ASEM Business Forum
Strengthening Asia-Europe Economic Ties
to Overcome the Global Financial Crisis and Beyond
Ho Chi Minh City, 6 May 2009
Asia-Europe Economic Ties
from the Perspective of a New EU Member State
seen in Context of Hungarian – VN Cooperation
Remarks of Hungarian Ambassador
László Vizi
ASEM IN ITS SECOND DECADE
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Different nature of regional cooperation – norms, practices and institutions
Creation of the “missing link”
Three pillar set-up of ASEM
Europe’s weight in global economy as largest
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single market
source of FDI
ODA donor
and
 Asia’s dynamism
 economies in Europe and Asia complement each other
► Successful match
GOALS, EXPECTATIONS AND ACHIEVEMENTS
OF THE SECOND PILLAR
 Strengthening economic ties through:
promotion of trade – TFAP ( Trade Facilitation Action Plan )
 improved regulatory climate for FDI – IPAP ( Investment
Promotion Action Plan )
 Active involvement of private sector – AEBF ( Asia-Europe
Business Forum )
 Track two – Economic cooperation and think tank initiatives
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ASEM in
 bilateral and multilateral framework
 multilateral trade order
ACHIEVEMENTS FROM DIFFERENT PERSPECTIVES
 reinforcing WTO based open trading system ?
 handling crisis situations ?
 promoting greater trade and investment ?
 Lack of substantial contribution in strengthening the multilateral
trading system at a time when individual national economies
increasingly tend to rely on bilateral free trade agreements.
 Lessons from ASEM wide handling of the Asian economic and
financial crisis of 1997-1999
 Networking and better knowledge of mutual regimes as basic nature
of ASEM and opportunity to achieve progress on country–to–country
level, promote greater bilateral trade and FDI flows
IMPACT OF EU ENLARGEMENT ON INTRA-ASEM DYNAMICS
– TRADE AND INVESTMENTS
EU – Enlargement of May 1, 2004
and ASEM Membership expansion of October 7-9, 2004 - ASEM 5 Summit Hanoi
 EU10 joins
Instead of
 Trade disruption and trade diversion
 FDI flow redirection
(predicted in some forecasts)
Real trends ( 1.)
Trade creation:
 Overall tariff level in NMS decreased as a result of Common External Tariffs
 Larger markets
 Single set of rules and procedures in trade
 GSP
TRADE STATISTICS
EU27 MERCHANDISE TRADE WITH ASIAN ASEM COUNTRIES
VIETNAM-HUNGARY BILATERAL TRADE
Bilateral trade turnover
Turnover
Export
Import
(Change in percentage, base 2004)
2004
2005
2006
2007
100
104
128
202
100
107
135
157
100
101
119
248
Export
Turnover
%
2008
216
200
235
Import
250
250
300
200
200
250
150
150
Turnover
% 150
100
50
0
200
%
100
100
50
2004
2005
2006
2007
2008
100
104
128
202
216
year
50
0
0
2004
2005
2006
year
2007
2008
2004
2005
2006
year
2007
2008
IMPACT OF EU ENLARGEMENT ON INTRA-ASEM DYNAMICS –
TRADE AND INVESTMENTS – CONT.
Real Trends (2)
FDI:
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EU15 inflows to EU NMS (New Member States) – not at the expense of inflows to Asian ASEM
economies
Expanding FDI from most developed Asian ASEM to EU NMS (membership as positive perception,
lower investment risk particularly for SMEs)
Future:
Opposite direction: EU NMS FDI to some major capital importing Asian ASEM economies ?
Another wave of Asian FDI to EU ?
Real Trends (3)
ASEM dynamics:
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benefiting from well established relations of some EU NMS in some parts of Asian ASEM ( Vietnam,
China, Laos, Cambodia, Mongolia)
 traditions of cooperation
 human capital
 market niche in ODA provision: experiences in transition management
CONTEXT OF HUNGARIAN – VIETNAMESE COOPERATION
MAIN REASONS FOR THE INTERNATIONAL INETEREST IN VIETNAM –
SHARED BY HUNGARY:
 Dynamic economic growth
 Business opportunities
 Attractive investment climate
 Pro business leadership
 Stable domestic environment
 New development paradigm
 Historical context
 China + 1 factor
BUILDING THE RELATIONSHIP
Background:
Traditional system of relationship, deep roots
Role of human ties
However:
Reasons for lower intensity on both sides in 1990s
Basics of moving on:
Change of system in Hungary
Doi Moi in Vietnam
New framework: Hungary’s EU and Vietnam’s ASEAN membership, their joint participation in
the ASEM process
Multilateral framework enhances bilateral cooperation opportunities
Conclusion:
We have found the right answers for the key question: how to transfer elements of stable
value from our traditional cooperation of decades to a new period, when both domestic
structures and international relations of the two countries changed basically, and the process
of globalization requires new types of cooperation.
GENERAL TREND OF CURRENT BILATERAL RELATIONS
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Growing political contacts
Strengthening confidence
Widening contractual relations
Hungary reappeared in Ho Chi Minh City through Honorary Consulate
New cooperation structures (such as renewed Joint Commission on
Economic Cooperation, the Joint Business Council in both countries, the new
framework of science and technology cooperation)
Through all the above:
 Catching up economic relations with the level of political ties, narrowing gap
 The cooperation is more and more widened, many fields have direct or
indirect positive impacts on the economic interests of both sides
BILATERAL ECONOMIC RELATIONS
New swing and turning-point
 Economic promotional events
 Appearance in media
 Economic focus and activities in the course of the high-level
visits
 Trade turnover increased dynamically in 2007 (+58%), a further
improving trend in 2008 (+26% in Hungarian export, appr. same
level of import)
→ more balanced trade
NEXT STEPS
A/ Fields
 Keep strengthening the market presence of various pharmaceutical
products with high turnover
 Products and technologies in agricultural field and food industry
 Cooperation in information technology, electronics, machinery,
pharmaceutical industry, etc… by applying advanced technologies
and technology transfers
 Take part in the infrastructure development projects from the stages of
preparation, design, making pre-feasibility studies of projects,
consultancy, etc… in the fields of public transportation, waste
treatment, sewage treatment, environment protection, water supply,
etc…
NEXT STEPS
B/ Tools
 By closer company ties, strengthening Hungarian presence,
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including the form of joint ventures
In the context of ongoing equitization of state-owned enterprises in
Vietnam, considering areas of possible and suitable Hungarian
investment opportunities
Maximizing the export generating effect of the already concluded ODA
(tied aid) loan agreement and of those under consideration
Promotional opportunities by the Joint Business Council
Hungarian enterprises need to strengthen their appearance at
exhibitions, conferences, trade fairs in Vietnam
Encouraging investments by Vietnamese companies in Hungary
Mutual strengthening of tourism promotion, multi-dimensional
approach
COOPERATION STRUCTURES
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Joint Commission on Economic Cooperation
Joint Business Council with chapters in both countries
Two offices opened to represent Hungarian SMEs
Economic Sub-Committee of Friendship Association
Embassy:
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Providing information
Lobbying
Consultations
Proposing exchange of delegations (government and business)
Supporting promotional activities with the presence of the Embassy
Press conferences, PR activities
IMPACT OF THE INTERNATIONAL FINANCIAL CRISIS ON
HU-VN TRADE TIES
Economic data forecast for Hungary
(Change, percentage)
IMF 2009.04.22.
GDP
Inflation
Current account deficit
Hungarian Government
2009
-3,5
3,8
3,9
2010
-0,8
2,8
3,4
GDP
Inflation
Current account deficit
2009
-5,5/-6
4,5
4 – 4,5
2010
-0,5
-
THE NEW GOVERNMENT MUST TACKLE ALL ELEMENTS OF THE
VICIOUS CIRCLE
THE GOVERNMENT WILL USE A NUMBER OF MEASURES
BEYOND THE BUDGET TO STIMULATE THE ECONOMY
CHANGES OF MACRO-ECONOMIC INDICES AS A
CONSEQUENCE OF MEASURES
IMPACT ON BILATERAL RELATIONS
 Chances of lower demand for Hungarian export items  possible but
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cushioning factors
Pharmaceutical products are the main export commodity of Hungary to
Vietnam (55 - 60 % of total )  with presence on the market through several
decades  no forecast of falling back
Consumption-led crisis management  gaining ground in Asia and may
create more opportunities in Vietnam as well
VN export items to Hungary – lower price category – chances of demand
increase
The interest of Hungarian companies  increased remarkably in the last two
years, new relations between the two countries’ enterprises creating new
opportunities for exchanging commodities from both sides, especially for
Hungarian export at medium term
Outsourcing  further increase according to international forecasts
Increase of Hungarian investments  expected to happen, including
equitization (although not short but rather mid or long term
ODA (tied aid) loans  one of the most important tools to widen our
economic cooperation, may be the most effective potential factor to help
Hungarian exports in the next 3-4 years
CONCLUSION
Instead of stopping or “wait and see”
 Keep in motion things we started
 Fine-tuning the tools of cooperation
 Minimize negative impacts caused by the financial crisis
 Use opportunities newly emerging in present circumstances
 Prepare capacities for the post – crisis period
 Maintain contacts, communication