EVFTA serves as leverage for Viet Nam in recovery after pandemic

Saturday, Oct 30, 2021 09:19

Production of export garment products. Viet Nam's total export value to the EU in the first nine months of 2021 recorded growth of 11.7 per cent year on year to $28.85 billion. — VNA/VNS Photo Pham Kien

The EU-Viet Nam Free Trade Agreement (EVFTA) will open up many opportunities for Vietnamese businesses to attract investment capital and expand export markets in the post-COVID-19 period.

In the context of economic recovery in the post-COVID-19 period, along with the shaping and development of new trade and investment trends, the EVFTA would facilitate and increase competitiveness for domestic enterprises so that Viet Nam can participate in the process of restructuring supply chains with European Union (EU) partners, Deputy Minister of Industry and Trade Dang Hoang An said.

The participation in the chains would open up opportunities to attract investment capital and advanced technology, and create new resilience and sustainable growth in the future, he added.

The two sides could be optimistic about a strong surge in the Viet Nam-EU trade and investment cooperation development in the new normal, An said.

EuroCham chairman Alain Cany said over the last few weeks, Viet Nam had begun to emerge from lockdowns and resume normal business activities. This is now giving EuroCham members renewed optimism about the prospects both of their enterprises and of Viet Nam’s business environment.

“We need to work together - to cooperate - to ensure that both domestic and foreign business communities can rebound and recover in the ‘new normal’,” Cany said.

Business leaders needed centralised rules implemented in a clear and consistent manner across all provinces and cities. This would enable companies to plan their re-opening in advance and resume at their full capacities wherever it is safe to do so, he said.

"In short, the challenge now is to ensure that private enterprise is able to rebound and recover as fast as possible. In doing so, we can help to achieve the second of the Government’s twin goals: maintaining economic growth. The EVFTA gives us a tool with which to achieve this."

“If we can unlock the full potential of the EVFTA and resolve the teething problems of doing business in the ‘new normal’, we can help our companies to benefit from preferential tariffs and privileged market access. This, in the end, will benefit consumers on both sides who will get greater access to more competitive goods and services.”

Viet Nam is in a stronger position than most to prosper in this post-pandemic period. The fundamentals that have underpinned its three decades of almost uninterrupted economic growth remain strong, according to Cany.

“And now that COVID-19 has been brought back under control, with the EVFTA in force, and the EVIPA soon to follow, Viet Nam has the chance to attract a new wave of foreign direct investment (FDI) from European investors looking for a prosperous, safe, and competitive place in which to invest and do business,” he said.

With a strong commitment to ensuring transparency, openness and favourable conditions in the trade and investment environment, Viet Nam has gained access to high-quality investment sources from the EU with projects using advanced technologies, An said.

In the context of the COVID-19 pandemic, Viet Nam attracted US$22 billion from the EU in the first nine months of the year, up 4 per cent year on year, accounting for 5.5 per cent of Viet Nam's total FDI, according to an official from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

"This figure is a small part of the total FDI but it has an important meaning in the context of the pandemic," Vu Van Chung, deputy head of FIA, said.

The investment agreement between the two sides had not yet taken effect, but EU investment had increased to anticipate business and investment opportunities in the future, Chung said.

“The EU is considered one of the strategic markets in the policy of attracting FDI to Viet Nam in the future. Therefore, preferential policies will be adjusted to suit actual needs,” he said.

"After the fourth outbreak of the pandemic, Viet Nam still strengthens measures to fight the pandemic and also restore production, including reduction of input costs. It also solves the barriers to entry of experts into Viet Nam."

"In the long term, Viet Nam will restructure the economy and develop railway and energy infrastructure to attract more FDI as well as restructure the labour force to serve investors."

Meanwhile, “the Ministry of Industry and Trade (MoIT) and trade offices of Viet Nam in the EU will stand side by side with businesses of the two sides to maximise opportunities offered by the EVFTA, thereby creating favourable conditions to foster trade and investment and address difficulties,” An said.

Businesses are urged to take the initiative in innovating themselves, raising capacity and adjusting business strategies to quickly adapt to the new situation.

To effectively take advantage of the EVFTA and new investment and business opportunities after the pandemic, An said that it needed great efforts from both the Government and the business community, especially as the pandemic was still complicated and unpredictable.

"Viet Nam should also build suitable scenarios to adapt to the new situation in a flexible and effective manner and seize all resources for recovery of economic growth, as well as address bottlenecks of businesses,” An said. At the same time, the Government needed to stabilise the business and investment environment.

"The pandemic also leads to changes in consumption trends, including online transactions of goods and services, thereby promoting the development of digital transformation and e-commerce," An said.

E-commerce has become a bright spot when traditional commerce methods are limited by the pandemic and this cross-border trade channel will have great potential of development in the future, according to An.

The pandemic has partly forced the domestic enterprises to have sustainable development and to actively change their business methods to catch up with new trends and improve competitiveness.

For example, tonnes of Bac Giang lychees have been exported to the Europe through Viettel Post's Seashell e-commerce platform.

Cao Cam Linh, strategy director of Viettel Post Corporation, said there had been only 1,200 orders of lychees to the German market, but this is opening a new path for exporting Vietnamese farm produce.

If Seashell can connect Vietnamese enterprises to foreign markets, including the EU, the beneficiary is the local enterprises, according to Linh.

Efficiency from EVFTA

Deputy Minister An affirmed that the EVFTA not only provided leverage to promote bilateral trade but also an advantage for the business communities of Viet Nam and the EU in the context of the global economy and trade being affected by COVID-19.

According to the General Department of Vietnam Customs, bilateral trade between Viet Nam and the EU after this agreement came into effect in August 2020 reached US$54.87 billion, up 12.1 per cent year on year, including the export turnover of $38.48 billion, up 11.3 per cent and import turnover at $16.39 billion, up 14 per cent.

Although Viet Nam was heavily affected by the fourth outbreak of the pandemic, bilateral trade value in the first nine months of 2021 still recorded growth of 13.4 per cent year on year to $41.3 billion, including an export value of $28.85 billion (up 11.7 per cent) and an import value of $12.4 billion (up 17.6 per cent).

According to Eurostat, Viet Nam has become the largest commodity trade partner of the EU in ASEAN just one year after the EVFTA took effect with the bilateral trade value of 43.2 billion euros ($50.5 billion).

Besides that, more and more domestic businesses are taking incentives from the EVFTA by using certificate of origin (C/O).

According to MoIT’s Import-Export Department, in the first year of implementation of the agreement, agencies and organisations authorised to issue C/O of the EUR.1 form granted about 207,682 certificates to Vietnamese products worth a total of about $7.71 billion, allowing them to export to 27 EU countries.

Enterprises exporting goods to the EU have also implemented self-certification of origin for 6,115 batches of goods to enjoy preferential tariffs under the EVFTA. — VNS

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