Tapping Full Advantages of FTAs

31-Aug-2019 Intellasia | VCCI News | 6:02 AM Print This Post

Vietnam has signed and concluded negotiations on many FTAs; expanded relations and upgraded partnerships with many countries; and successfully organised many regional events. This has opened up a vast space for economic cooperation in the near future. However, to grasp every opportunity of development, there is a need for coordination of the government and the business. Vietnam Business Forum Magazine would like to excerpt expert opinions on this topic.

Vu Ba Phu, director of the Vietnam Trade Promotion Agency, Ministry of Industry and Trade

In the context of globalisation alongside Vietnam’s entry into many new generation free trade agreements (FTAs), the Vietnam Trade Promotion Agency has been working for the ultimate goal of making full use of commercial interests from FTAs, with a focus on promoting information technology application to e-commerce, and speeding up international cooperation for business support.

Besides, we have been desperately seeking potential partners for domestic businesses and enhance business support to maintain a long-term, sustainable cooperation with those trading partners. They are perhaps major associations and giant foreign corporations such as Amazon Global Selling. In the present context, finding a trading partner is deemed more important than marketing because the partner can invest in the market today but it may leave tomorrow for other markets. Therefore, an effective and sustainable connectivity with trading partners is extremely important.

We will also help businesses improve market intelligence, enabling them to form a smooth market information channel for Vietnamese trade offices and representative agencies on the world market with the Vietnam Trade Promotion Agency, the Import and Export Department, local trade promotion centers and business associations.

By market, export promotion will prioritise markets with which Vietnam has FTAs and focuses on sectors with the sharpest tariff reductions. Then, priority is placed on traditional markets which Vietnam has already established cooperation and export platforms and Vietnamese goods have had certain competitive advantages. Next, we will move into new export markets.

Businesses are very active in trade promotion. The government cannot do all for them and cannot afford all trade promotion activities. For that reason, they need to share funds for trade promotion with the government. They must be active to find markets as well as building, maintaining and developing their brands in the international market to ensure sustainable export operations.

Dr Mac Quoc Anh, vice Chair, Secretary general of Hanoi Small and Medium-sized Enterprises Association

Currently, Vietnam has a highly open economy, as evidenced by its entry into many ambitious new-generation trade agreements such as CPTPP and EVFTA.

In this context, Vietnam must take into account State roles in fulfilling integration commitments to create catalyst forces through reforms such as SOE administration, public procurement, services and even dispute settlement mechanism according to general international principles. FTA communications must go with raising institutional capacity for agreement enforcement. At the same time, the country must create opportunities for enterprises to join with relevant authorities to execute trade agreements.

In addition, the active responsiveness of every business is important. Enterprises themselves must prepare for going to the ‘vast sea’ with modern means but Vietnam must get to grips with those tools. To capitalise on FTA benefits, businesses, especially SMEs, need to actively research information to have active preparations to grasp opportunities, respond to challenges in the EU market, take solutions for higher product quality and better product design, enhance competitive edge and increase productivity. Notably, to enjoy all FTA preferences, their products must meet the EU’s requirements on rules of origin, technical specifications, hygiene and safety standards.

Currently, the EU is a comprehensive partner of Vietnam and is moving towards sustainable partnership. Therefore, the two sides can cooperate in technology transfer and training to improve human resource quality and build up institutional capacity. Hence, this is a great opportunity for Vietnam to form a necessary and very important integration platform. At the same time, it needs to establish a new strength and position in the international arena to equally and effectively integrate into the world economy.

Economist Do Thanh Nam

Vietnam has signed and concluded negotiations on many FTAs (e.g. with South Korea, the Eurasian Economic Union, CPTPP and EVFTA), opening up a vast cooperation room for the economy in the near future. Besides, Vietnam has expanded relations and upgraded partnerships with many countries, successfully organised regional and global events such as Apec 2017, the sixth Mekong Subregion Summit (GMS 6), the 10th CambodiaLaosVietnam Development Triangle Summit (CLV 10), and the second US-North Korea Summit. These are testaments to the nation’s position, demonstrate its active and positive role in the region and the world.

With its deepening integration, Vietnam’s economy has effectively utilised external resources for development. Vietnam has already signed 12 FTAs and is negotiating another four, enabling Vietnam’s economy to link to 60 economies that account for 90 percent of Vietnam’s trade turnover. This is one base for Vietnam to maintain high GDP growth momentum in the past years and conduct economic restructuring, institutional reform and growth model change, associated with the new industrial revolution.

As a non-permanent member of the United Nations Security Council in 2020-2021, Vietnam will make great contribution because Vietnam has obtained many achievements in economic growth and social progress well recognised by the international community. Vietnamese enterprises will also have new opportunities to deepen their world economic integration.

Pham Hong Hai, CEO of HSBC Vietnam

The influence and perception of Asean region in general and Vietnam in particular in the eyes of foreign investors are still very poor. I have asked many foreign investors about why they did not invest in Vietnam or other Asean countries, most answered that Vietnam’s market is too small. When doing investment promotion, they tend to target at big markets like China and India.

Therefore, Vietnam needs to further introduce and promote its market potential. While we see our great potential; investors, however, see that the Vietnamese market is too complex with ambiguous rules. In addition, the improvement of the business and investment environment has not been synchronised among ministries and localities.

In order to attract foreign investors, Vietnam needs to understand and address their matters of concerns like rapidly rising labour costs (7-8 percent annually), complicated public administrative procedures and changing laws.

To attract global supply chains, businesses themselves need to change. China had to spend many years asserting itself as the world’s production base. Vietnam also needs time to do so. However, to join value chains, Vietnamese businesses must change themselves, make quality-stable products, and invest in modern machinery system to meet international standards.

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Category: Economy, Vietnam

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