The effect of the Free Trade Agreement of Vietnam and the European Union (EVFTA) has contributed to help enterprises recover quickly through the Covid-19 epidemic peak. The agreement is expected to contribute to economic growth in short and long term.
Production operations is on-going at DS Vina Corporation at Dat Cuoc Industrial Park
Exportation revenue increases
Assessing the effects of EVFTA on the economy, Minister of Industry and Trade Tran Tuan Anh emphasized that the implementation of EVFTA is important to help offset the economic slowdown in the Covid-19 pandemic. EVFTA offers more diversified market opportunities to help businesses regain their recovery momentum during the time of difficulties. For Binh Duong, Europe is a major export market which is accounted for about 15% of the total export turnover of the province, which is an important premise for businesses to restore and promote production and business operations.
In fact, right after the EVFTA took effect, businesses in the province expanded and increased their exports to the European market. The main products that Binh Duong exports to the above market are furniture, textiles, footwear, agricultural products, computers, electronics, and components. Do Xuan Ngoc, Director of Trung Dung International Joint Stock Company in Thuan An city, said: “The company has a long-standing market in Europe. Since EVFTA took effect, we have actively focused on our expansion of exports. In 2020, some of the company's export products have been maintained at high growth compared to the previous year partly because of the good exploitation of the European market.”
The woodwork industry has also taken great advantages of EVFTA to exploit the market. Huynh Quang Thanh, General Director of Hiep Long Company Limited in Thuan An city, also said that the company had expanded by about 20% to the European market during the Covid-19 pandemic. And, to do this, the company had proactively exploited potential markets in European countries instead of focusing on familiar markets.
In particular, enterprises with foreign direct investment (FDI) in the province prepare to anticipate free trade agreements at very early stage to develop production plans in each period for easy access to tax incentives. According to the leader of Hoan Cau Co. Ltd. in 2020, although the disease situation is complicated, the company's growth will still reach a high level. In 2021, the company strives to exploit more French market when investing in researching and designing new products to meet orders as well as seize market opportunities.
For the textile and garment industry, leaders of DS Vina Company at Dat Cuoc Industrial Park also said that in 2020, the European market also opens up many opportunities for enterprises in exporting. In the production and business plans, the company pays attention to expand consumption into the European market because the cut down on textile and garment product tax has created favorable conditions to expand consumption. The company has researched and prepared in advance the regulations on the origin of input materials, so it can enjoy tax incentives.
Currently, EVFTA not only helps businesses increase exports of goods to Europe but also helps to better lure FDI into Binh Duong. In recent years, the capital resources from Europe into the locality has continuously increased. It is expected that in 2021, when the Covid-19 pandemic is controlled, the wave of FDI investment in Vietnam would increase strongly, of which Binh Duong is a destination highly appreciated by European investors.
Market maintained
EVFTA is the first agreement with a partner that has never had an FTA with Vietnam before - the partner with the world's leading technology resources and the second largest export market of Vietnam and the second largest purchasing power as well as the world's largest foreign direct investors. Therefore, the EU has very strict regulations. In the immediate future, in order to maintain export turnover, businesses must take the market to orient their production and make good use of the market in order to increase opportunities for tax exemption and reduction and increase competitiveness of goods.
From an expert perspective, lawyer Tran Huu Huynh, Chairman of the Vietnam International Arbitration Center, also said that on joining EVFTA, winning on "away field" is not easy, but losing in "home field" is easy. The implementation of EVFTA offers an opportunity to boost exports but it also brings up the challenge of increasing imports and causing domestic goods to compete at home; the challenge posed to Vietnam is not small.
In order for the economy to operate smoothly in such manner, Vu Tien Loc, Chairman of Vietnam Chamber of Commerce and Industry (VCCI), said that policy and institutional reforms should facilitate businesses to promote economic development. In addition, the State and localities need programs to promote the development of small and medium-sized enterprises and improve science and technology, and corporate governance to be able to support Vietnamese enterprises in competition with the top economies in the world.
Reported by Tieu My - Translated by Vi Bao
