13:00 | 25/08/2020 EVFTA
(VEN) - Hanoi, the capital, will help businesses, especially small and medium sized enterprises (SMEs), to take advantage of opportunities and confront challenges generated by the EU-Vietnam Free Trade Agreement (EVFTA), which took effect on August 1.
Boosting exports, creating jobs
According to data from the Hanoi People’s Committee, 23 EU countries have invested in Hanoi total capital of US$4.16 billion, accounting for about 10 percent of all foreign direct investment (FDI) in the capital. Exports to the EU account for only 12-15 percent of the city’s annual export value, with main exports including leather and footwear, high quality vegetables and fruits, and electronics.
Over the past two years, city-based FDI enterprises’ export rate to the EU has decreased from 55 to 46 percent, while that of domestic businesses in the city has increased from 46 to 54.5 percent.
The door to the EU market has opened wider for Vietnamese enterprises in general and Hanoi businesses in particular since the EVFTA took effect.
With strong market opening commitments, including elimination of almost all EU import duties, the EVFTA is expected to open up opportunities for Vietnamese businesses to increase its export value to the EU by about 42 percent in 2025 and nearly 45 percent by 2030. The agreement is also expected to help create almost 150,000 jobs each year.
Nguyen Thi Thu Trang, Director of the WTO and International Trade Center under the Vietnam Chamber of Commerce and Industry (VCCI), said the economic structure of Vietnam in general and Hanoi in particular is not directly competitive with that of the EU. Rather, they complement each other with their different fortes, she said. By opening the doors to EU commodities, Vietnamese enterprises can access raw materials, machinery and equipment at low prices, helping them minimize production costs and improve product competitiveness.
Business capacity improvement
The EU is a discerning market that has strict quality, production and labor standards.
Nguyen Van Than, Chair of the Vietnam Association of Small and Medium Enterprises (VINASME), said Vietnamese enterprises need better product quality and value in order to improve their competitiveness in the EU market. Enterprises need to meet EU food safety and hygiene and management standards, attach importance to social accountability, make transparent information about the labor and production environment, and follow rules of origin when exporting to the EU, Than said.
Director of the Hanoi Department of Industry and Trade Le Hong Thang said that in June 2020, the department opened a program of training in the EVFTA’s rules of origin provisions for 200 import and export businesses in the city. It is necessary to review legal documents, labor relations policies and workforce standards in accordance with international standards, commitments and conventions of which Vietnam is a signatory, he said.
Hanoi has prepared plans for investment promotion and cooperation with EU partners, especially EU localities and countries that have had long-term, good relations with Hanoi. Priorities will include strengthening administrative reform to improve the business environment, and further attracting EU investment, especially technology transfer projects in the fields of health, pharmaceuticals, manufacturing, support industries, and farm produce, forest products and seafood processing in Hanoi and its neighboring provinces.
The city will assist SMEs in technology transfer and exchange in accordance with the government’s instructions, including pilot economy digitization and application of the Fourth Industrial Revolution or Industry 4.0’s achievements to farm produce, forest product and seafood production and processing and related services.
EU tourist market
The EU has become Hanoi’s fourth biggest tourist market. Although the number of EU visitors to the city has decreased due to the Covid-19 pandemic, it is expected to remain an important tourism market for the capital.
Deputy Director of the Hanoi Department of Planning and Investment Tran Ngoc Nam affirmed that the city would focus on promoting the disbursement of public investment in addition to stimulating domestic tourism this year. The city has also fostered investment promotion activities and called for investment in important areas, including the manufacturing industry, tourism, green agriculture, and others, Nam noted.
The city will be developing production and service infrastructure. Recently, a number of private enterprises in Hanoi inaugurated logistics trade centers using goods reception and classification technology lines certified by the EU. The city will stimulate investment promotion to help Vietnamese SMEs increase exports.
Hanoi is continuing to review and will propose that competent authorities amend, supplement, repeal or issue new legal documents to realize the EVFTA’s commitments and create a transparent legal environment for businesses. Hanoi’s gross regional domestic product (GRDP) during the first six months of 2020 rose 3.39 percent compared to the same period last year, as announced by the Hanoi Statistics Office on June 29.
|In the first seven months of 2020, due to the Covid-19 pandemic, Hanoi’s exports to the EU reached an estimated US$998 million, accounting for 12.3 percent of the country’s total and down 22.5 percent compared to the same period last year.|