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Last updated: Tuesday, December 11, 2018

 

EVFTA Triggers Boost to Vietnam’s Trade and Investment

Posted: Thursday, November 01, 2018


Recently, the European Commission (EC) submitted the EU- Vietnam Free Trade Agreement (EVFTA) for approval. This coincided with the visit by Prime Minister Nguyen Xuan Phuc to Europe. With this new progress, the agreement is expected to be signed in 2019.

EVFTA: Benefit for both sides
This will be one of the most ambitious and comprehensive trade agreements signed by the EU and a developing country. Once EVFTA is signed, Vietnam will join the group of privileged tax-free countries when entering the market with more than 700 million European consumers.

Once approved and implemented, EVFTA will trigger tax reductions of up to 99 per cent on a range of items, removing technical barriers, tariffs and increasing intellectual property protection. Vietnam will liberalise 65 per cent of the value of European exports to Vietnam as soon as the agreement enters into force. The remaining tariff will be eliminated within 10 years.

EU will eliminate 84 per cent of tariffs on goods imported from Vietnam as soon as EVFTA becomes effective, and will reduce 99 per cent within 7 years. While Vietnam is actively negotiating, signing and implementing FTAs with many major trading partners, EVFTA will have a synergy effect on the ASEAN Economic Community and other FTAs, attracting investment from the EU, thereby promoting the reform of Vietnam’s growth model, contributing to a transparent and stable business environment for enterprises and investors. For the EU, the benefits from EVFTA are also very clear. EU research has shown that EVFTA will increase EU national incomes in the long term, with an increase of up to € 29.5 billion.

EVFTA will expand the market, strengthen trade and help Vietnam become an attractive investment destination for European companies in Southeast Asia. Vietnam will become a centre of trade and investment in the region, said Mr Denis Brunetti, Co-Chairman of the European Chamber of Commerce in Vietnam (Eurocham).

Taking advantage of AFTA to attract high quality investment
 By the end of 2017, 24 out of 28 EU member states had invested in Vietnam with about 2,000 active projects and a total registered capital of over US$21.5 billion. EU investors have been present in almost all Vietnam's key economic sectors, with the largest focus on processing and manufacturing; production and distribution of power, gas and water; information & communication; real estate business and mining. Once the EVFTA is adopted, it is expected to boost EU investment into the country.
Dr Pham Tat Thang from Trade Research Institute, Ministry of Industry and Trade, said that Vietnam has thus far participated, signed and concluded 16 bilateral and multilateral free trade agreements with 65 economies around the world.

The Government is continuing to reform the law and improve the business investment environment, reform administrative procedures and strengthen business conditions. This will increase investor confidence in the Vietnamese market and continue to encourage more FDI.

The signing of free trade agreements has opened the door to receiving and bringing Vietnam's investment abroad. In order to attract FDI in a sustainable manner, he said that Vietnam needed to take full advantage of the agreements in the FTAs. Through the FTAs, Vietnam will have access to modern technologies from Japan, the EU and member countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).

To attract more FDI, Ambassador Bruno Angelet, Head of the Delegation of the EU to Vietnam, said that Vietnam needs to continue to grasp the trend of free trade and open markets. At the same time, Vietnam needs to continue to remove the current investment and trade barriers along with improving the business environment. Transparency is a key factor for investors to understand the rules and procedures to follow.

Nguyen Thanh









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