Debasish Mallick Deputy Managing Director Mumbai, June 24, 2016 INDO VIETNAM BILATERAL RELATIONS: Exim Bank’s Perspective INDO VIETNAM CHAMBER OF COMMERCE & INDUSTRY

Hon’ble Finance Minister, while presenting the Union Budget for FY : The ‘Act East’ policy of the Government of India endeavors to cultivate extensive economic and strategic relations in South-East Asia. In order to catalyze investments from the Indian private sector in this region, a Project Development Company will, through separate Special Purpose Vehicles (SPVs), set up manufacturing hubs in CLMV countries, namely, Cambodia, Laos, Myanmar and Vietnam. ‘Look East-Act East’ - GOI’s Policy 2

 Land area: 331,600 sq. km; Forest Area: 12 mn ha; Wood reserves: 600 mn m3  13 th most populous country: 91.7 mn o Working Age Group: 70% o Adult Literacy: 94% (2009)  GDP: US$ bn (2015); Rating: BB-  Exports: US$ bn; Imports: US$ bn  Ranks 90 out of 189 countries in World Bank’s Ease of Doing Business 2016  Natural Resources: Phosphates, Coal, Manganese, Rare Earth elements, Bauxite, Chromate and Offshore oil and gas deposits  Water resources: o Ground water reserve: 3.3 bn m3/year o Surface water volume: 835 bn m3/year VIETNAM: A Brief Profile 3

4 INNOVATION RANKING  Labeled as ‘Innovation outperformers’  Ranks 52 (141 countries) in the Global Innovation Index (GII)  Ranks 9th in GII’s parameter on ‘Innovation Efficiency Ratio’  Ranks 17th in GII’s parameter on ‘Growth of GDP Per Person Engaged’ (an indicator of labor productivity)  Ranks 24th in GII’s parameter on ‘Expenditure on Education’  Performance consistently high in infrastructure, knowledge, technology and creative outputs  Improving regulatory framework and engaging in institution building to improve upon further SIGNIFICANT ACHIEVEMENTS  Textiles:  4% of global Apparel Export Market Share (Exports of USD 27 bn)  4 th largest Garment exporter to the world and 2 nd largest to USA  Electronics: Attracted significant investments in Assembly from major International companies Workforce characterized as young, high-disciplined, quick in learning, adaptable and committed. VIETNAM: Innovative Ranking / Significant Achievements

VIETNAM GLOBAL TRADE 5 Largest Exports to USA (22.1%) and China (14%) Largest Imports from China (35.2% and Korea (14.7%) Share of India: 2.8% of Imports and 1.8% of Exports

 India’s total trade with Vietnam has increased from US$ 5.4 billion in FY 12 to US$ 7.8 billion in FY 16.  Both sides have agreed on a trade target of US$ 15 billion by  India has consistently maintained a trade surplus over the last 10-year period.  Huge potential exists to increase bilateral trade by integrating manufacturing companies in both the countries into the regional value chain. Source: Ministry of Commerce & Industry, Government of India INDO-VIETNAM BILATERAL TRADE 6

INDO-VIETNAM BILATERAL TRADE: Major Traded Commodities Source: Ministry of Commerce & Industry, Government of India 7

FDI IN VIETNAM  Total FDI (stock) in Vietnam stood at US$ billion in 2015  Vietnam has registered FDI (flow) of approx. US$ 9 billion per year over the last five years;  FDI in the industrial sector accounted for 64.3% of total FDI (accumulate projects in effective), followed by services (30.5%), construction and real estate (3.9%), and agricultural sector (1.3%)  Major investments are in assembly facility investments by Samsung (USD 11 bn), LG (USD 1.5 bn) and Intel (USD 1 bn).  Emergence of dedicated industrial clusters for electronics and electrical appliances  Attracting Japanese, Korean and Taiwanese parts and component suppliers to invest in supporting industries. 8

INVESTMENT OPPORTUNITIES  Textiles: Scope in manufacturing of yarn and fabrics, spinning and dyeing. Signing of FTA with EU and of TPP presents good scope for manufacturers who should enter in the entire value chain of textiles.  Leather: Vietnam is among top four largest footwear producers and ranks third among world footwear exporters with exports to nearly 45 countries.  Agri food-processing: Agriculture productivity very high in Vietnam with 3 harvests in a year and the sector accounts for 20% total trade. Government is encouraging investments in agri-processing.  Tyre / Rubber: Rubber manuf. industry expanding by 30% a year. Leading tyre makers in the world have opened tyre export factories in Vietnam considering low labor costs and tax policies. INFRASTRUCTURE OPPORTUNITIES  Power generation : Envisages an installed capacity of ~50 GW by 2020 and ~110 GW by This entails capacity addition of at least 4 GW MW each year.  Roads: Target for construction of 2,000 km of new highways by Indian companies can look for opportunities on a BOT basis. OPPORTUNITIES IN VIETNAM 9

. VIETNAM, TPP and FTAs – Global Integration 10

 Better access to US market at almost zero duty;  Increase in World textile market share expected from 4% to 11% by 2024 with the signing of the TPP;  Exports by units will increase significantly. Projected apparel exports of USD 55 bn by 2025;  Shifting import of raw materials from China, S Korea and Taiwan to TPP member countries;  Likely to attract investment in ancillary industry and FDI inflows to exploit benefits from TPP;  Growth projected at a CAGR of 9.8% per year. Vietnam in Post TPP World... 11

Exim Bank helps Indian companies in going Global 12

Partner in India’s Globalization 13