New doors open for Vietnamese businesses

FTA Index helps Vietnam take advantage of opportunities from free trade agreements, promote the economy, enhance local competitiveness, and open up opportunities for businesses.

Participation in free trade agreements (FTAs) such as CPTPP, EVFTA, UKVFTA has brought many opportunities for Vietnam in economic development, diversifying import and export markets and attracting investment. However, the implementation and utilization of FTAs ​​are uneven among localities, requiring strong solutions from central and local management agencies. Since 2022, the Ministry of Industry and Trade has developed the FTA Index, which is currently being finalized and expected to be announced soon, with the goal of submitting a report of results to the Prime Minister.

Reporter of Cong Thuong Newspaper had an interview with Mr. Nguyen Minh Khoi, Tony Blair Institute for Global Change (TBI) to clarify the scientific and legal issues and predict the policy implications after the announcement of the FTA Index.

Mr. Nguyen Minh Khoi, Tony Blair Institute for Global Change (TBI)

How do you evaluate the implementation of these FTAs ​​in Vietnam in recent times, especially from the perspective of internalizing policies and solutions of the Government, ministries, branches and localities in supporting the exploitation of FTAs?

The Government and relevant agencies are making efforts to improve the implementation of FTAs ​​to benefit people and businesses. Vietnam is not only one of the economies that has signed many free trade agreements but also has a very open economy, with a high import-export ratio to GDP. Two important factors promoting the development of the Vietnamese economy are institutional reform and international integration.

In recent years, the Government and ministries, sectors and localities have significantly improved the implementation of FTAs, aiming to maximize the benefits from these agreements for businesses and people. In particular, the level of utilization of FTAs ​​in Vietnam has increased from 33% in 2023 to more than 37% in 2024, reflecting progress in implementing free trade agreements.

Regarding internalization, Vietnam's legal system is different from countries like the UK or the US, where agreements automatically come into effect after signing. In Vietnam, after signing an FTA, it requires the approval of the National Assembly and the Government, along with decrees guiding its implementation. Vietnam has seriously and effectively implemented the internalization of these agreements.

There are two main reasons for this success: First, Vietnam's strong commitment to the international community, enhancing its reputation as a reliable partner. Second, the Government and localities clearly recognize that rapid domestication will help increase efficiency and bring broader benefits to businesses and people.

How do you evaluate the scientific and legal nature of the FTA Index as well as the work of building and implementing this index?

The development of the FTA Index demonstrates Vietnam's proactive and active commitment to implementing its international legal commitments. This process has consulted many domestic and foreign experts to ensure accuracy and effectiveness.

Legally, the Government has implemented the regulations correctly, with the approval of the National Assembly and in compliance with the requirements of domestic law. This also demonstrates Vietnam's commitment to international agreements, including technical assistance for developing countries like Vietnam to implement domestic law.

On the scientific side, the Ministry of Industry and Trade invited international experts, including the Tony Blair Institute, to consult on the development of the methodology and questionnaire. The implementation process includes two phases: pilot and full implementation, helping to evaluate the effectiveness of the questionnaire and ensure feasibility in collecting information from localities and businesses.

This process also takes into account regional and local diversity, avoiding bias when comparing areas of different sizes and characteristics. These factors ensure that the FTA index accurately reflects the level of implementation of free trade agreements nationwide.

What do you think about the approach, content and evaluation criteria of the FTA Index? Can you share more about the implementation experience and significance of similar indexes around the world?

The development of the FTA Index is a new and different step compared to international experience. This is a positive initiative, demonstrating innovation in Vietnam's trade work. Although lacking direct international experience to apply, this also reflects an advantage, because we are pioneering and have a creative vision.

In fact, currently, large countries and trade blocs such as the European Union or North America do not have a unified index similar to the FDI Index. This creates both difficulties and opportunities. Although there is a lack of reference from other countries, this is also an opportunity for Vietnam to proactively develop an innovative and proactive FTA Index, monitor and improve over time.

Some recent international experiences that can be shared include the index of preferential use of provisions in free trade agreements. This is an index used by many countries to assess the extent to which tariff preferences from trade agreements are used. The European Union, going further, not only assesses tax preferences but also takes into account technical and environmental factors.

In addition, the OECD has also developed an index since 2011 to assess the level of trade facilitation, based on 12 different indicators. However, this index only assesses at the national level, unlike Vietnam's FTA Index, which is expected to assess specifically at the local and provincial levels.

In short, the construction and development of the FTA Index for Vietnam is a very welcome innovation. Despite the lack of international experience, Vietnam will gradually complete this set of indexes, thereby creating an overall picture to facilitate trade and support businesses in localities, promoting economic development.

Deep integration and expansion of FTA commitments will certainly impact the implementation and maintenance of the index as well as the implementation of FTAs ​​in Vietnam. What recommendations do you have for the subjects of FTA implementation in Vietnam?

The FTA Index will create a comprehensive picture, helping localities clearly see their position and efforts in taking advantage of free trade agreements (FTAs). Thereby, it not only enhances healthy competition between provinces but also encourages localities to improve their strengths and overcome their weaknesses.

To effectively implement this set of indicators, there needs to be close coordination between provinces and the central government, ministries, sectors, as well as central government policies. Commitments and incentives from free trade agreements need to be immediately translated into practical benefits for businesses and localities. Provinces can learn and share experiences, such as province A is strong in production capacity, province B is good at communication and information provision, thereby improving overall competitiveness.

In addition, local authorities need to pay attention to listening and understanding the difficulties of enterprises in the process of implementing the index. Insufficient information about incentives from FTAs ​​can be a signal for local authorities to provide more information to enterprises, helping them to access better and thereby improving the final results for the locality.

Another important factor is the application of science and technology, especially digital transformation, in illustrating the results of the index. The use of digital transformation tools will help businesses, local governments, and policy makers easily monitor and evaluate the results. The Ministry of Industry and Trade has built a portal on free trade agreements, and if the results of the index are connected to this portal, it will create a diverse platform, helping businesses access information, learn about incentives, and improve the effectiveness of FTA implementation.

Thank you!

Source: https://congthuong.vn/fta-index-canh-cua-moi-mo-ra-cho-doanh-nghiep-viet-nam-363389.html