ASEM Business Forum Strengthening Asia-Europe Economic Ties

1. 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

2. ASEM IN ITS SECOND DECADE • 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 • single market • source of FDI • ODA donor and • Asia’s dynamism • economies in Europe and Asia complement each other ►Successful match

3. 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 ASEM in • bilateral and multilateral framework • multilateral trade order

4. 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

5. 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

6. TRADE STATISTICS EU27 MERCHANDISE TRADE WITH ASIAN ASEM COUNTRIESVIETNAM-HUNGARY BILATERAL TRADE

7. IMPACT OF EU ENLARGEMENT ON INTRA-ASEM DYNAMICS – TRADE AND INVESTMENTS– CONT. Real Trends (2) FDI: • 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: • 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

8. CONTEXT OF HUNGARIAN – VIETNAMESE COOPERATION • Dynamic economic growth • Business opportunities • Attractive investment climate • Pro business leadership • Stable domestic environment • New development paradigm • Historical context • China + 1 factor MAIN REASONS FOR THE INTERNATIONAL INETEREST IN VIETNAM – SHARED BY HUNGARY:

9. A relációs magyar építkezés alapjai: • Mély gyökerű, komoly hagyományokkal rendelkező kontaktusrendszer • Humán kapcsolati tőke • Ugyanakkor: • A 90-es évek visszafogottabb intenzitásának okai mindkét oldalon • A továbblépés determináltsága: • Magyarországi átalakulás • Vietnami Doi Moi • Új keretek: Magyarország EU - Vietnam ASEAN tagsága; közös ASEM részvételünk • A kétoldalú kapcsolatok merítési lehetőségei ezen multilaterális csatornákból • Konklúzió: • Napjainkban jó válaszok a relációs kapcsolatok azon alapkérdésére: hogyan tudjuk átvinni évtizedes múltra visszatekintő együttműködésünk értékálló elemeit egy olyan időszakba, mikor mindkét ország belső helyzete és külkapcsolatai gyökeresen megváltoztak, s a globalizáció is új kooperációs formákat kíván meg a kétoldalú viszonyrendszerben. 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.

10. GENERAL TREND OF CURRENT BILATERAL RELATIONS • 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

11. 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

12. 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…

13. NEXT STEPS B/ Tools • By closer company ties, strengthening Hungarian presence, 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

14. COOPERATION STRUCTURES • 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: • Providing information • Lobbying • Consultations • Proposing exchange of delegations (government and business) • Supporting promotional activities with the presence of the Embassy • Press conferences, PR activities

15. IMPACT OF THE INTERNATIONAL FINANCIAL CRISIS ON HU-VN TRADE TIES Economic data forecast for Hungary (Change, percentage)

16. THE NEW GOVERNMENT MUST TACKLE ALL ELEMENTS OF THE VICIOUS CIRCLE

17. THE GOVERNMENT WILL USE A NUMBER OF MEASURES BEYOND THE BUDGET TO STIMULATE THE ECONOMY

18. CHANGES OF MACRO-ECONOMIC INDICES AS A CONSEQUENCE OF MEASURES

19. IMPACT ON BILATERAL RELATIONS • Chances of lower demand for Hungarian export items  possible but 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

20. 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