Vietnam’s major trade pacts: Where challenges offer opportunities

09:21 | 06/03/2020 Society

(VEN) - In 2020, free trade agreements (FTAs) are expected to continue providing Vietnam with export and investment attraction opportunities. Businesses need to take the initiative in making the best of those opportunities, Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, told Vietnam Economic News’ Ngoc Thao.

where challenges offer opportunities
Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy

What opportunities will FTAs offer businesses?

Vietnam has signed 16 FTAs, 12 of which have taken effect. Two of the signed FTAs - the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) - are expected to have profound impacts on the Vietnamese economy. Their implementation will boost trade growth through tariff reductions and market expansion commitments, contributing to economic growth, creating more jobs and providing the country with more opportunities to attract foreign direct investment (FDI).

With their comprehensive commitments in different fields, CPTPP and EVFTA can help Vietnam speed up its institutional reform to improve the business environment, improve enterprises’ competitiveness and accelerate Vietnam’s participation in the global value chain.

What should domestic enterprises do to take advantage of FTA opportunities?

Vietnam is an open economy, but it faces many risks. Although it has improved, the Vietnamese economy still has a number of problems, and FTA implementation confronts Vietnamese enterprises with challenges. Agriculture has become one of the most vulnerable sectors.

However, those challenges will also cause domestic businesses and farmers to restructure production and strengthen connectivity to develop. Thus, FTAs have opened up a wider playing field for businesses, but enterprises need to take the initiative in improving production capacity and getting information including market information if they are to take advantage of these opportunities. In any competition, there are winners and losers, and losers can seek opportunities in a different playing field.

where challenges offer opportunities
Enterprises need to take the initiative in order to enjoy the advantages of FTAs

Fast negotiation and early signing of FTAs made Vietnam one of the world’s most attractive investment destinations, providing opportunities to improve the quality of investment inflows. What is your assessment of this?

Fast negotiation and signing of FTAs has given Vietnam a new impetus, helping the country maintain its investment growth despite slowing investment attraction outside the country.

However, the state needs to continue reforming institutions and laws to attract quality FDI, especially in sectors with high added value, and at the same time facilitate startups and support industries, create opportunities for FDI enterprises to work with domestic businesses, and encourage domestic enterprises to participate in the global supply chain.

In 2019, FTAs helped Vietnam reach a foreign trade value of US$517 billion, an increase of nearly US$100 billion over the previous year. In 2020, FTAs are expected to provide domestic businesses with additional export opportunities.

Ngoc Thao