Assoc. Prof. Dr. Ngo Tri Long: VIFTA adds "door" for Vietnam's import and export

The Vietnam-Israel Free Trade Agreement (VIFTA) has just been signed by Vietnamese Minister of Industry and Trade Nguyen Hong Dien and Israeli Minister of Economy and Industry Nir Barkat. Sharing about this FTA, Associate Professor Dr. Ngo Tri Long - Economic expert emphasized that the Ministry of Industry and Trade has always been proactive and active in seeking and negotiating with partners.

According to Associate Professor Dr. Ngo Tri Long, VIFTA was negotiated for 7 years, through 12 exchanges and concluded in early April this year. Notably, the signing of VIFTA took place only 3 months after the announcement of the conclusion of negotiations, clearly demonstrating the active role of the Ministry of Industry and Trade.

Israel and Vietnam have had trade relations since 1994. Through that process, the trade relationship between the two countries has grown more and more. The fact that we have continued to sign VIFTA has further deepened the trade relationship between the two countries.

Assoc.Prof.Dr. Ngo Tri Long: VIFTA adds "door" for Vietnam's import-export activities

Information shows that the trade turnover between Vietnam and Israel is ranked 5th, in terms of import and export, it is ranked 3rd, after UAE and Türkiye, so the initiative of the Ministry of Industry and Trade to sign VIFTA is very commendable. This is also an effort of the Ministry of Industry and Trade, aiming to create opportunities to improve the adaptability of the economy in international economic integration.

According to Associate Professor Dr. Ngo Tri Long, each FTA always comes with opportunities and challenges. With VIFTA, we must consider Israel's potential to recognize opportunities. "I know that Israel is a small country but has a very strong economy and foreign trade activities. Israel's population is only 1/10 of our country's, meaning about 10 million people, but their average income per capita is very high, about 55 thousand USD/year" - the expert informed.

In addition, Israel's annual trade activities average over 173 billion USD, of which the main trade deficit is import. On the other hand, we can see that Israel is a country with 70% of its area being desert, so resources are very scarce. However, the Israeli people are very intelligent. The proof is that many Nobel Prizes in the world belong to scientists from Israel. Or the number of successful people in the US, up to 20% are Israelis.

“So, for a country that is small but has very strong economic potential, when signing an FTA with Israel, we will need to take advantage of that opportunity,” Associate Professor, Dr. Ngo Tri Long emphasized.

According to Mr. Long, because of Israel's difficult natural conditions, their commercial activities are mainly imports, especially consumer goods. According to published data, Israel has an annual import turnover of about 35 billion USD for consumer goods. Meanwhile, this industry is one of Vietnam's strengths. At the same time, Vietnam also needs to create conditions to be able to take advantage of their intellectual strengths, or high technology that Vietnam needs. "This can be considered an opportunity for us to both export and import" - Mr. Long commented.

There are currently about 70 items that Vietnam can export to Israel.

It is known that currently, Vietnam's import and export activities with Israel are on an upward trend. If in 2020 the import and export turnover was nearly 2 billion USD, by 2021 it increased to 2.3 billion USD, then in 2022 it reached 2.6 billion USD and the trend this year will increase further.

“According to the two-way trade situation, I think this is beneficial for Vietnam's economic activities,” the expert affirmed, adding that there are great opportunities for Vietnam not only in terms of trade but also in terms of investment. “We can see that Israel has a trade deficit more than we have a trade surplus. Meanwhile, the advantage of the FTA is that tariffs are reduced in stages, so there is a huge advantage in import and export activities. Currently, there are about 70 items that Vietnam can export to Israel. This is a huge advantage and opportunity,” said Mr. Long.

Besides the opportunities, according to the expert, integration is competition, but competition in the context of Vietnam's limited capacity, so it is necessary to find advantageous products to access and export. "VIFTA is a great opportunity, opening the "door" for Vietnam's import and export activities. Especially if Vietnamese enterprises know how to take advantage of their strengths, I think it will raise Vietnam's position in international economic activities" - the expert affirmed.

Regarding the challenges, Mr. Long said, here is the challenge of competitiveness. During the negotiation and signing process, I think that the Ministry of Industry and Trade, representing the State agency, found out the strengths and advantages of Vietnam to sign. Among them, there are things to be implemented immediately, and there are things to be implemented according to the roadmap. Therefore, to effectively utilize VIFTA, Vietnamese enterprises need to pay attention to a number of issues:

Firstly, businesses must be proactive in understanding mechanisms, policies, markets, and trade barriers in order to improve the quality of their products. In addition, businesses also need to be proactive in trade promotion and market research.

Second, Vietnamese businesses must operate more professionally. Because Israel is a highly competitive partner with good conditions, if we are not professional in import and export activities, it will be difficult to approach them. Above all, Israel's science and technology are very developed, so the consumer goods that Vietnam exports to Israel must pay attention to improving quality, especially food hygiene and safety. Therefore, businesses must be proactive in these issues.

Advice for Vietnamese enterprises to effectively take advantage of VIFTA opportunities will have two important issues. One is that enterprises must proactively approach the market and two is to be professional in import and export.

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