Improvements required to make EVFTA work

08:12 | 26/02/2017 Cooperation

(VEN) - The EU-Vietnam Free Trade Agreement (EVFTA) is expected to increase annual bilateral trade by approximately 50 percent after it takes effect, and to encourage 39 percent of European businesses in Vietnam to increase investment in the country.  

improvements required to make evfta work

Untapped potential

According to Deputy Minister of Industry and Trade Tran Quoc Khanh, European businesses have invested US$23.16 billion in Vietnam through 1,809 projects, accounting for 8.7 percent of the total number of projects and eight percent of the total amount of registered foreign direct investment (FDI) in Vietnam. European FDI in Vietnam is concentrated in the processing and manufacturing industries, real estate, and electricity generation and distribution.

“We hope the EVFTA will bring more European investors with modern technologies and advanced management skills to Vietnam, especially in fields where the country pledged to open the domestic market, such as machinery, electronic appliances, timber and wood products,” Deputy Minister Tran Quoc Khanh said.

Bui Huy Son, Director of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade, said there are a lot of opportunities for European businesses to invest in Vietnamese industries, such as textiles and garments, leather and footwear, and food processing.

The Vietnamese textile and garment sector still lacks materials and accessories. European businesses therefore can invest in manufacturing high-grade materials and design. The EU’s decision to provide Vietnam with US$400 million in funds for power and renewable energy development is expected to encourage European businesses to invest in the Vietnamese energy market. Vietnam wants to attract FDI for the oil, gas, and machinery manufacturing sectors in which European businesses have advantages.

Boris Gueudin, an Executive Board member of the European Chamber of Commerce in Vietnam, said pharmaceuticals, nutrition products, food, agricultural produce, and seafood would be key areas of European investment in Vietnam. Clean energy and machinery will also attract the attention of European businesses.

Potential hurdles

However, Boris Gueudin thinks European businesses will meet difficulties when investing in Vietnam. Poor infrastructure, a lack of support industries, and a big gap between Vietnam and the EU in exhaust fume standards and product quality control will hinder European investment in the Vietnamese motorcycle and automobile industries.

In the fields of food, agricultural produce and seafood, Vietnamese businesses still lack knowledge of safety and quality requirements, as well as laboratories. The Vietnamese government has yet to create a suitable legal framework for green growth. Vietnam lacks a specific court dealing with intellectual property-related cases. Pricing policies applied to the sale of European pharmaceutical products in Vietnam still lack transparency. Customs procedures remain unclear.

Deputy Minister Tran Quoc Khanh said the Vietnamese government and the Ministry of Industry and Trade would seek the opinions of international experts and foreign investors, which could help improve preferential policies applied to foreign investment in Vietnamese industries.

Viet Nga