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| Vietnamese enterprises have not yet taken advantage of the EVFTA, so some of Vietnam's key export items such as seafood, although growing well, only account for a very small part of the total import value of these items to the EU. (Photo: Nha Chi) |
The European Union (EU) is a demanding market with very strict product standards. Therefore, Vietnamese enterprises wishing to penetrate this market must make efforts to adapt and make good use of the support of functional agencies, international trade promotion organizations and industry associations.
This is the comment of Mr. Marko Walde, Chief Representative of the German Chamber of Industry and Commerce in Vietnam, Myanmar, Cambodia and Laos (AHK) on the occasion of the 3rd anniversary of the implementation of the Vietnam-European Union Free Trade Agreement (EVFTA).
According to Mr. Walde, after 3 years of implementing EVFTA (August 2020 - August 2023), it is clear to see some of the benefits that this agreement brings and there is still a lot of potential for companies to benefit from this agreement.
He said that by the time the EVFTA comes into effect (August 1, 2020), this is the fourth free trade agreement the EU has signed with an Asian country and the second with a country in the Association of Southeast Asian Nations (ASEAN).
Referring to the effectiveness of EVFTA, Mr. Walde said that despite the disruptions caused by the Covid-19 pandemic in the first 3 years of EVFTA implementation, Vietnam's export turnover to the EU still recorded growth, with annual growth rates of 14.2% in 2021 and 16.7% in 2022, respectively.
Meanwhile, EU exports to Vietnam also increased significantly in many areas such as machinery, automobiles, pharmaceuticals, chemicals and consumer goods. Regarding investment between the two countries, Mr. Walde emphasized that EVFTA creates more opportunities for German companies to access the Vietnamese market.
However, in addition to the advantages, there are still shortcomings in the effective implementation of EVFTA. According to Mr. Walde, so far, Vietnamese enterprises have not taken full advantage of this agreement in the sustainable development of their export activities because Vietnamese brands are still not widely known in European countries.
The proportion of Vietnamese goods in EU imports accounts for only about 2%. Some of Vietnam's key export items (such as vegetables, seafood, rice) have grown well but have not achieved the expected results in this market, accounting for only a very small part of the total import value of these items in the EU.
Meanwhile, there are still some items that have not shown signs of growth after EVFTA comes into effect, such as: paper, paper products and cashew nuts.
According to Mr. Walde, although Vietnam has made efforts to simplify procedural regulations, one of the main barriers for German and European companies is the complicated administrative and licensing procedures, which cause delays in implementation.
Improving transparency and efficiency in these processes is essential to promoting trade facilitation.
In addition, some European companies are struggling to fully understand the technical aspects of the EVFTA, causing them to miss out on valuable opportunities that the agreement brings.
Inadequate infrastructure is another obstacle. Capacity expansion, especially in renewable energy, is needed to avoid shortages that could slow economic growth, as well as modernizing roads, railways, ports and airports to ensure smooth business and trade.
According to Mr. Walde, partnerships with European and German businesses offer good opportunities for technology transfer and integration into the supply chain.
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| Mr. Marko Walde, Chief Representative of the German Chamber of Commerce and Industry in Vietnam, Myanmar, Cambodia and Laos (AHK). (Source: VNA) |
AHK Vietnam provides multiple platforms, networking and technical support to share reliable information in many industries, especially in thematic areas such as healthcare, food processing, renewable energy, energy efficiency, business due diligence in the supply chain and ecosystem for SMEs and startups, to increase export attractiveness to environmentally conscious EU consumers.
Participation in these cooperation forums helps Vietnamese businesses to assert themselves as future-oriented and environmentally conscious trading partners. Businesses need to proactively raise awareness and understanding of EU standards and regulations, and can seek support from the authorities, especially through government-run programs to enhance business competitiveness.
In addition, Vietnam should take advantage of technical assistance and funding from the EU and Germany to improve supply chain linkages, such as the Supply Chain Due Diligence Act and Germany’s Energy Transition Programme. Taking advantage of this support will help improve Vietnam’s global export capacity and competitiveness.
Mr. Walde assessed that ensuring visas and work permits for foreign workers working in Vietnam is also a challenge.
Restrictions on work permits and visas under Decree 152 (Decree regulating foreign workers working in Vietnam and recruitment and management of Vietnamese workers working for foreign organizations and individuals in Vietnam) limit the movement of skilled workers and the recruitment of talented people, limiting the development of a skilled workforce considered important for foreign direct investment (FDI) and labor force competitiveness.
Addressing these labour mobility constraints is important to fully exploit the EVFTA’s potential in attracting European investment and related knowledge transfer.
Administrative barriers, such as difficulties in obtaining the necessary permits and approvals for investment projects, have caused delays and deterred investors. Reducing red tape and simplifying regulations would create a more friendly environment for capital flows from Europe.
Developing Vietnam’s human resources through education, vocational training combined with practice and skills development of the workforce creates great opportunities, as significant investment in human resource development will make Vietnam more attractive to European and German investors who are looking for skilled workers and long-term partnerships.
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