Vietnam's signed and implemented Free Trade Agreements have created numerous opportunities for businesses to increase exports and integrate further into the global value chain.
To take advantage of opportunities
By the end of 2024, Vietnam had signed, implemented and was negotiating a total of 19 Free Trade Agreements (FTAs); of which 16 FTAs had come into effect and 3 FTAs were under negotiation. Through these FTAs, Vietnam has established partnerships with about 56 countries, and these countries account for about 90% of global GDP. This is considered to help businesses develop more strongly, contributing to enhancing Vietnam's international reputation and attracting more foreign investors.
With new generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the European Union - Vietnam Free Trade Agreement (EVFTA)... Enterprises benefit from more preferential channels and advantages, particularly because several countries involved in FTAs are traditional suppliers for many manufacturing industries in Vietnam and play a key role in global production supply chains. By leveraging input materials at competitive prices and encouraging domestic enterprises to connect and collaborate with foreign-invested companies to transfer technology, these businesses can increase their localization rates. This participation in the supply chains of multinational corporations from FTA member countries offers significant advantages for domestic enterprises.
According to Mr. Alexander Christopher Falter, General Director of Ecco Vietnam Co., Ltd., the company has effectively utilized FTAs to reduce export taxes for markets with which Vietnam has signed agreements. This enables Vietnamese enterprises to boost production and increase goods exports to both traditional and new markets. For instance, with the EVFTA, the company has fully leveraged the advantages of exporting to this market and is aiming to reduce export taxes to 0% by 2027.
Efforts from all parties involved are important
“We are actively monitoring the export situation, particularly developments regarding countries that are signing FTAs with Vietnam. This includes adjustments in trade, investment, and currency policies. Our goal is to provide timely support to manufacturing enterprises, helping them stay informed about market trends, import and export demands, cooperation opportunities, and market access, etc.” (Ms. Phan Thi Khanh Duyen, Deputy Director of Provincial Department of Industry and Trade) |
According to Ms. Trinh Thi Hong Chau, Director of Kim Chung Mechanical Company, FTAs present numerous opportunities, but they also bring significant challenges for businesses. The "open" international commitments in FTAs are likely to attract more foreign investors to Vietnam, which will increase competitive pressure on domestic suppliers. Therefore, it is essential for businesses to enhance their capabilities and strive for higher standards in order to be prepared to meet the demands of the global value chain.
“For a Vietnamese enterprise to successfully integrate into the supply chain of foreign-invested companies and expand onto the global stage, it requires not only the dedication of the domestic business community but also support from central and local agencies and departments,” said Ms. Trinh Thi Hong Chau.
Mr. Nguyen Liem, Chairman of Binh Duong Furniture Association, shared that From the perspective of enterprises, significant changes are essential for them to effectively capitalize on opportunities arising from FTAs. In the context of deep integration, businesses must move beyond traditional safety limits and clearly define their goals and desired positions within the value chain. This clarification will help them identify solutions to reach those positions.
Currently, various policies have been implemented to assist enterprises in enhancing their production capacity, maximizing the benefits of FTAs, and integrating into sustainable supply chains. However, these policies need to be adjusted to better align with reality, ensuring that businesses can more effectively implement and benefit from them.
“Policies should be designed in greater detail and linked to the measurement of specific practical results. This allows for appropriate adjustments that align with the efforts of businesses. Such measures will help businesses quickly seize opportunities from FTAs, enhance investment cooperation, attract resources, connect with market partners, and deepen their involvement in the global value chain," Mr. Nguyen Liem proposed.
Ms. Phan Thi Khanh Duyen, Deputy Director of the Department of Industry and Trade, stated that many enterprises currently show little interest in FTAs, viewing them as unimportant rather than beneficial. As a result, their understanding of FTAs remains unclear. Despite the industry and trade branch organizing numerous training courses and providing information about the regulations related to the FTAs in which Vietnam participates, most businesses only send specialists to attend these sessions. Unfortunately, decision-makers within these companies often do not participate. This lack of engagement is one reason why the rate of domestic enterprises utilizing tariff incentives from FTAs remains low.
In the near future, the Provincial Department of Industry and Trade will continue to promote awareness and disseminate information about the FTAs that Vietnam has signed, as well as the markets of countries that have also signed these agreements. In particular, the Department of Industry and Trade focuses on developing specialized issues to meet the requirements of partners, minimizing non-tariff barriers from other countries; at the same time, coordinating with the Ministry of Industry and Trade and the Vietnam Trade Office in other countries to organize connection and promotion activities to help businesses find partners and expand markets.
Reported by Tieu My - Translated by Ngoc Huynh
