European bonanza around the corner

European bonanza around the corner - illustration photo

Giorgio Aliberti, Ambassador of the Delegation of the European Union to Vietnam, told VIR that with the EU-Vietnam Free Trade Agreement (EVFTA), scheduled to be adopted by the EU next February and by Vietnam the following May, the country will have the chance to attract major European investment and expand trade with the EU.

“I’m very positive about European investment prospects in Vietnam because the government here is committed to working together with us to try to find strong ways to move forward and reform, so I expect interest to increase,” Aliberti said. “Right now, already, we have important moves from ­European companies here – German companies, French, Belgian, Dutch, and many other companies, so there is already interest but we expect quite a bit more.”

“The bilateral Investment Protection Agreement (IPA) needs to be ratified by ­member states so it will take longer. Trade will come when these relationships strengthen and more companies will invest in the country,” Aliberti continued. “We cannot say in concrete terms where there will be bigger investment but it is what usually happens when you build stronger relationships. It’s possible that with the trend moving in the right direction, there will be an increase in trade and an ­increase in economic relations.”

Aliberti added that the next stage for the EVFTA is now in the hands of the European Parliament. “The agreement is being discussed in relevant committees. There is one leading committee in international trade, featuring members that visited Vietnam in the past. Discussions are ongoing and then there will be a vote, followed by a vote in the plenary, and then a final vote in the European Parliament,” Aliberti explained.

Inked in Hanoi on June 30, the agreements are set to bring unprecedented benefits for European and Vietnamese companies, consumers, and workers while promoting respect for labour rights, environmental protection, and the fight against climate change under the Paris Agreement.

Timo Vuori, executive vice president of Finland Chamber of Commerce, told VIR that Finnish firms are set to benefit from the EVFTA in Vietnam.

“The EVFTA improves market access for Finnish companies in environmental, insurance, postal, courier, and shipping services. Examples of environmental ­services covered by the agreement are sanitation and sewerage services, as well as nature and landscape conservation services,” Vuori said. “Barriers to market entry will also be reduced in the maintenance and repair services of machinery and equipment important to Finland. In education, Vietnam is opening its doors to cross-border adult education and language education for the first time. The agreement creates new opportunities for, as an example, operators offering online courses.”

Vuori added that Finnish businesses find Vietnam a very attractive market. “Therefore, more Finnish companies will definitely set up trade relations with Vietnamese companies,” he said.

The EVFTA will eliminate over 99 per cent of tariffs, with the EU immediately eliminating 85.6 per cent of its all import duties and 99.2 per cent after seven years. It is the highest commitment by an overseas partner so far. Meanwhile, Vietnam will liberalise 65 per cent of import duties on EU exports to Vietnam at entry into force, with the remainder of duties being gradually eliminated over a 10-year period.

According to new survey released recently by the European Chamber of Commerce in Vietnam (EuroCham), nearly 80 per cent of EuroCham members believe that the EVFTA will have either a ‘significant’ or ‘moderate’ impact on their business in the medium term. Meanwhile, 72 per cent said that it will help Vietnam to become a hub for European business in Southeast Asia.

“Remarkably, 80 per cent of EuroCham members ­believe the EVFTA will improve Vietnam’s competitiveness compared to other countries such as China, Japan, and South Korea,” said Nicolas Audier, chairman of EuroCham.

In the first 10 months of 2019, total trade turnover hit $46.4 billion, with Vietnam earning $34.2 billion from exporting to the EU and spending $12.2 billion importing goods from this market.

According to the Ministry of Planning and Investment, financiers from 23 out of 28 EU member states have registered about $25 billion into over 2,200 projects in Vietnam.