The recently signed Việt Nam-Israel Free Trade Agreement (VIFTA) has the potential to boost economic and trade relations between the two countries, said an Israeli official.

Speaking at the Việt Nam-Israel Business Forum 2023 on Tuesday, Israeli Economy Minister Nir Barkat highlighted the increasing importance of Asia, including Việt Nam, as an export market for Israel. 

“The VIFTA offers numerous opportunities for both countries to leverage each other’s strengths and contribute to economic growth in various sectors,” he said.

By expanding trade ties with Việt Nam, Israel can gain access to a rapidly growing and diverse market in Southeast Asia, reducing its dependence on a limited number of trading partners. 

As trade volumes increase, Israeli companies have the potential to establish a stronger presence in Vit Nam, leading to job creation and economic growth in both countries, he said.

Israel is one of the leading countries for start-ups in the world. With a population of only 10 million, Israel has over 10,000 start-up businesses targeting global markets, he said. 

Israel is known for its expertise in sectors such as high-tech, science and technology, healthcare, manufacturing, education, human resources, tourism and agriculture.

The VIFTA will enable Israeli companies to explore investment opportunities in these sectors in Việt Nam.

One of the barriers to cooperation between the two countries is the limited transportation connectivity and limited sharing of market information, according to Barkat.

He proposed the opening of a direct flight from HCM City to Israel to shorten the geographical distance and create favourable conditions for businesses and investors from both countries. 

Võ Văn Hoan, vice chairman of the People’s Committee, said the VIFTA has great potential to strengthen economic and trade relations between Việt Nam and Israel.

As HCM City is Việt Nam’s largest economic, cultural, and tourism hub, it offers vast market potential for domestic and foreign businesses to invest and conduct business, he said.

Trần Ngọc Liêm, director of the Việt Nam Chamber of Commerce and Industry (VCCI)’s HCM City Branch, said Israel currently has 40 foreign direct investment (FDI) projects worth a total of over $140 million in Việt Nam.

Việt Nam has four investment projects in Israel worth a total of $76 million, he added.

Israel is the fifth largest trading partner and the third largest export market of Việt Nam in the Middle East, according to Liêm.

In 2022, the total import-export turnover between Việt Nam and Israel reached $2.2 billion, up 17.9 per cent year-on-year. 

However, foreign direct investment from Israel in Việt Nam remains modest.

The Vietnamese government will create favourable conditions to encourage Israeli enterprises to invest in Việt Nam, he said. 

“Both countries have set a bilateral trade target of $3 billion in the near future,” he noted.

The VIFTA, signed last month in Jerusalem, marks Israel’s second FTA with an East Asian country after South Korea. 

The trade pact is expected to facilitate the activities of Israeli exporters in the Vietnamese market and contribute to the growth of the Israeli economy. 

It will also help lower the costs of imports from Việt Nam, providing mutual benefits for both countries. — VNS 

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