Exporting to Kenya vs. Vietnam: Trade Policies Compared

Introduction: Two Emerging Export Markets

Kenya is the largest economy in East Africa, making it a regional transportation and financial hub. The country's growth originates from its promotion of rapid economic development since independence through various initiatives, including public investment, incentives for private — often foreign — industrial investment, and the encouragement of small-scale agricultural production (Kenya: Economy, 2011).

Vietnam, by contrast, was considered one of the fastest-growing economies in the world from 1990–1997 and again from 1998–2003. Its economic growth can be partly attributed to significant foreign trade and foreign direct investment following the authorization of foreign investment in 1988. Between 1990 and 2005, the country was transformed from a net food importer into the second-largest exporter of rice in the world. While Vietnam still runs a structural trade deficit — approximately $12.4 billion in 2010 — its exports were around $71.6 billion and its imports approximately $84 billion that same year.

Kenya's Economy and Trade Background

Kenya's role as the dominant economy in East Africa positions it as both a financial and logistical hub for the broader region. Its sustained economic growth since independence has been driven by a combination of public investment, foreign private investment incentives, and support for small-scale agricultural production. These factors have made Kenya an attractive destination for international trade partners and foreign firms seeking a foothold in the East African market (Kenya: Economy, 2011).

Kenya's Import Policies, Tariffs, and Restrictions

As a member of the East African Community, Kenya uses the EAC Customs Union Common External Tariff. This tariff structure consists of three bands: 25 percent for finished products, 10 percent for processed or manufactured inputs, and zero duty for raw materials and inputs. Kenya also maintains a list of sensitive items subject to rates above 25 percent, comprising 58 tariff lines that include products such as popcorn, milk and milk products, wheat, corn, rice, and wheat flour. According to reports by the World Trade Organization, Kenya's average applied tariff rate in 2008 was 12.6 percent (Kenya, 2010). In recent years, the Kenyan government has permitted duty-free importation of white maize in response to growing food security concerns.

Kenya's current import policies also require importers to pay an import declaration fee of 2.25 percent of the customs value of imports. Importers must additionally provide pre-export verification of conformity, an international standard mark, valid invoices from the exporting company, and a certificate of conformity.

A significant non-tariff obstacle to investment in Kenya is the backlog of investment-related cases within its judicial system. This backlog makes financial institutions reluctant to provide loans and leads them to charge higher interest rates, creating a challenging environment for businesses seeking to establish or expand operations in the country (Kenya, 2010).

Vietnam's Economy and Trade Background

Vietnam's economic trajectory over the past three decades has been shaped largely by its opening to foreign trade and investment. After authorizing foreign investment in 1988, the country experienced sustained high growth rates and a dramatic shift in its trade profile — moving from a net food importer to the world's second-largest rice exporter within roughly fifteen years. Despite a structural trade deficit, Vietnam's high import volumes reflect strong domestic demand and active participation in global supply chains (Vietnam: Economy, 2011).