Hastening institutional reform and improving competitiveness has become more pressing than ever for Vietnam to help firms grab opportunities from several new-generation free trade agreements (FTAs).

Since entering the World Trade Organisation, reforms have been a focus but results remain disappointing, reported the Central Institute for Economic Management (CIEM) at a conference in Hanoi on January 20.

With new-generation FTAs like the European Union – Vietnam FTA (EVFTA) which went beyond tax liberalisation and facilitation, the pressure for institutional reform intensified in the Southeast Asian nation.

According to Tran Toan Thang from CIEM, the EVFTA did not directly require Vietnam to revise its legal documents and policies but doing this would be vital to limit negative impacts and take advantage of opportunities.

Hoang Van Phuong, Director of the ASEAN Department under the Department for Multilateral Trade, said at the conference that the EVFTA would come into force in 2018 and its commitments were under legal review.

Phuong said that the Ministry of Industry and Trade estimated 44 Vietnamese legal documents must be amended and five new ones issued.

CIEM Director Nguyen Dinh Cung stressed the importance of the trade deal to the Vietnamese economy despite Brexit.

“Vietnam must implement the EVFTA with seriousness,” Cung said. “Opportunities are there. But the Government must speed up reforms to enable firms to grab opportunities.”

Improve awareness

Improving businesses’ understanding of the EVFTA is also vital.

A survey carried out by CIEM on 120 firms that import and export to and from European markets showed that 69 percent of respondents had heard about the EVFTA but did not know anything about it.

Only 5 percent of them said they had deep knowledge while the rest had basic knowledge about the trade deal.

Another survey by the Vietnam Chamber of Commerce and Industry found that 63 percent of businesses had not taken any steps to get ready for the EVFTA or other trade deals.

The EVFTA would open opportunities for Vietnamese products such as garments, seafood, fruits and footwear with the removal of most of tariff lines, experts said.

Nguyen Minh Thao, head of the CIEM’s Business Environment Department, said that Vietnamese businesses must improve product quality and competitiveness to expand in the European market where there were strict quality requirements.

The EVFTA is expected to boost Vietnam’s export revenue to the EU by 4.6 percent.

VNA