19/09/2024

Russia Investment in Vietnam garment to Hit USD 4.74 Billion by 2029

Russia is poised to increase its investments in Vietnam’s fashion sector, with spending projected to exceed USD 2.8 billion this year, and expected to rise to USD 4.74 billion by 2029.

Russia, as the world’s fourth-largest economy in terms of purchasing power parity, is increasingly focused on bolstering its trade relationships with Vietnam, particularly in the fashion sector.

“Russia’s booming tourism is driving a surge in infrastructure development and increased demand for clothing,” said Alexander Stuglev, Chairman and CEO of the Roscongress Foundation, during the Eastern Economic Forum (EEF) in Ho Chi Minh City on July 4.

“At the same time, Russia is experiencing growing demand for agricultural investments and imports, both of which present opportunities for Vietnam.”

Alexander Stuglev is presenting in a Vietnam Russia meeting

Alexander Stuglev, Chairman and CEO of the Roscongress Foundation in the Eastern Economic Forum (EEF) in Ho Chi Minh City on July 4 - Photo by VnMedia

As VnExpress reports, Stuglev expressed optimism about the future of bilateral trade, expecting it to grow to USD 15-20 billion. “Crises bring both challenges and new potentials. Recent global geopolitical shifts have opened up possibilities for small and medium-sized businesses,” Stuglev said.

21 representatives from the Vietnam Textile and Apparel Association (Vitas), including major companies such as VTEC (Viet Tien Garment Corporation), GARCO 10, Phuong Dong Garment, NAGACO, Bac giang LGG garment corp, An Hung Garment, Tex-giang JSC are eager to strengthen partnerships and expand their exports of textiles and garments to the Russian market.

According to VnEconomy, Vietnam’s high-quality apparel, which aligns well with Russian consumer preferences and fashion trends, has emerged as a key area for growth. Data provided by Vietnam’s General Department of Customs shows that textile and garment sector has seen remarkable growth in exports to Russia, with significant increases in recent years.

Key figures

Textile and garment exports to Russia soared to USD 490 million in 2023, marking a 125% increase from 2022.

In the first four months of 2024, exports hit nearly USD 260 million, up 134% year-on-year..

Russia imported over USD 343 million in textiles from Vietnam for the first ten months of 2023, reflecting a 91% rise from the previous year.

The direct sea route between Vladivostok and Ho Chi Minh City, as well as Hai Phong, has facilitated trade between the two nations. Payment challenges, which initially arose due to the Russia-Ukraine conflict, have also been largely resolved. Currently, transactions are primarily conducted in Vietnamese dong (VND) and Russian rubles through the Vietnam-Russia Joint Venture Bank (VRB).

Founded in 2007 by the directive of President Vladimir Putin, the Roscongress Foundation organizes Russia’s key annual economic forums. Stuglev said that Vietnam and Russia share a wide range of promising opportunities for cooperation in fields such as energy, transportation, construction, tourism, fashion, and information technology.

Vietnam’s Trade Counselor to Russia, Duong Hoang Minh, said that despite significant growth, Vietnam’s export to Russia account for only a modest portion of Russia’s total imports in the apparel sector, which indicates potential for further cooperation between the two countries. Vita’s leaders said that Russian businesses are interested in forming partnerships with Vietnam, particularly in yarn production and textile dyeing.

To ensure stable growth in textile exports to Russia, Vitas Chairman stressed the importance of revising the Free Trade Agreement between Vietnam and the Eurasian Economic Union (EAEU). This would address safeguard measures and increase the quota for Vietnamese apparel products that enjoy a 0% import tax rate.

With rising demand in Russia and Vietnam’s growing production capacity, adjusting these quotas would prevent unreasonable trade barriers and foster greater cooperation in the fashion industry between the two countries.