Vietnam-EU FTA will trigger a wave of high-quality investment

The Vietnam-EU Free Trade Agreement is expected to trigger a wave of high-quality investment into Vietnam and promote deep integration.

At the launching ceremony of the White Book and the EU-Vietnam FTA vision, senior leaders of Vietnam and the European Union (EU) agreed to make efforts to carry out legal reviews, move towards signing procedures and aim for the Vietnam-EU Free Trade Agreement (EVFTA) to be applied in 2018.

Great strides

Ambassador Bruno Angelet - Head of the EU Delegation to Vietnam said that EVFTA will trigger a larger wave of high-quality EU investment in Vietnam and promote deep integration, as well as create added value for the Vietnamese economy.

However, according to Mr. Bruno Angelet, the bright prospects and great opportunities from EVFTA need to be supported by the Vietnamese private sector. This sector must increase its supply to European businesses in Vietnam so that they can source locally instead of importing components from abroad.

Besides, Vietnamese companies also need to develop through trade and export, exploiting European markets more.

The Head of the EU Delegation to Vietnam affirmed that the EVFTA is an important milestone in trade, economic and investment relations between Vietnam and the European Union, laying the foundation for a comprehensive partnership between the two sides.

Minister of Industry and Trade Vu Huy Hoang emphasized that over the past time, trade and investment relations between Vietnam and the EU have developed very positively. Two-way trade turnover increased from 4.1 billion USD in 2000 to 41.4 billion USD in 2015, making the EU Vietnam's leading trade partner.

Mr. Bruno Angelet - Ambassador, Head of the European Union Delegation to Vietnam - speaking at the launching ceremony of the White Book 2016 in Hanoi

Minister Vu Huy Hoang said that the EU is one of the largest sources of foreign direct investment (FDI) in Vietnam with 2,162 valid investment projects and a total registered investment capital of 38.4 billion USD. In particular, the most prominent feature in the trade and investment relationship between Vietnam and the EU is mutual complementarity.

The Minister noted: “The Vietnam-EU Free Trade Agreement will open up opportunities to access the market and continue to improve relevant laws, especially economic laws.”

This is the basis to affirm the potential for trade, investment and cooperation development between the two sides after the EVFTA is signed, the Minister assessed.

According to the 2016 White Paper, when the EVFTA comes into effect, it is estimated that Vietnam's GDP could increase by over 15% and the value of Vietnam's export turnover to the EU could increase by nearly 35%.

Furthermore, when 99% of tariff lines are removed, Vietnam will liberalize 65% of import tariffs on EU-origin goods when the Agreement enters into force and gradually liberalize the remaining tariffs over the next 10 years.

Vietnamese goods exported to the EU will have their tariffs gradually removed over 7 years. Vietnamese consumers will have access to a wider range of EU products at much more affordable prices, from wine and spirits to cars and motorbikes.

Ms. Nicola Connolly - Chairwoman of the European Chamber of Commerce in Vietnam (EuroCham) said that the development and attractiveness of Vietnam to foreign investors is undeniable, because Vietnam is constantly improving its domestic business environment.

However, according to Ms. Nicola Connolly, further necessary improvements still need to be addressed to maintain the achievements that have been made, as well as provide deeper insights into the investment and trade markets.

Knots to be untied

The 2016 White Paper notes that the guidelines for many of the new laws have yet to be issued and that there are delays in processing applications for investors. EU businesses expect an improvement in processing times once the new implementing regulations come into force and that case handlers will quickly become familiar with the changes.

For example, inadequate auditing and reporting standards (ranked 130th) and cumbersome business establishment procedures (ranked 116th) remain barriers to foreign investors.

There are still many bottlenecks that need to be resolved to promote effective FDI enterprises in Vietnam. (Illustration photo: Internet)

In addition, many foreign investors still face significant difficulties when working with Vietnam's administrative system. Tax declarations, customs clearance procedures, business registration and licensing procedures, and other administrative procedures are often delayed, and the results of processing documents are often unpredictable.

Businesses often have to spend resources on administrative procedures that could otherwise be used to invest in expanding their core business activities.

To create more added value, the European Union representative said that Vietnam will have to address the human resource issue through vocational training, increase labor productivity and improve capital allocation through better and more transparent decision-making processes./.

According to VOV