European Vietnam Free Trade Agreement (EVFTA) negotiation concluded in December 2015. In order to realize the benefits of EVFTA, Vietnam and EU agreed on the full commitment to complete the authorization of the Agreement in 2018. Till then, it is time for businesses to complete their preparation.
With the size of 510 million consumers, 25 member states, EU is the largest export market for Vietnam, with turnover for both sides of 41 billion USD in 2015.
The authorization of EVFTA is coming, but currently, a number of domestic businesses show signs of worry on how to utilize the chance for export with reduced tax from the EU for Vietnamese products.
To the end of 2015, Nha Be JSC reached 651 million USD in turnover from export with 35% around 200 million USD from EU market. From the export potential, Nha Be had fully prepared for production capacity from 2 years prior in order to increase export with benefits of reduced tax.
In 2015, Nha Be put the factory Nha Be – Hau Giang into production with 4000 labours with focus on bringing products to EU and American markets.
For 2016 plan, Nha Be will expand production by building Duc Linh – Binh Thuan factory with total investment of up to 400 billion Vietnam Dong, with 3000 labours with the aim to better exploit the export markets.
From integration current status, Deputy Minister of MoIT Tran Quoc Khanh supposed that Vietnamese businesses had already the experience of 15 – 20 years of integration, so there is no need for the worry due to competition pressure from outside.
The Deputy Minister showed example of 1995, total domestic export turnover was only 5 billion USD and in 2015 the number reached 160 billion USD, a difference of 30 times. Another example could be the participation to WTO in 2006, the total export turnover was at 50 billion USD, after 10 years, the number was at 3 times larger.
In the last 10 years, the trade relation between Vietnam and EU has increased by 7 times from 6.3 billion USD in 2003 to 41.2 billion USD in 2015, making EU become a leading trading partner of Vietnam. The export from Vietnam to EU reached nearly 31 billion USD and import from EU to Vietnam reached more than 10 billion USD.
“After 7 years of EVFTA authorization, EU will terminate 99.2% export tax for Vietnamese goods and keep at least 42% of all export revenue (around 28 billion USD) with 0% tax. This could be a very crucial benefit for our exports. However, the benefits do not stop there; the participation to EVFTA and TPP can show the effort of Vietnam to rebalance the export market.”
“According to calculation from specialists, more than 60% of import-export revenue come from East Asia area. With such high dependency rate in one market, of course, risks can occur at any time and lead to effects to import-export activities. As such, rebalancing the market from EVFTA is a strategic long term goal.”
“After nearly 20 years of integration, domestic businesses mostly are able to evaluate and take up opportunities. With EU, after signing the agreement erasing quota in 2005, export of textile, wood, shoes, and fishery are increasing strongly.”
“These results on increasing export in the recent times show that businesses have been able to take up opportunities; however, actively approaching more opportunities should be of focus, not idly waiting for customers. For example, Phu Quoc fish sauce is excellent in quality, already exported to EU market., but businesses still do not create more opportunities for approaching customers. There is a need for listening to feedback on packaging and quality, which can definitely lead to better improvement in export numbers.” – Mr. Khanh stressed.
“I really want Vietnamese businesses to travel to the EU, to approach distribution channel and consumers directly, from which perfecting the products.”, Deputy Minister shared. In addition, many trade negotiators also advised Vietnamese businesses on the strict requirements of EU market and if able to export to EU, businesses can be confident in trading in any market.
Source: Investment Digital Newspaper