Prompt action needed to take advantage of FTAs

The seminar on business and investment opportunities arising from the EU-Viet Nam Free Trade Agreement (EVFTA) on Wednesday in Hanoi. (Photo qdnd.vn)

Viet Nam has signed many trade deals with different countries and regions but both local authorities and businesses have been slow to prepare plans for these changes, said Ngo Chung Khanh, deputy director of the Ministry of Industry and Trade’s Multilateral Trade Policy Department.

Speaking at the seminar on business and investment opportunities arising from the EU-Viet Nam Free Trade Agreement (EVFTA), Khanh said inertia is common among Vietnamese authorities and businesses. He expressed his fear that businesses are not doing enough to take advantage of the ongoing implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

As an example, Khanh cited the Prime Minister's request for local authorities and ministries to build action plans to implement CPTPP. To date, only a few have submitted their proposals.

"Up to now, we’ve yet to receive full action plans from ministries, sectors and localities," he said. "Implementation is too slow and if we continue this stagnancy then all the presentations on opportunities will remain on paper and never become a reality."

EVFTA and CPTPP are two new-generation FTAs with a broad scope and the highest level of commitments that Viet Nam has ever signed. Under the two trade deals, some reference calculations estimate Viet Nam’s gross domestic product (GDP) could increase by between 1.3 per cent and 1.6 per cent.

EVFTA has a very short schedule for tariff reduction with many Vietnamese products enjoying tariff-free exports to the EU. Viet Nam's competitors in the region such as China, Thailand and Malaysia have not signed an FTA with the EU, but that does not mean they never will. Khanh told businesses they must move quickly to take advantage of the FTA while Viet Nam is in an advantageous position.

He pointed out the indifference of local businesses to the trade deal. Only two foreign direct investment enterprises have sent questions on issues of tax codes or rules or origin concerning EVFTA.

Viet Nam and the EU signed EVFTA and the Europe-Viet Nam Investment Protection Agreement (EVIPA) on June 30. Khanh said the two agreements would be submitted to the National Assembly for approval in October this year and the European Parliament would vote around the same time to hopefully have the deals take effect next year.

Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry (VCCI), said Viet Nam’s economic openness was second in ASEAN only to Singapore but its competitiveness and capacity for integration were still low.

Viet Nam placed 77th out of 140 countries in the 2018 Global Competitiveness Report by the World Economic Forum. It placed 99th for institutional competitiveness and 101st in business competitiveness.

The EU is highly demanding market and has little direct competition with Viet Nam so Vietnamese products have advantages, Loc said. To make the most of their strong position, Loc said local businesses must satisfy many requirements for origins, environmental standards, labour relations and sustainable development. This means they need to restructure their production processes and technologies.