Local aluminium firms urged to tap opportunities from EVFTA

Experts share ideas that could help local aluminium producers fully take advantage of EVFTA.- Photo bizlive.vn

Nguyen Minh Ke, chairman of the association of Vietnamese aluminium profile for the North told a workshop in Ha Noi this week that the local aluminium industry has faced fierce competition from foreign firms in the domestic market. The country’s aluminium sector is still young and has not yet employed advanced technologies.

“In addition, the competitiveness of Vietnam’s aluminium products has been weak," Ke said. "Imports of input materials for aluminium production have been taxed at 3 per cent since September 2015 while the export tax was increased from zero to 5 per cent, making it difficult for local aluminium producers."

He added that EVFTA would bring opportunities but also challenges due to strict requirements from the EU in the areas of product origins, environmental protection and labourer regulations.

Vu Van Phu, the association’s vice chairman cum general secretary, said only 5 per cent of the aluminium produced in Vietnam is exported to the EU.

“Goods exported to the EU must be of good quality and clear origins to meet with requirements," he said. "Vietnamese aluminium businesses have been weak in the area of goods origin. They must overcome this shortcoming to fully tap the opportunities from EVFTA.”

He added that most local firms relied on imported materials.

He suggested businesses have their own materials or import from countries other than China.

Vice President of the European Chamber of Commerce in Vietnam (EuroCharm) Nguyen Hai Minh said the tariff for Vietnamese aluminium exports to the EU would be eliminated within eight years of when EVFTA takes effect. However, Minh emphasised that businesses must meet market conditions to enjoy incentives even after tariffs are removed.

With this deal, European businesses will shift their investment to Vietnam, then export to ASEAN countries and move towards other Asian markets, he said.

He suggested businesses, especially small- and medium-sized enterprises, change their mindset and working style to make use of opportunities from trade deal.

Senior economist Vo Tri Thanh said Vietnam’s aluminium products have primarily been exported to ASEAN countries, the US and the EU.

He suggested local producers further enhance exports to reduce the impact of competitiveness in the domestic market.

There is still a lot of room for Vietnamese aluminium in the European market, he said. In the domestic market, the anti-dumping tax is a protection tool but will only last for a few years. Therefore, he said, improving competitiveness is a way for Vietnamese enterprises to develop and take advantage of FTAs with exports.