The EVFTA has contributed to strengthening Vietnam's position as an attractive destination for European investment, bringing the European Union (EU) to the sixth position among the largest FDI investors in Vietnam.
In 2020, Vietnam became the first developing country in the world to sign a Free Trade Agreement (FTA) with the EU (EVFTA). The agreement commits to eliminating or reducing tariffs on most goods and services between Vietnam and the EU, creating great opportunities for Vietnamese businesses to access the EU market and promote the export of goods.
Chairman of the European Chamber of Commerce in Vietnam (EuroCham) Dominik Meichle had a talk with The Gioi va Viet Nam newspaper on the occasion of the fourth anniversary since the EVFTA Agreement came into effect (August 1, 2020 - August 1, 2024).
 |
| Chairman of EuroCham Vietnam Dominik Meichle. (Photo: NVCC) |
How do you evaluate the results of nearly four years of implementing EVFTA for businesses on both sides and the Vietnamese economy?
The EVFTA, which took effect in August 2020, has had a significant impact on Vietnam. The agreement makes Vietnam one of only two ASEAN countries (along with Singapore) to have an FTA with the EU, giving it a competitive advantage over other ASEAN countries that are still negotiating with Europe.
The biggest impact can be seen in Vietnam's exports to the EU, increasing from around 35 billion euros in 2019 to more than 48 billion euros in 2023. Electronics, textiles, footwear, agriculture and fisheries all saw strong growth.
However, in contrast, EU exports to Vietnam grew at a slower pace (up only slightly from €11 billion to €11.4 billion over the same period). About a quarter of EuroCham Vietnam members benefited significantly or moderately from the agreement, in particular through tariff reductions and improved market access. Clearly, there is a lot of potential for EU businesses to access a market of 100 million people.
Attracting foreign direct investment (FDI) from the EU to Vietnam is also one of the highlights. What is your opinion on this issue?
The EVFTA has increased Vietnam’s attractiveness to EU investors. The EU, currently the sixth largest foreign direct investor in Vietnam, has invested €28 billion in 2,450 projects across the country. In 2023, despite the global FDI decline, EU “eagles” added €800 million to the Vietnamese market in the first nine months of the year, demonstrating their confidence in the country’s potential.
However, to fully exploit the potential to attract more FDI thanks to the EVFTA, the EU-Vietnam Investment Protection Agreement (EVIPA) needs to be ratified. The EVIPA requires individual consent from all 27 EU member states. To date, 18 member states have ratified the EVIPA and ensuring the remaining members “nod” to the agreement is essential.
EuroCham Vietnam continues to actively advocate for the ratification of the EVIPA among EU stakeholders. The agreement is expected to significantly boost investor confidence and pave the way for increased EU business investment in Vietnam.
What difficulties do EU businesses face when implementing EVFTA?
There is no denying that the EVFTA opens up opportunities for EU businesses in Vietnam. But the EuroCham Business Confidence Index (BCI) survey for Q2/2024 has highlighted the main ongoing challenges. Specifically as follows:
Complex regulations: Many companies find Vietnamese regulations difficult to apply.
Non-recognition of international standards: Local authorities sometimes do not accept international standards, which can cause delays and additional costs for European businesses, especially in areas such as medicine and high-tech manufacturing.
Lack of understanding: Not everyone clearly understands how the EVFTA works, which can lead to missed opportunities and unintended mistakes.
Customs issues: Different interpretations of customs regulations can cause delays and additional costs for EU businesses exporting goods to Vietnam, especially those with complex supply chains or expensive products.
Despite the challenges, we remain optimistic about the potential of the EVFTA. Going forward, EuroCham is committed to working with the Vietnamese Government to address these challenges and ensure that the EVFTA delivers on its full potential for both parties. Through open dialogue and mutual understanding, EuroCham can create a more transparent and predictable business environment, promoting win-win outcomes for businesses.
 |
| Lego factory (Denmark) is under construction in Binh Duong province. This is one of the largest FDI projects in Binh Duong and also one of the largest Danish investment projects in Vietnam. (Source: Investment Newspaper) |
In the coming time, what should businesses on both sides do to take advantage of the benefits of this historic agreement, sir?
Firstly, investing in EVFTA training programmes will help businesses understand the terms of the agreement. This includes learning about tariff reductions, rules of origin, customs procedures and sector-specific regulations. This will help businesses maximise the benefits of the agreement.
Second, active engagement with governments and business associations such as EuroCham is essential. EuroCham can share experiences and concerns, helping businesses identify and address challenges, thereby making the EVFTA implementation smoother and more effective.
In addition, businesses on both sides should prioritize innovation and adaptation to meet the evolving standards of both markets. This could involve upgrading production processes, improving product quality or implementing sustainable practices. By complying with international standards, businesses can ensure compliance with EVFTA regulations and increase their competitiveness in both markets.
In the context of the EU applying more green standards, what recommendations do you have for Vietnamese enterprises to improve their capacity and export competitiveness?
The EU market holds huge potential for Vietnamese businesses, but to succeed, they must meet the sustainability standards of the European Green Deal. The agreement includes rules on areas such as carbon emissions, deforestation, responsible business practices and requires significant investment in skilled workers, technology and resources.
Instead of viewing these requirements as obstacles, Vietnamese businesses should see them as opportunities to invest strategically and become more competitive. Vietnamese businesses need to train their employees in sustainable practices and use green technology to meet EU standards. This will help businesses reduce costs, work more efficiently, and turn compliance with the European Green Deal into a competitive advantage.
To support businesses in their green transition, EuroCham Vietnam is committed to providing additional training opportunities and resources focused on understanding and implementing green regulations. These initiatives will equip businesses with the tools and knowledge they need to adapt to the sustainable development context and thrive in the EU market.
To encourage collaboration and drive concrete action towards a greener future, EuroCham is hosting the Green Economy Forum & Exhibition (GEFE) 2024. Following the success of previous events, GEFE 2024 will take place in Ho Chi Minh City from 21-23 October, with a series of in-depth conferences, an exhibition showcasing green innovations from hundreds of companies and high-level policy dialogues from Vietnam and Europe.
This important event will bring together key industry players, government officials, academics, SMEs and together we will explore solutions to meet the requirements of the European Green Deal, helping Vietnamese businesses prepare to succeed in a sustainable global market.
Source: https://baoquocte.vn/viet-nam-tang-suc-hap-dan-nho-evfta-280914.html
Comment (0)