European firms wait for opportunities by EVFTA

Goods, services and capital flow from the EU into Vietnam’s market have gradually increased amid the EU-Vietnam Free Trade Agreement (EVFTA) is in the progress to be passed and expected to become effective next year.

Several European firms participated in trade promotion activities in Vietnam. (Photo: SGGP)

Several European firms participated in trade promotion activities in Vietnam. (Photo: SGGP)

Noticeably, some European firms also choose Vietnam to set up facilities so as to bring their goods into countries in the ASEAN with a market of up to 650 million people.
At trade fairs and exhibitions in Vietnam, the majority of participants are usually local and Asian firms whereas there are a few European ones. However, the number of European firms accounted for half of nearly 450 firms participating in the Food & Hotel Vietnam – 2019 recently held in Ho Chi Minh City.

‘This shows that European firms are aiming at Vietnam and holding high expectation for the 100-million-people market’, said Mr. BT Tee, CEO of UBM Vietnam, the organizer of the aforesaid exhibition. These firms came from England, Austria, Poland, Belgium, France, Denmark, Germany, Holland, Russia, Finland, Turkey, Switzerland, Italia and Ukraine.

According to Mr. BT Tee, the broader participation of European firms showed that they want to wait for business opportunities from the EVFTA with expectation that it will be passed soon. In addition, Vietnam is considered as a potential market thanks to young population and a developing economy in the South East Asia and in the world.

Similarly, Mr. Jose Ramon Godoy, international area director of the Argo-food Inter-professional Organization of the Spanish Beef Industry (Provacuno), said that Vietnam was one of priority markets that Spanish beef producers and exporters were aiming at. Currently, four Spanish firms have been licensed to export beef to Vietnam and seven others are waiting for their licenses though Vietnam has already imported beef from Australia, the US and Canada which will directly compete with Spanish beef. However, Mr. Godoy believed that Spanish beef will be able to enter Vietnamese market as the country imports up to 60,000 tons of beef from many countries in the world.

In fact, in the past two years, several delegations of firms from the EU have continuously come to Vietnam to seek for business opportunities via trade fairs, exhibitions or trade promotion held by associations, ministries and the governments. They expressed optimism and said that they were not afraid to compete with products of other countries when approaching Vietnamese market. 

With less direct competitiveness in import and export structure of Vietnam and the EU, many products from this region are waiting for the right time to enter Vietnamese market as the EVFTA will open market widely. An import tariff of zero percent will be applied on products that countries in the EU have advantage in, such as cars, machineries, devices, alcoholic drinks, medicines, temperature agricultural products and food.

European firms said that Vietnam has advantage in attracting investment and can be a bridge for them to enter ASEAN’s market. According to experts, with scale and development potential of European countries and the establishment of the ASEAN economic community, Vietnam has an opportunity to become an intermediate area, connecting trade and investment activities of the EU with other countries in the region.
As one of French firms investing in Vietnam, Mr. Valentin Tran, director of Andros which specializes in processing fruit products, said that his company chose Vietnam because the country has been developing rapidly with a crowded population and plentiful material source which is suitable for production requirement of his company.

Mr. Valentin Tran also said that the relation between Vietnam and France has become better which is also the reason for firms to choose Vietnam to invest, hereby approaching the market with 650 million people of countries in the ASEAN.

Mr. Michele D’Ercole, chairman of Italian Chamber of Commerce in Vietnam, said that this year foreign direct investment attractiveness of Vietnam is expected to strongly increase, especially in value, as foreign investors in high-tech and industrial services industries have been choosing Vietnam as a destination. Italian firms have been considering investing and moving their current facilities from other Asian countries to Vietnam.

Mr. Nicolas Audier, co-chairman of EuroCham, also said that Vietnam currently is an attractive destination of European firms. Survey conducted on more than 1,000 firms operating in Vietnam showed that European firms will continue to focus on investing, doing business and expanding trade in Vietnam this year.

According to leader of EuroCham, the EVFTA is expected to promote trade and investment activities between the EU and Vietnam, opening new opportunities for firms and consumers of both sides. Economic experts also forecasted that gross domestic product of Vietnam will increase by 7-8 percent by 2025 with trade and investment stimulus from the EVFTA.

However, European firms proposed that Vietnam should improve logistics, infrastructure, green growth, tax policy, transfer pricing, human resources and legal issues.

By Le Khoi – Translated by Thuy Doan

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