UKVFTA opens up opportunities for steel, mechanical firms

Illustrative image (Source: VNA)

Hanoi – Vietnamese exporters in the steel and mechanic sectors expect to get easier access to the UK market following the signing of the UK-Vietnam Free Trade Agreement (UKVFTA) last month.

According to the Vietnamese Ministry of Industry and Trade, the UK is Vietnam’s third largest trade partner in Europe.

Vietnam’s major exports to the UK include phones and component, garments-textiles, footwear, seafood, wood and timber products, computers and components, cashew nuts, coffee, and pepper.

Previously, Vietnamese steel products had been mainly shipped to Southeast Asian nations, the US and China, the Vietnam Steel Association (VSA) said, noting that there is ample room for those products to enter the UK market.

However, it is not easy to boost steel exports to the country right in 2021 as the UK is a demanding market in terms of standards and incentives. In addition, steel is not Vietnam’s strength.

Notably, the complex developments of the COVID-19 pandemic in the UK and Europe have hindered the exchange of goods in general and steel products in particular.

Given increased protectionism, it is necessary to shift towards other markets apart from such traditional ones as ASEAN, China and the US, and the EU-Vietnam Free Trade Agreement (EVFTA) and the UKVFTA are set to facilitate Vietnamese steel exports.

The VSA suggested Vietnamese enterprises update technologies and revamp their production process as well as business methods.

Dao Phan Long, Chairman of the Vietnam Association of Mechanical Industry, pointed out weaknesses in production technologies, especially machinery and high-tech equipment, facing the domestic mechanical sector.

There will be not many opportunities for Vietnamese mechanical product exporters, he said. Therefore, those firms should optimise the agreement to attract British investments in mechanics, electronics, processing and manufacturing, in order to participate in production and supply chains.

Nguyen Duc Cuong, General Director of Hikari Vietnam Production and Trading Company Limited, said only companies that have long-term operation plans with good administration methods can exist and grow in 2021.

Experts also emphasised the need for Vietnamese goods to meet high-standards set by the UK regarding product quality, environment, hygiene and prices.

To that end, domestic firms must further apply technologies, improve product quality and lower prices, while keeping a close watch on changes in product standards, production process and customs procedures, they said.