EuroCham to help unlock door to Europe

Dr Matthias Duhn

Dr Matthias Duhn, EuroCham managing director, tells VIR’s Thanh Hieu about his optimism for increasing Vietnam-made exports to Europe amid an ongoing debt crisis and his view on Vietnam-EU Free Trade Agreement (FTA) negotiations.

Do you think the ongoing EU debt crisis will affect Vietnamese exports to the market?

I don’t believe that the crisis will affect Vietnamese exports. You have to see that the crisis only affects a few southern countries, but most of the exports go to the bigger countries like Germany, France, Italy and England. So you have to keep it in perspective. I would like Vietnamese to know that this crisis will be handled. It’s not a catastrophe or a disaster. There are issues with Greece, but the stability in the Eurozone is not in danger in the medium and long term. That’s why Vietnamese exports will also be very important and the market in the EU will be growing despite the crisis.

Do you think Vietnamese exports to the EU will increase or decrease, especially next year?

I believe exports will increase as there is demand but the Vietnamese need to distinguish their products a little bit from, say, Chinese products. They have to work on marketing and design, and upgrading the products and then the volume will be even bigger. Because you see currently most Vietnamese exports are raw materials and simple finished goods, such as garments, leather, footwear and furniture. In the long run, EuroCham has always recommended Vietnamese exporters upgrade products, not only design furniture or garment, add the values, and then the value in monetary terms is higher. It’s not so much how many pieces of garments you export. If one piece is $2 but if you export less and can get $20 per piece that is much better. So that I think is the focus for Vietnamese firms to upgrade products, make better products,  look at the design and look at what customers really want in the EU.

You have just said that Vietnamese exporters should increase the added value in products. How can they do that and does EuroCham have any supporting programmes?

EuroCham is a member organisation mostly for European companies that are in Vietnam already. But we also organise workshops and run EU projects that benefit particular Vietnamese businesses. For example, the MUTRAP is a good example of how we can support Vietnamese companies with information by getting together speakers and topics from the EU and helping them access the market, and also the trade information centre that we have established at the EuroCentre building in District 1, Ho Chi Minh City that will help with information to access the EU better.

What do you think of the current progress of the Vietnam-EU FTA negotiations?

We are not very happy about it because there is not so much progress at the moment. Karel De Gucht, the EU Commissioner for Trade met Prime Minister Nguyen Tan Dung in March 2010. That’s now one and a half years ago, and in this one and a half years we have not yet started official negotiations and it’s a pity because time is running out and the EU is also looking at other countries now, such as Indonesia, Thailand, Malaysia, Singapore.

And Vietnam probably has only a limited timeframe of maybe another year or two years to get this negotiation going or to complete that. Because the EU as you know had FTA talks within ASEAN but this did not work out. So the EU is not taking country-to-country approach, which includes Singapore, Malaysia, Thailand and Vietnam. But eventually if Vietnam will not enter into negotiations they will focus on another country like Malaysia, Indonesia or Singapore rather than Vietnam.

What are the potential benefits of a signed Vietnam-EU FTA to Vietnamese exporters?

It will boost exports because it will eliminate tariffs. Vietnamese goods would be much more competitive in the EU market because they could be imported at zero tariffs and all trade obstacles would be removed. Besides, most assessment studies said that the Vietnam-EU FTA will boost the gross domestic product (GDP) growth to 3 per cent. That’s quite an impressive number because 3 per cent of GDP will mean at least 3 to 4 billion euros.

The FTA will also allow strategic imports from the EU at a cheaper rate that will help bring in strategic goods such as machinery and equipment that you can use to make high added value products. But this will take some time, say, a couple of years until you feel these benefits. So you have to look at medium and long term benefits and by allowing more imports from the EU you will boost export of high-quality goods in the long run.