Vietnam and Switzerland expect FTA horizon by year-end

The hybrid seminar was organised by the Vietnam Embassy in Switzerland on September 8 to commemorate Vietnam’s 78^th National Day and attracted some 150 attendees, including government officials, economists, bankers, fund managers and entrepreneurs from the two countries.

Ambassador Markus Schlagenhof of the Swiss State Secretariat for Economic Affairs

Speaking at the seminar, Ambassador of Vietnam to Switzerland Phung The Long reiterated that the Vietnamese government considers Switzerland as one of its important partners in Europe, while the latter confirmed Vietnam as “the most dynamic economy in Southeast Asia” and “an increasingly important partner for Switzerland” in its Southeast Asia Strategy 2023-2026 that was issued earlier this year

The strategy publicised in February this year also stated, “Switzerland is working towards the conclusion of an EFTA-Vietnam free trade agreement as a way of further improving the conditions for business and countering the existing disadvantages of Swiss companies as opposed to those that are EU-based.”

The free trade agreement (FTA) negotiations between Vietnam and EFTA started in 2012 and halted in 2018 after 16 rounds of negotiations. Since then, this issue has been repeatedly mentioned during every meeting between the two countries, but no major progress has been seen.

However, it was discussed in the Swiss parliament last week and several high-level contacts have taken place over the last few weeks, revealed Ambassador Markus Schlagenhof, head of the World Trade Division at the Swiss State Secretariat for Economic Affairs (SECO) and Delegate of the Federal Council (the government) for Trade Agreements.

These developments must have been attributed to the results of the visit by President of the Swiss National Council (the lower house) Martin Candinas to Vietnam in June this year.

Ambassador Schlagenhof also said that, through the recent developments, he believes both sides understand each other’s flexibilities and what is needed in order to gain support from both sides for the conclusion of the FTA, "At least we have very clear way forward on what needs to be done."

“A couple of expert meetings are anticipated over the weeks to come. And the next round of negotiations to clear all the outstanding elements should be held by the end of this year,” he disclosed.

"I have never been as optimistic as I am today. I am pretty sure we will get there. The new trade agreement will provide additional legal certainty for Swiss investors, promoting and protecting Swiss direct investment into Vietnam," he concluded.

Swiss presence in Vietnam

The head of SECO’s World Trade Division also expressed his satisfaction at the fact that more than 100 Swiss companies, from multinationals to small- and medium-sized enterprises, have been present in Vietnam since the early 1990s.

They operate in all fields, from construction, machinery manufacturing, precision tools, and food processing, to medical technology, IT, transportation, and logistics, hiring some 20,000 people. The food group Nestlé has been repeatedly named the best employer in Vietnam, he said proudly.

Joining the seminar via a video call from Hanoi, Ambassador of Switzerland to Vietnam Thomas Gass also shared his delight as he visited to witness the success of Swiss companies in Vietnam over the last eight months since his arrival in the country. Several large Swiss enterprises such as Sika, ABB, and Nestlé have or will soon celebrate their 30^th anniversary of successful operation in Vietnam.

The Swiss presence in Vietnam is however not readily visible, added Ambassador Gass.

“If you want to see Switzerland's presence in the Vietnamese economy, don't look for the signboards. Go to the machine rooms, the laboratories, go to the fields and food processing plants, walk the factort floors, visit the building sites. There you will see Swiss technology, know-how, and management processes, through which you can easily recognise the contribution of Switzerland to Vietnam to build a more resilient and sustainable economy,” he said.

Meanwhile, Chairman of Hanoi People’s Committee Tran Sy Thanh, who was coincidently visiting Switzerland and joined the seminar, said the Swiss companies have to date invested $109 million in the capital city.

"As Vietnam is aiming to become a developed, high-income country by 2045, Swiss companies, with their strengths, cutting-edge technologies, and experience, have ample room to strengthen economic cooperation between the two countries. This is especially true in Hanoi, one of the two largest economic centres of Vietnam," Thanh said.

He expressed his desire to promote cooperation with Switzerland in terms of research and development (R&D) and high-tech industries, as well as green and sustainable economic sectors.

Agreeing with Hanoi’s mayor, Ambassador Gass suggested that the two countries should promote R&D cooperation through higher education facilities, universities, the private sector, and joint innovation projects.

Promising market

Angela Di Rosa, senior consultant for the Southeast Asian market from Switzerland Global Enterprise (the investment and export support agency under SECO), encouraged Swiss companies to come to Vietnam to explore the market and its business environment, find local partners, and start business if conditions are assessed as favourable.

Senior consultant for Southeast Asia at Switzerland Global Enterprise Angela Di Rosa

Meanwhile, from the view of a Swiss company operating in Vietnam for more than 30 years, Dr. Laurent Sigismondi, head of the CEO Office and member of the Executive Committee of the trading and service business group DKSH, shared his company’s success in the market. He found Vietnam to be an important investment hotspot in Southeast Asia that offers many attractive opportunities.

Dr. Laurent Sigismondi from DKSH Group

“The increasing trend of bilateral trade and investment from Switzerland into Vietnam confirms that Vietnam is a promising market for Switzerland,” Ambassador Schlagenhof said in his speech, adding that the International Monetary Fund recently made optimistic forecasts about Vietnam such as average economic growth of 6.9 per cent annually over the coming years, and a rise in per-person income from the current $4,000 to $7,000 by 2028.

Switzerland sees downside as FTA not yet reached The entry into force of the EU-Vietnam free trade agreement (FTA) has put Swiss exporters at a competitive disadvantage over their main EU competitors, spokesman for Switzerland’s State Secretariat for Economic Affairs (SECO) Fabian Maienfisch told Thuc Minh.

In search of access to EFTA markets Vietnam has been in negotiations for a free trade agreement with the European Free Trade Association (EFTA) since 2012. Karin Büchel, head of FTAs and EFTA at the State Secretariat for Economic Affairs in Switzerland, highlights the benefits to both sides once such an agreement is in place.