Socialist Republic of Vietnam

Vietnam Investment Review, March 17-23, 2003)

VIETNAM and the US late last week did not reach final agreement on the long-awaited Bilateral Aviation Agreement (BAA) which aims to boost two-way trade and investment links.

The sides signed a memorandum of understanding (MOU) and agreed to a further round of talks, according to Nguyen Tien Sam, director general of the Civil Aviation Administration of Vietnam (CAAV).

“There still remains several points of the agreement which we will try to resolve in the next round [of talks] that we plan to hold in Washington D.C,” Sam told Vietnam Investment Review.

The talks came after the successful implementation of the Bilateral Trade Agreement (BTA) signed between the US and Vietnam in 2001 which saw a rapid surge in two-way trade which touched $1.8 billion in 2002.

“The talks were very positive and we will try to settle all differences this year,” Sam added.

At present, there are no direct flights between the two countries. However, a code-sharing agreement between Vietnam Airlines and US giant Boeing was inked in mid 2000.

While the signing of the BAA would benefit both countries, the US was expected to lead the push to finalise the agreement as part of a plan to open new markets for US airlines struggling in the aftermath of the September 11 terrorist attacks.

Christopher Flint, manager of Boeing Vietnam, said the BAA would serve the national interests of both countries and had Boeing’s support.

“If signed, the agreement would be another step in the development of a bilateral relationship between the US and Vietnam, and a major boost to investment, trade and tourism.”

Alessandro Pio, principal economist at the Asian Development Bank (ADB) in Hanoi, said: “The main beneficiaries of the agreement should be consumers, who will benefit from the competition and the increased number of travel options.

“However, if the initial agreement is simply for code-sharing on flights operated by Vietnam Airlines, the impact will be more modest.”
Pio said Vietnam has much to gain when it comes to establishing aviation links with the US. “There is a significant potential market in America, comprising both overseas Vietnamese, tourists and business travellers,” he added.