EVFTA strengthens Vietnam's attractiveness to European investors

Businesses need to continue taking advantage of opportunities from EVFTA. Photo: H.Dịu

According to the Ministry of Industry and Trade, after four years of EVFTA coming into effect, the proportion of Vietnamese goods exported to the EU market has increased and Vietnam has become the country with the largest market share compared to other countries in the ASEAN region exporting to the EU. EVFTA helps many EU importers know more about Vietnamese suppliers.

Statistics from the General Department of Customs show that the export turnover of goods to the EU in June 2024 reached over US $ 4.28 billion, an increase of 7.85% compared to May 2024 and an increase of 19.54% compared to June 2023. In the first six months of 2024, the total export turnover of goods to the EU reached over US $24.69 billion, an increase of 15.37% over the same period in 2023. Exports to most key markets in the EU increased in turnover compared to the same period in 2023.

According to the assessment of the European Chamber of Commerce in Vietnam (EuroCham), EVFTA has significantly boosted Vietnam's exports to Europe, soaring from €35 billion in 2019 to more than € 48 billion in 2023. The growth is evident in areas such as electronics, textiles, footwear, agriculture and seafood. However, the increase in EU exports to Vietnam was much more modest, increasing from only € 11 billion to €11.4 billion in the same period, significantly increasing the trade imbalance.

Regarding the level of business utilization, a recent survey by the Vietnam Federation of Commerce and Industry (VCCI) showed that the rate of businesses understanding EVFTA is higher than other FTAs. Nearly 50% of businesses have enjoyed specific benefits from EVFTA. The rate of utilizing EUR.1 C/O incentives is high. In 2023, the rate of using EUR.1 C/O will be 35.2% of export turnover, equivalent to the export turnover using C/O of US $ 15.4 billion, an increase of 26.1% compared to 2022.

EuroCham's Business Confidence Index (BCI) survey in July showed that nearly 2/3 of survey participants said they had received benefits but at different levels. Notably, 27% of businesses - a significant increase from 18% of businesses surveyed in 2023 - are currently receiving moderate to very large benefits, while 23% of businesses have yet to see any tangible benefits.

In terms of investment, EuroCham businesses commented that the EVFTA has certainly strengthened Vietnam's attractiveness to European investors. Investors from the European Union have poured €28 billion into 2,450 projects, thereby underscoring the EU's confidence in Vietnam's potential. It is notable that EU investors added €800 million in foreign direct investment between January and September 2023, bucking the global trend of declining FDI.

Seizing the opportunity, understanding how EVFTA works

EVFTA is assessed by businesses to have many benefits in terms of reducing tariffs as EVFTA eliminates tariffs on 65% of the value of EU exports from the time the agreement comes into effect, the remaining taxes will be gradually eliminated in the next decade. Meanwhile, 71% of Vietnamese exports to the EU will be tax-free after EVFTA comes into effect. This rate is expected to increase to more than 99% in the next seven years. At the same time, in EVFTA, businesses will be facilitated in investment procedures, customs, improved market access...

At the same time, businesses also face stricter requirements on green growth, intellectual property... from the EU market. In addition, EuroCham’s BCI survey also pointed out a number of obstacles that European businesses face in making the most of the EVFTA, including complex legal requirements and the lack of recognition of international standards by local authorities, as well as technical barriers, especially in the field of product certification and testing…

According to Mr. Dominik Meichle, Chairman of EuroCham Vietnam, the EVFTA has certainly created new opportunities for European businesses in Vietnam, but many challenges remain. Therefore, as we enter the fifth year of the agreement, it is important to continue efforts to simplify procedures, unify standards and ensure everyone understands how the EVFTA works.

In addition, EuroCham is actively supporting the full ratification of the EU-Vietnam Investment Protection Agreement (EVIPA) as an important step to unlock the full potential of the EVFTA to attract foreign direct investment.

On the part of Vietnamese enterprises, experts recommend that Vietnamese enterprises need to continue to proactively take advantage of opportunities from EVFTA, grasp information about the world market, impacts of the world economy... At the same time, proactively innovate production and business methods, innovate technology, create quality products, better meet the needs of the EU market.