam in the Middle East (after the UAE and Turkey). In contrast, Vietnam is one of Israel's largest trading partners in Southeast Asia (ASEAN). In 2022, Vietnam's total import-export turnover with Israel reached US$ 2.2 billion, up 17.9% over the same period in 2021, of which Vietnam's export turnover to Israel reached US$ 785.7 million, and Vietnam's import turnover from Israel reached US$ 1.4 billion.

Although the population size is only approximately 9.7 million, Israel's economic and foreign trade activities are quite developed. In 2022, foreign trade turnover reached US$ 173 billion, of which exports reached US$ 67 billion and imports reached US$ 106 billion.

On April 2, the Israeli Minister of Industry and Trade and the Israeli Minister of Economy and Industry issued a Statement on the conclusion of negotiations for the Vietnam - Israel Free Trade Agreement (FTA), after the efforts of two negotiating teams of Vietnam and Israel during 7 years with 12 sessions. With the official conclusion of the negotiations, the two countries will soon promote the final internal and legal work to prepare for the signing of the Vietnam - Israel FTA Agreement, which is expected this year.

According to Ms. Nguyen Thi Diem Hang, Vice Chairman of the Vietnam Agricultural Enterprise Council (VCAC) - Vice Chairman of the Board of Directors, General Director of Vietnam Organic Nutrition Food Joint Stock Company, this is the wish of many Vietnamese enterprises, because after the negotiation is over and the agreement is signed, it will open up great trade opportunities for enterprises of the two countries.

Notably, opportunities are open for Vietnamese agricultural products not only in the Israeli market, the Vietnam-Israel FTA is expected to be signed this year will open up opportunities for cooperation with the potential Middle East region through the gateway of the United Arab Emirates (UAE). Along with that, boost exports to a number of niche and potential markets such as Bangladesh and Pakistan. At the same time, it is a “springboard” to promote exports to the Indian market with a large purchasing power of more than 1.4 billion people.

According to Ms. Nguyen Thi Diem Hang, agricultural products have the strength to export to Israel and the Middle East, the first must be spices. Because these markets consume a large number of spices each year. More importantly, we have also previously exported spices such as cinnamon, anise and pepper to the Middle East market, but because we have not negotiated an FTA, we are subject to high export tax. The signing of the FTA will bring benefits in terms of tariffs and ease of trade in the flow of goods.

According to Mr. Pham Xuan Hong, Chairman of Ho Chi Minh City Textile, Embroidery and Knitting Association, the first 3 months of the year the textile and garment industry's exports were very difficult. Orders of enterprises fell sharply by 30-40%. Importers in most markets are very cautious when placing new orders.

In that context, the completion of the Vietnam-Israel Free Trade Agreement (FTA) negotiation is of special significance, helping textile enterprises to expand their exports. Although Israel is not a really big market, creating a breakthrough for the industry, will be very valuable in the long term.

Mr. Pham Xuan Hong said that despite the potential, the difficulties and challenges for Vietnamese enterprises to export to the Israeli market are not small. The market is small, and two-way information is not extensive, so the Ministry of Industry and Trade and the Trade Office of Vietnam in Israel need to promptly provide information on the market, trade policies and disseminate information soon about agreements for enterprises to research and approach.

Opportunities to export high-value-added goods

Mr. Le Thai Hoa, Vietnam's Trade Counsellor in Israel, said that although the market size was modest, the demand for this country's imports was quite large, and the consumption cycle was fast in the Israeli market, reflected in the import commodity value increased year by year.

According to Mr. Le Thai Hoa, the business practices and habits of Israeli enterprises were to want to buy finished, processed, high-value-added products that were packed with complete packaging, especially for groups of food, foodstuffs and consumer goods, including electronics and household goods, to be put into distribution channels or retail supermarket chains for immediate use by consumers. These are favourable factors for Vietnamese manufacturing and exporting enterprises to take advantage of opportunities to export high-value-added goods to the Israeli market.

For quality standards, Israel required imported goods to strictly comply with specific local standards. Besides, Israel also applied the standards of the EU and the US and implements quite strict inspection and control. In order to increase the supply of goods from outside and compete in the market, Israel implemented a number of import reforms and increased the application of internationally recognized standards of developed countries.

Vietnamese manufacturing and exporting enterprises should focus on offering high value-added processed products, with competitive prices and consistent quality, quickly respond to transactions with Israeli customers, and comply with the requirements of the newly issued Israeli import regulations and standards.

Besides, Vietnamese enterprises should actively pay attention to and invest in exploiting the Israeli market; Specifically, taking the initiative to survey, learn about the market, attend fairs, exhibitions, trade promotion events, trade connections held in Israel, directly meet partners and customers to find the cooperation demand of each other, thereby contributing to promoting exports to this market.