FTAs: Opportunities and challenges for Vietnamese businesses

Government agencies and the business community are gearing up to take full advantage of these deals.

Vietnam has signed a number of bilateral and multilateral free trade agreements, completed negotiation of an FTA with the EU, and is negotiating the Regional Comprehensive Economic Partnership.

Vietnam is also negotiating the ASEAN-Hongkong FTA and bilateral FTAs with Cuba and Israel. In 2016, Vietnam became a member of the ASEAN Economic Community and started implementing an FTA with the Eurasia Economic Union.

Vietnam’s international integration has expanded from goods to services, including finance, investment, state-owned enterprises, and Government procurement.

The Government last September announced 10 special preferential import tariff rates while the Finance Ministry has implemented or is creating roadmaps for import tariff commitments.

Minister of Industry and Trade Tran Tuan Anh

Vietnam has cut more than 8,500 or nearly 90% of its tariff lines on imports from the Republic of Korea.

“Vietnam is committed to opening its retail market. We are designing a strategy for the retail industry for 2017 with a vision until 2025 and completing appropriate and legitimate technical barriers to protect domestic products,” said Minister of Industry and Trade Tran Tuan Anh.

FTAs have put increasing pressure on domestic businesses. A 2016 survey by the Vietnam Chamber of Commerce and Industry showed that 88% of Vietnamese businesses have plans to improve their performance by raising product quality, applying advanced technologies, and expanding markets to tap the full potential of FTAs.

Experts say that understanding FTA commitments, particularly to open markets, is a prerequisite for seizing opportunities and handling challenges effectively.

“During integration, Vietnam has realized that internal strength is vital for development. We must reinforce the strength of the national economy and domestic businesses because no country can develop relying merely on external resources. Integration is worthwhile only when it makes Vietnam stronger,” said economist Pham Chi Lan.