VCN - The conflict between Russia and Ukraine has lasted for more than two months and is ongoing, causing the import and export of goods to be interrupted. What should Vietnamese businesses do to overcome issues and avoid risks?
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At the workshop on "Safe adaptation solutions for import-export activities in the context of the Russia-Ukraine crisis" organized by the International Arbitration Center over the weekend, Dr. Vu Tien Loc, President of the Vietnam International Arbitration Center, said that the conflict between Russia and Ukraine is considered one of the global hot spots, directly affecting the economies of many countries. The war led to punitive embargoes, so the delivery of goods was delayed and interrupted, with transportation costs increasing and payment problems.
Talking more specifically about the difficulties of enterprises, Mr. Truong Dinh Hoe, General Secretary of the Association of Seafood Exporters and Producers of Vietnam, said businesses have difficulties transporting goods from Vietnam to Russia. Many ports stopped working, not loading and unloading goods. In the early stage of the Russia-Ukraine conflict, many shipments were stuck at the port, making payment for these orders very difficult.
Goods of Vietnamese enterprises to Russia must be diverted to some other ports or forced to return. "Transport was deadlocked, the partner suggested moving to another port like Poland or Turkey, then they tried to bring it back to Russia but it was very risky," said Mr. Hoe.
According to the General Statistics Office, in the first months of 2022, Vietnam's goods exports to Russia and Ukraine decreased sharply. In February, exports reached just over US$180 million, down 44.46% compared to January. With Ukraine, Vietnam's exports to this country reached nearly US$13 million, down 60.3% compared to the previous month. In fact, many businesses are not directly affected by the Russia-Ukraine crisis, but the indirect consequences of the conflict between these two countries are huge, affecting the operation of a series of production activities and business of enterprises.
According to Dr. Vu Tien Loc, businesses must have a long-term strategy to cope with the volatile market context. Along with that, it is necessary to be equipped and guided with solutions on risk management, damage reduction and dispute handling to be more resilient and recover business activities in a more efficient manner.
Businesses change to respond
According to experts, the conflict between Russia and Ukraine continues, and Vietnamese businesses need to have solutions to cope and avoid risks. Mr. Truong Dinh Hoe gave some recommendations for businesses. Specifically, for delivered orders, it is necessary to conduct quick payment measures through channels from foreign banks and private banks. For orders that are on the way or plan to be delivered, they should pull the goods back, postpone or cancel the order; orders are still delivered according to customer requirements, so it is advisable to re-unify the payment stage, change the port and the customer bears the costs incurred; at the same time, strengthen the information from Russian and Ukrainian partners to promptly solve arising problems.
In addition, businesses also note solutions to indirect impacts, such as looking for opportunities to increase pangasius market share in European countries; develop trade promotion programs to expand exports to markets that previously consumed a lot of Russian seafood indirectly; taking advantage of agreements in the Eurasian Economic Union as well as other agreements to increase exports to neighboring markets.
Mr. Pham Binh An, Deputy Director of Ho Chi Minh City Development Research Institute, said that with the conflict between Russia and Ukraine, businesses need to diversify markets and supply and payment currencies; review contracts and legal documents; actively negotiate to limit payment risks when signing and performing contracts and learn more about the embargo of countries with Russia.
In particular, businesses need to take advantage of opportunities and research product lines that enjoy preferential treatment of free trade agreements to take advantage of and expand the market.
One of the major obstacles facing businesses today is international payments. Noting this issue, Dr. Le Hoang Anh, Banking University of Ho Chi Minh City, said that now many Vietnamese exporters choose to pay through an intermediary payment system in China, from which they pay their partners in Russia. In addition, businesses choose another channel which is payment via remittance. The most important issue for businesses in the current context is that payments must be secure.
Giving recommendations on the safety of these new payment channels, Assoc. Prof. Dr. Vo Tri Hao, Rector of Gia Dinh University and an arbitrator of the International Arbitration Center, said usually in export contracts, the importer, in addition to business information, contact number, will include bank account number, SWIFT payment channel number and this information is mutually agreed upon by both parties. In case the two parties want to change, they must sign a written appendix, not unilaterally change, oral agreement, email or phone call.
In addition, Assoc. Prof. Dr. Vo Tri Hao warned that Vietnam's law on foreign exchange payment is very strict. Switching to a new payment channel should be done cautiously, because it will violate the foreign exchange payment regulations, and fall under the supervision of suspected money laundering or terrorist financing. In other countries when SWIFT is closed, they can choose to pay with digital currency, but in Vietnam, this payment is not accepted. At the same time, some payment channels from other countries should also be considered, the possibility that users will be monitored and controlled, affecting economic and political security.
By Le Thu/Quynh Lan