Iceland has one of the world’s highest per capita incomes - 51,000 USD per year. With high economic growth for several years, Iceland has become a developed industrial country and a model for developing countries. Iceland and Vietnam have great potentials and opportunities for expanded trade and investment.

Bilateral relationship has progressed

Vietnam and Iceland have maintained a good relationship since they established diplomatic ties in 1973. Several high-level visits were organized, including visits to Iceland by Prime Minister Vo Van Kiet in June, 1995, by Prime Minister Phan Van Khai in September, 2002, and by Deputy Prime Minister Hoang Trung Hai in September, 2011, and a Vietnam visit by Icelandic Prime Minister David Oddsson in April, 2002.

The two countries signed an Agreement on Double Taxation Avoidance, an Agreement on Encouragement and Reciprocal Protection of Investments, and an Agreement on Aviation Transport.

So far, Vietnam-Iceland trade relations have remained limited with modest revenue. Vietnam exports to Iceland wood, garments, textiles, vegetables, and fruits, while Iceland ships seafood and a small volume of machinery to Vietnam. Two-way trade reached 6 million USD in 2014 and 9 million USD in the first half of this year.

Vietnam is one of 9 countries receiving Official Development Assistance (ODA) from Iceland. In 2005, Iceland’s ODA for Vietnam was 3.5 million euros and the amount has increased in subsequent years, mainly for poverty reduction, health, institutional improvement, private economic development, administrative reform, and climate change mitigation.

Vietnam and Iceland have cooperated in clearing landmines and unexploded ordnance from the war, resolving Agent Orange/ Dioxin consequences, and search and rescue activities.

Potential for cooperation

Vietnam and the European Free Trade Association (EFTA), which includes Iceland, intend to conclude a free trade agreement this year. Iceland has approved a cooperative fishery program with Vietnam which includes training Vietnamese experts at the UN University Fisheries Training Program in Iceland and organizing training courses in Vietnam.

Approximately 1,000 Vietnamese are living in Iceland’s capital Reykjavik. They have a good life, stable incomes, and a good relationship with local authorities and neighbors, while preserving their Vietnamese traditions and identity.

Based on that solid foundation, President Olafur Ragnar Grimsson’s visit to Vietnam is an opportunity for both countries to promote their cooperative advantages.