On the 28th of August in Hanoi, the EU Delegation to Vietnam (the Delegation) in association with the European Chamber of Commerce in Vietnam (EuroCham) and Vietnam Chamber of Commerce and Industry (VCCI) co-organised a roundtable event: “The EVFTA and Vietnam’s Integration in Global Value Chains in a Post Covid-19 World.”
This is the first of three roundtables to be organised by the Delegation throughout of 2020. The event gathered about 70 participants from the EU Delegation, the Ministry of Industry and Trade (MOIT), VCCI and EuroCham as well as other experts.
H.E. Mr. Giorgio Aliberti, the EU Ambassador to Vietnam, stressed in his opening remarks that it is necessary to have a profound understanding of global value chains, opportunities, and challenges facing Vietnam. The EVFTA, which entered into force on the 1st of August, represents a historic agreement in the relationship between both sides. A proportion of tariff lines were cut immediately, thereby bringing about a range of economic benefits. Furthermore, FDI could flow into the Vietnamese market even more strongly if trade barriers are removed, the EU diplomat believes. Along with attracting greater FDI, Vietnam also needs to calculate its retention rate of FDI enterprises. The EVFTA is not only about reducing tariffs and introducing incentives, it is also about the attitude of Vietnam towards greater improvements such as transparency and predictability..
In the midst of the COVID-19 pandemic and the trade war between the US and China, for the first time we have witnessed such an important need for a secure and responsible supply chain, Dr. Vu Tien Loc, President of VCCI, stated. He also identified the EVFTA as an important platform for the EU and Vietnam to jointly build a secure and responsible supply chain. And he expressed high expectations for the upcoming waves of FDI from Europe to Vietnam, especially investment into higher stages of supply chain process such as research and development, supporting industries, and technology platforms. Turning to upcoming plans, he also mentioned the establishment of the EU-Vietnam Business Council with EuroCham. This will help the implementation of the EVFTA at the practical business level, creating greater links between Vietnamese and European companies.
Commenting on Vietnam's integration into the global value chain, PhD. Truong Thi Chi Binh (Vice President and General Secretary of the Vietnam Association of Supporting Industry) said that Vietnam is a latecomer in the supporting industry, so it is still young and faces many difficulties. According to research, only businesses with a turnover of 5 million USD / year or more will usually have the opportunity to export to the EU. However, not many Vietnamese enterprises in the supporting industry meet this criteria. Therefore, in addition to their own efforts, enterprises need support from the Government. The Government should have policies to support manufacturing enterprises to join the supply chain by reducing costs. These could include helping them to access credit (concessional loans and non-mortgage guarantees); stabilizing expenses and labor resources; as well as reducing administrative procedures and informal fees.
On behalf of EuroCham and its one thousand members, Vice Chairman Jean-Jacques Bouflet congratulated the Government of Vietnam on securing this historic free trade agreement with the European Union. The EVFTA is just the second FTA agreed between the EU and an ASEAN country, and it is also the most comprehensive and ambitious deal ever signed by EU with a developing nation. Therefore, it is clear that this EVFTA is a vote of confidence from the European Union in Vietnam, its record of reform, and its strategic importance on the world stage.
“Now the EVFTA has entered into force, our next task is to ensure that it lives up to its full potential. EuroCham will now dedicate ourselves to ensuring a smooth and effective implementation of this agreement, working with the Government, the EU Delegation to Vietnam, and our key strategic partners” said the Vice-Chairman. For the better implementation of the EVFTA, EuroCham will reach out to partner organisations like VCCI to create an EU-Vietnam Business Council in mid-September. The idea is to facilitate advocacy, dialogue, and the coordination and exchange of information between our two chambers. This will also include engaging EU institutions and Vietnamese authorities, business groups and related parties in the preparation and implementation of the EVFTA.
Also participating in the panel discussion, Mr. Bouflet highlighted the opportunities for Vietnam in growing its position in global value chains. With the increasing trends of protectionism and moving manufacturing hubs outside China, Vietnam is in a unique position to strengthen its authority as a leading alternative manufacturing choice. And with the implementation of the EVFTA, unfortunately overlapping with the COVID-19 pandemic, presents an even stronger need for helping Vietnam and Vietnamese companies to enhance the quality of its products, re-brand, and identify the potential wave of investment and cooperation from Europe.
To take full advantage of the EVFTA, Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, shared that Vietnamese enterprises should change their mindsets and business activities. Only when Vietnam has many large enterprises will it be a reliable and equal partner with foreign investors. However, in reality, there are still too many barriers that make private enterprises not want to grow.
The EVFTA is an historic trade agreement which will help to strengthen the position of Vietnam in global value chains. The EVFTA is important for small and medium enterprises, creating a more equal playing field for businesses participating in international markets. At the same time, the EVFTA is also an opportunity for the business communities of both the EU and Vietnam to raise awareness and capacity. If enterprises cannot compete at home, it will be difficult for them to compete in the world marketplace.
