Last weekend marked a milestone for Vietnam`s trade relations when the long-awaited deal was signed.
The EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA), which were signed in Hanoi on June 30, are expected to benefit both sides.
Accordingly, under the EVFTA, over 99 percent of tariffs would be eliminated with the EU removing duties on thousands of items sourced from Vietnam. Meanwhile, Vietnam will liberalize 65 percent of import duties on EU exports to Vietnam and the remainder of duties will be phased out over a 10-year period.
Many see this as a huge chance for both European and Vietnamese companies.
Win – win chance
“We are extremely confident that the EVFTA will further increase GDP growth of Vietnam,” said Denis Brunetti, CEO of Ericsson Vietnam, Myanmar, Cambodia and Laos.
The CEO explained that, the FTA would boost high-tech investment and trade between the EU and Vietnam, further increase mobile broadband data traffic across mobile networks, especially as all industries progressively become digitally transformed by Industry 4.0.
“We can also expect the accelerated introduction of 5G networks in Vietnam from 2020 onwards due to the higher digital data growth, anticipated through this increased trade and investment emanating from the EVFTA,” Brunetti told Hanotimes.
|Mr. Denis Brunetti|
Meanwhile, Marko Walde, chief representative of German Industry and Commerce Vietnam (AHK), believe that the agreement offers more opportunities for companies on both sides.
“This will happen through removing tariffs, reducing regulatory barriers and overlapping red tape, ensuring protection of geographical indications, opening up services and public procurement markets and making sure the agreed rules are enforceable,” said Walde.
New market access opportunities across a range of sectors will also be created thanks to EVFTA, he added.
|Mr. Marko Walde|
Marko quoted the result of AHK’s World Business Outlook, a survey conducted in April this year, as showing that German investment intention would grow further in Vietnam in 2020. 55 percent of German companies in Vietnam intend to expand their activities in the country and 59 percent assume an increase in employment. They expected EVFTA would improve the economic policy in Vietnam in the long run, according to the survey.
Amid the context, the EVFTA will benefit EU businesses exporting to and investing in Vietnam.
“I would give two examples in the automobile and machinery sectors: The current duties in Vietnam for imported European machinery and cars are up to 35 percent and 78 percent respectively. Once this FTA is fully in force, the duties will be reduced to zero percent. These figures show huge advantages of EVFTA for both sides,” Walde stressed.
IT - Industry benefits the most?
Both Vietnamese and European enterprises in numerous areas have waited for a long time to grab the chance from this FTA. The elimination of tariffs is expected to boost bilateral trade considerably and new opportunities to access markets will emerge across a range of sectors including goods, services and investment for German companies in Vietnam, according to Marko Walde.
“This is particularly true in the automobile, green energy, electronics, IT, food processing, and health care sectors,” said the leader of AHK Vietnam.
Meanwhile, Industry 4.0 & IoT projects, smart manufacturing initiatives and R&D facilities would also be the sectors which benefit the most from the FTA.
“This is due to improved intellectual property rights and investment protection mechanisms, coupled with increased incentives to invest in high tech innovation projects, a stronger focus on environmental sustainability and improved labor standards brought by the EVFTA,” Brunetti said.
Increased startup entrepreneurship and a growing digital economy will also fuel and drive up STI (Science, Technology & Innovation) project investments in Vietnam in light of the EVFTA, he added. Hanoitimes
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