According to the Vietnam Trade Office in Israel, with the current growth rate, it is estimated that the trade exchange value between Vietnam and Israel could reach over 3.10 billion USD in 2024.
2024 is a year full of difficulties, instability, fluctuations and turmoil for the Israeli market, with highlights that are constantly reported by international media such as: The fierce war with Hamas forces in the Gaza Strip shows no signs of stopping; the outbreak of war with Hezbollah forces in Lebanon; mutual air attacks (using long-range/ballistic missiles, drones and fighter jets) between Israel and Iran as well as between Israel and the Houthis forces in Yemen are taking place in tension; escalation in relations leading to the outbreak of a trade war with Turkey and the two sides retaliating against each other; the Houthis forces in Yemen continuously attack and capture cargo ships of Israeli origin, traveling from and to Israel in the Red Sea to protest Israel's attack on the Gaza Strip; a series of mass protests continuously occur in the country protesting the government's failure to take effective measures to rescue hostages taken and detained in the Gaza Strip; Several international credit rating agencies have continuously downgraded Israel's credit rating and warned of a negative outlook for the economy….
Along with the burden of war costs, the above factors have negatively impacted and contributed to the difficulties of the Israeli economy over the past year, partly disrupting the supply of goods from abroad - especially the important supply from Türkiye, although foreign exchange reserves have continued to increase.
The Central Bank of Israel forecasts that in 2024, GDP growth will reach 0.5%, the budget deficit will stand at 7.2% (higher than the control target limit of 6.6% set at the beginning of the year), public debt will increase by nearly 68% of GDP, inflation will increase by 3.8% (exceeding the target range of 1%-3%), imports and exports of goods and services will decline... (even some international credit rating agencies have forecasted with more gloomy related indicators). The Israeli Ministry of Finance expects to increase VAT to 18.5% from January 1, 2025 (the government has agreed in principle to increase to 18% from the current level of 17%) to have enough revenue to cover government spending.
The Israeli Ministry of Finance has also announced that it will introduce a 15% Global Minimum Additional Tax from 2026, in line with the OECD program. Prices of essential goods and basic services are rising, the cost of living is high, and people's lives are difficult.
However, in the context of such difficulties and complexities in the local market, with the determination of relevant units under the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development on specialized cooperation to promote the opening of the Israeli market; the active activities of the Trade Office - Embassy of Vietnam in Israel on strengthening market development, economic diplomacy, trade promotion, business seminars, promoting the image of the market and export goods of Vietnam, connecting trade opportunities between the business communities of the two countries, mobilizing Israeli purchasing enterprises/importers to Vietnam to attend international trade fairs and exhibitions and directly meet/trade/negotiate/sign purchase contracts with domestic manufacturers/suppliers; With the efforts of Vietnamese enterprises in exploring the market and finding new partners in Israel, economic and trade cooperation activities between Vietnam and Israel in 2024 have made remarkable progress and some outstanding results and spectacular growth can be mentioned as below.
2024 is the year the Vietnam-Israel Free Trade Agreement (VIFTA) is approved by the two Governments and put into effect. Previously, the VIFTA Agreement was officially signed by Minister of Industry and Trade Nguyen Hong Dien and Minister of Economy and Industry Nir Barkat on July 25, 2023, representing the two Governments of Vietnam and Israel, after 7 years and 12 continuous negotiation sessions. The business communities of the two countries have expressed their active interest in the implementation of the VIFTA Agreement, creating an important legal framework for market opening and business activities as well as favorable conditions for goods of each side to penetrate each other's markets.
Many Israeli enterprises are increasingly interested in doing business with the Vietnamese market and enterprises, actively going to Vietnam to seek sources of goods, especially in the context of the disruption of supply to the Israeli market due to the negative impact of the current war as well as the trade war between Israel and Turkey and the Houthis' control/attack and capture of cargo ships in the Red Sea to and from Israel.
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| Israeli Minister of Economy and Industry announces the entry into force of VIFTA |
Regarding trade in goods, according to the latest statistics, in the first 10 months of 2024, two-way trade between Vietnam and Israel reached 2.578 billion USD, up 12.92%; of which, Vietnam's exports to Israel reached 676 million USD, up 23.4%, and imports from this market reached 1.902 billion USD, up 9.6% over the same period in 2023. It is expected that if the market situation does not have sudden fluctuations, bilateral trade in the whole year of 2024 can reach over 3.10 billion USD and exceed the target of 3.0 billion USD set at the Intergovernmental Committee Meeting between the two countries held in Hanoi on August 16, 2023; Of which, Vietnam's exports reached over 850 million USD, an estimated increase of 34.71% compared to 2023, and imports from Israel reached about 2.25 billion USD.
With a modest market size, a population of less than 10 million people, and high payment capacity, Israel is currently the third largest trading partner (after Kuwait, UAE), the fourth largest export market (after UAE, Turkey, Saudi Arabia) and the second largest import market (after Kuwait) in the West Asia (Middle East) region. In contrast, Vietnam is one of Israel's largest trading partners in the Southeast Asia (ASEAN) region. The structure of import and export goods between the two countries is complementary, the goods that Israel needs to import are also the export goods that Vietnam has strengths in and vice versa.
Regarding the structure of export items, there are currently about 70 categories of items exported to Israel, of which, Vietnam's main export items with high growth in the first 10 months of this year include: Phones and components of all kinds reaching 218.1 million USD, up 24.5%; seafood reaching 89.6 million USD, up 41.4%; footwear of all kinds reaching 56.7 million USD, up 8.3%; cashew nuts reaching 53.6 million USD, up 25.2%; textiles reaching 33.7 million USD, up 38.8%, coffee reaching 26.8 million USD, up 34.7% over the same period in 2023.
Notably, seafood is an important export item of Vietnam to Israel and has established a stable position in this market, highly appreciated and favored by Israeli consumers. In fact, Israel is the largest seafood export market of Vietnam in the West Asia (Middle East) region and ranked 16th in the list of more than 100 seafood export markets of Vietnam, as of the end of October 2024.
In recent years, Vietnam's seafood exports to Israel have reached a turnover of about 90 million USD/year and this figure continues to increase due to Israel's increasing import demand for this item to meet domestic consumption (including different consumer groups such as Jews, Arabs, foreign workers of African and Asian origin). According to the Food Safety and Hygiene Authority under the Israeli Ministry of Health, Vietnam's seafood exports to Israel annually account for about 12-13% of Israel's total seafood import turnover and the prospect of import growth for this group of products is quite large in the coming time.
Specific seafood products exported from Vietnam to Israel include: Canned tuna, frozen shrimp (black tiger shrimp and other types of shrimp processed, peeled, steamed), frozen squid, tra fish, basa fish, red tilapia, some other types of scaly fish... In the first 10 months of 2024, tuna exports to Israel reached 56.7 million USD, up 55.4% over the same period last year and accounting for 6.91% of the total tuna export turnover of the country; Israel is in the Top 5 largest tuna export markets of Vietnam (ranked 2nd, after the US, for tuna code HS16, and ranked 4th, after the US, Russia, Canada, for tuna code HS03). In general, every year, Israel is always a tuna export market in the Top 10 largest markets of Vietnam.
Meanwhile, frozen shrimp exports reached 17.93 million USD, up 36.0% over the same period in 2023 and accounted for 0.56% of the total export turnover of this item of the country. Frozen squid exports reached 7.08 million USD, up 36.6% over the same period last year and accounted for 1.34% of the total export turnover of this item of the country; Israel ranked 7th (after China & Hong Kong (China) Japan, Korea, Thailand, the US and Malaysia), among the 10 largest frozen squid export markets of Vietnam. Pangasius exports reached 5.93 million USD, up 42.2% over the same period in 2023 and accounted for 0.35% of the total export turnover of this item of our country.
In addition to seafood as mentioned above, exports of other major items in the first 10 months of this year such as mobile phones, footwear of all kinds, cashew nuts, textiles, and coffee also had strong growth and these are also items trusted by consumers in Israel. Israel is stepping up its search for supply sources from other markets, including Vietnam, to replace the disrupted source from Türkiye.
Israeli businesses are actively looking for Vietnamese partners and manufacturers to increase imports of groups of products such as: Food and agricultural products (rice, noodles, coconut rice, canned tuna, sauces/dipping sauces, canned and dried fruits, soft drinks of all kinds, confectionery, coffee, cashew nuts, pepper, spices, shrimp, fish, squid, canned fish...), household and consumer goods (clothes, shoes, sports goods, plastic products, household appliances, electric cables, plastic and plastic products, rubber and rubber-related products...), electronic equipment (vacuum cleaners, air conditioners...), construction materials (iron and steel, tiles, floorboards, sanitary equipment, toilets, bathtubs, sinks, water pipes, faucets, machinery and electrical equipment, glass products of all kinds, cement, plaster, construction glass, marble and granite...) to meet production needs and domestic consumption
According to Israeli data, Israel imports rice worth around 130 million USD each year. In 2023, Israel imported about 2.12 million USD worth of milled rice from Vietnam. The latest statistics from Israel show that in June 2024, Israel imported rice worth 17.92 million USD, an increase of 24.01% over the previous month. In the first 6 months of 2024, Israel's rice import turnover reached 81.36 million USD, an increase of 10.15% over the same period last year, of which the 5 largest rice export markets to Israel were Thailand, Australia, India, the US and Vietnam.
For Vietnamese rice products, specifically fragrant, long grain, 5% broken rice, packaged in 5 kg or 20 kg bags, continues to steadily penetrate the Israeli market with initially modest quantities and values, and has been widely distributed in the market to serve workers and people of Asian origin. In addition, Vietnamese pepper continues to be regularly imported into Israel and is always favored by local consumers.
On the contrary, in the first 10 months of 2024, Vietnam imported the following main items from Israel: Computers, electronic products and components reaching 1.78 billion USD, up 9.5%; machinery, equipment, tools and spare parts reaching 59.4 million USD, up 53.6%; fertilizers of all kinds reaching 31.6 million USD, up 30.7%; and vegetables and fruits reaching 4.29 million USD, up 36.0% over the same period last year.
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Trade between Vietnamese enterprises and Israeli partners |
Notably, Vietnam often imports computers, electronic products and components with large value, reaching nearly 2.0 billion USD/year in recent times. These are mainly electronic circuit boards imported from Israel by foreign joint venture companies in industrial zones, because they are a strong product of this country, in their system chain, they bring them to Vietnam as input materials for assembly, production into finished products and then export to other markets.
For fertilizers and machinery, equipment, tools and spare parts, Vietnam imports approximately 30 million to 60 million USD each year to serve domestic production needs, as Israel is also one of the export markets with strengths for these products.
In general, in international trade activities, Israeli businesses are dynamic, adapt quickly to market fluctuations, do business quite systematically and seriously, and conduct transactions quickly. In particular, Israeli businesses are always proactive in seeking partners through many different channels, have diverse needs and stable purchasing power, high and basically fair payment ability, are willing to deposit or pay in advance, like to meet partners directly and go to the factory to see the goods, often approach suppliers separately in small groups and avoid going in large groups, want to buy goods directly from the manufacturer and do not want to go through an intermediary.
Although the market capacity is modest, the import demand is quite large, the consumption turnover in the Israeli market is fast, reflected in the sharp increase in the value of imported goods every year. In addition, the business practices and habits of Israeli enterprises are to want/prefer to buy finished, processed products with high added value, pre-packaged, complete packaging, especially for food and consumer goods (seafood, cashew nuts, coffee, pepper, soft drinks, confectionery, cinnamon, textiles, footwear of all kinds, etc.), including electronics and household goods, to bring back to distribution channels or retail supermarket chains for consumers to use immediately after purchase. These are favorable factors for Vietnamese manufacturing and exporting enterprises to take advantage of opportunities to export high value-added goods to the Israeli market.
Regarding investment cooperation, according to statistics from the Ministry of Planning and Investment, in September 2024, Israel had newly registered foreign direct investment (FDI) capital (increased capital and contributed capital) of 2.531 million USD in Vietnam (specifically, there were 3 FDI projects with a capital of 2.006 million USD newly registered and 8 capital contributions/share purchases with an amount of 0.525 million USD).
As of September 2024, Israel has 44 projects with a total FDI capital of 153.3 million USD in Vietnam, ranking 43rd out of 153 countries and territories investing FDI in our country. According to official foreign direct investment data, so far, Israel is the second largest investor (after Türkiye) in the West Asia (Middle East) region in Vietnam.
Israel's investment projects in Vietnam are mainly concentrated in the following fields, in descending order, such as processing and manufacturing industry, healthcare and social assistance services, agriculture, forestry and fisheries, information technology, environment, wastewater treatment, tourism real estate, etc. According to investment locations, Israel has invested in about 06 provinces and cities of Vietnam such as: Binh Dinh province, Ho Chi Minh city, Da Nang city, An Giang province, Hanoi capital and Dong Nai province, etc.
Some typical Israeli investment projects in Vietnam include: Delta Galil Vietnam Textile - Dyeing - Garment Factory, granted investment registration certificate on January 26, 2015, with total initial registered investment capital of 54.42 million USD, with investor being Delta Galil Industries Ltd; Project of yarn production, woven fabric production, textile product finishing (including dyeing), knitted fabric production, crocheted fabric production and other non-woven fabrics, ready-made garment production (except for garments), garment sewing (except for garments made from fur), knitted and crocheted garment production..., with expected revenue in the years reaching about 24,000,000 USD, equivalent to 28,000,000 products/year.
Some relevant organizations and Israeli enterprises are also interested in cooperating with Vietnamese partners in areas such as: Start-up activities, application of science and technology and technical solutions in production activities, automatic control and monitoring of vehicles operating on highways and in inner cities, clean energy production technology, renewable energy storage technology, investment in solar power projects, high technology....
On the contrary, Vietnam has initially invested in Israel. Recently, some of our enterprises have implemented investment projects in Israel. Specifically, Vines Energy Solutions Joint Stock Company, a member of Vingroup, has maintained an investment of 40 million USD (in a 65 million USD investment project) in Israel in the form of purchasing 5% of the shares of StoreDot-Israel Company specializing in the production of fast-charging batteries for electric cars, and this project is currently operating effectively.
In addition, according to some information, Vingroup Corporation, through its branch in Singapore, also had a plan to invest 8 million USD in the form of startup investment in a self-driving car operating company in Israel. In addition, a number of Vietnamese corporations and information technology companies such as Viettel, FPT... are also looking for opportunities to expand joint venture cooperation with Israeli partners in specialized activities such as developing products on network security, software solutions..., because these are Israel's strengths that we need to take advantage of. A number of other Vietnamese companies have also been looking for investment opportunities in the form of startups, venture capital... in the technology field in Israel.
The performance in 2024 creates an important premise for the prospect of further expanding economic and trade cooperation between the two countries in 2025 and the coming years, after the security, political and social situation in Israel stabilizes. Vietnamese exporters, manufacturers and investors need to continue to closely monitor the situation in the Israeli market as well as developments in the region and seek opportunities to promote business/investment cooperation with Israeli partners, including increasing the export of goods with risk insurance to this market, for the legitimate interests of each party.
Source: https://congthuong.vn/hop-tac-kinh-te-thuong-mai-tro-thanh-diem-sang-trong-quan-he-hai-nuoc-viet-nam-israel-361300.html
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