Electronics, seafood and garment industries to benefit the most from EVFTA

Vietnam is the second country in Southeast Asia, following Singapore, that has signed an FTA with the EU.

The European Parliament (EP) on February 12 ratified the EU-Vietnam FTA (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA).

Electronics, seafood and garment industries to benefit the most from EVFTA



The EU was Vietnam’s second largest export market in 2019. The General Department of Customs (GDC) reported that the total import/export turnover between Vietnam and the EU (28 countries, including the UK) hit $56.4 billion in 2019, which accounted for 11 percent of Vietnam’s total import/export value.

A study by the Ministry of Planning and Investment (MPI) found that if EVFTA took effect in 2019, Vietnam’s GDP would be 2.2-3.3 percent in 2019-2023, 4.6-5.3 percent in 2024-2028 and 7.1-7.7 percent in 2029-2033 higher than the GDP without EVFTA.

According to VNDIRECT Securities, the tariff cuts will create a competitive edge for Vietnam’s exports over other rivals such as China and ASEAN member countries.

 


Vietnam’s footwear products, for example, will enjoy tariffs which are 3.5-4.2 percent lower than Chinese when the tariff is cut to zero percent after three to seven years.

A study by the Ministry of Planning and Investment (MPI) found that if EVFTA took effect in 2019, Vietnam’s GDP would be 2.2-3.3 percent in 2019-2023, 4.6-5.3 percent in 2024-2028 and 7.1-7.7 percent in 2029-2033 higher than the GDP without EVFTA.

Electronics, seafood and textiles and garments are believed to be the biggest beneficiaries from the agreement.

The EU is the second largest seafood export market for Vietnam which consumed $1.44 billion worth of products in 2018. About 90 percent of tariff line duties on seafood products will be cut to zero percent within 3-4 years from the current average rate of 14 percent.

As for electronic products, 74 percent of import tariff lines will be removed soon after the FTA takes effect, while the remaining will be eliminated within 3-5 years.

Electronics are Vietnam’s biggest export item to the EU, with the export value of $18.1 billion in 2018, which accounted for 43.3 percent of Vietnam’s total export value to the market.

The tariff cuts will not only create competitive advantages to Vietnam’s electronics, but also help encourage the trend of relocating factories to Vietnam to enjoy the preferential tariffs the EU offers to Vietnam.

As for textiles and garments, 42.5 percent of tariff lines will be removed soon after the agreement takes effect, while the remaining will see the tariff reducing gradually to zero percent within 3-7 years.

Meanwhile, pharmaceuticals, dairy and livestock products will face challenges in EVFTA.

Vietnam has committed to remove 48.5 percent of tariff lines on EU’s exports to Vietnam at the time when EVFTA takes effect, or 64.5 percent of total import value from the EU.

About half of the EU drug exports will be exempted from tax immediately and the remaining will enjoy this after seven years. Frozen pork will enjoy tax exemption after seven years, processed food after seven years and the tariff on chicken will be reduced to zero percent within 10 years. 

Linh Ha

EVFTA to boost Vietnam’s growth in long term: GSO head

EVFTA to boost Vietnam’s growth in long term: GSO head

The EVFTA and EVIPA, scheduled to become effective in July, will help improve Vietnam’s business and investment climate and boost its institutional reform, thus contributing to fostering its growth in a long term.

Investors upbeat regarding EVFTA

Investors upbeat regarding EVFTA

European companies are eager to grasp new business and investment opportunities from the EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement.

 
 

Other News

.
Is Vietnam ready to receive new FDI wave after Covid-19?
Is Vietnam ready to receive new FDI wave after Covid-19?
BUSINESSicon  27/05/2020 

Prof Nguyen Mai, an expert on FDI, and chair of the Vietnam Association of Foreign Invested Enterprises (VAFIE), pointed out three problems in the picture of FDI in Vietnam.

Vietnam ready for swift actions to boost economy
Vietnam ready for swift actions to boost economy
BUSINESSicon  26/05/2020 

The ongoing health crisis has been taking a heavy toll on the Vietnamese economy.

Numerous SOEs under special financial supervision
Numerous SOEs under special financial supervision
BUSINESSicon  26/05/2020 

Subsidiaries of SOEs like Jetstar Pacific, Angkor Air, DAP-Vinachem, and Petrolimex Laos will come under special financial supervision.

Environment Minister: Land Law disallows foreign ownership of land
Environment Minister: Land Law disallows foreign ownership of land
BUSINESSicon  26/05/2020 

The Land Law disallows the issuance of land use rights certificates to aliens, Minister of Natural Resources and Environment Tran Hong Ha told reporters on the sidelines of the National Assembly session on May 25.

Ministry proposes slashing corporate income tax by 30% for small, micro businesses
Ministry proposes slashing corporate income tax by 30% for small, micro businesses
BUSINESSicon  26/05/2020 

The Ministry of Finance has proposed that the Government reduce corporate income tax by 30% for small and micro enterprises in 2020 to help them overcome difficulties caused by the Covid-19 pandemic.

Funding shortage may leave 25 traffic projects suspended
Funding shortage may leave 25 traffic projects suspended
BUSINESSicon  26/05/2020 

As many as 25 traffic projects in Vietnam could be suspended or delayed due to capital shortages, according to the Ministry of Transport.

Local airlines would offer more rates with increasing ceiling prices
Local airlines would offer more rates with increasing ceiling prices
BUSINESSicon  26/05/2020 

Increasing ceiling rates for airfares would bring more chances for the local aviation firms to have flexible and suitable price policies on the...

China tests digital currency and policy recommendations for Viet Nam
China tests digital currency and policy recommendations for Viet Nam
BUSINESSicon  26/05/2020 

China this month started testing its sovereign digital currency, the so-called Digital Currency Electronic Payment (DCEP), putting pressure on Vietnam to research cryptocurrency in the context of international integration.

VN Trade Ministry sets up working groups for EVFTA
VN Trade Ministry sets up working groups for EVFTA
BUSINESSicon  26/05/2020 

The Import and Export Department under the Ministry of Industry and Trade has set up different working groups to implement the the EU-Viet Nam Free Trade Agreement (EVFTA).

Coronavirus: Lufthansa agrees €9bn rescue deal with Germany
Coronavirus: Lufthansa agrees €9bn rescue deal with Germany
BUSINESSicon  26/05/2020 

European markets rose on the bailout deal news, which sees Germany take a 20% stake in the firm.

WB: EVFTA could lift Vietnam’s exports by 12 percent by 2030
WB: EVFTA could lift Vietnam’s exports by 12 percent by 2030
BUSINESSicon  26/05/2020 

The World Bank (WB) has predicted that the EU-Vietnam Free Trade Agreement (EVFTA) could help Vietnam’s GDP and exports grow 2.4 percent and 12 percent, respectively, by 2030, the Ministry of Industry and Trade (MoIT) has reported.

Japanese firm and officials under investigation over alleged bribery
Japanese firm and officials under investigation over alleged bribery
BUSINESSicon  26/05/2020 

Minister of Finance Dinh Tien Dung has requested an urgent investigation into an alleged bribery of Vietnamese officials by Tenma Vietnam - a subsidiary of Japan’s plastic product maker Tenma Corporation.

Pharmaceutical enterprises enjoy good earnings in Q1
Pharmaceutical enterprises enjoy good earnings in Q1
BUSINESSicon  26/05/2020 

Increasing demand for medicine amid the COVID-19 pandemic has helped most pharmaceutical enterprises report positive business results in the first quarter of this year.

Vietnam hopes to redraw map of supply chains as more companies leave China
Vietnam hopes to redraw map of supply chains as more companies leave China
BUSINESSicon  26/05/2020 

Experts believe that the departure of large manufacturing corporations from China, plus the plan to boost global economic development, will bring new opportunities to Vietnam.

During COVID-19, VN real estate markets gather online
During COVID-19, VN real estate markets gather online
BUSINESSicon  26/05/2020 

Realtors have been trying to sell products online and through mobile apps.

VN car market continues to slide
VN car market continues to slide
BUSINESSicon  26/05/2020 

As predicted by experts, the Vietnamese automobile market continues sliding as manufacturers cannot sell products and their production has arrived at a ‘new normal’.

Vietnamese businesses ready to exploit EU market under EVFTA
Vietnamese businesses ready to exploit EU market under EVFTA
BUSINESSicon  26/05/2020 

Vietnamese enterprises’ awareness of EVFTA has been heightened significantly, and they have prepared to grab business opportunities and find a foothold in the supply chain.

VN ready to be world’s factory, but is the world?
VN ready to be world’s factory, but is the world?
BUSINESSicon  26/05/2020 

Vietnam attracted US$12.33 billion worth of foreign direct investment in the first four months of 2020, a year-on-year decrease of 15.5 per cent due to the impact of the COVID-19 pandemic, according to the Foreign Investment Agency.

A common voice in labor relationship needed
A common voice in labor relationship needed
BUSINESSicon  26/05/2020 

Covid-19 has forced many enterprises to lay off their employees. However, the biggest headache in the labor relationship is how to seek a common voice between employers and employees.

Transport Ministry proposes State to compensate controversial BOT tollgates
Transport Ministry proposes State to compensate controversial BOT tollgates
BUSINESSicon  25/05/2020 

The Ministry of Transport has proposed that the Government compensate developers of two out of four build-operate-transfer (BOT) tollgates and shut them down due to protests among road users.

 
 
 
Leave your comment on an article

OR QUICK LOGIN