Vietnam has become known as one of the most attractive investment destinations in Asia because of its politico-economic stability, stable foreign exchange, inflation and interest rates as well as modern infrastructure. In 2007 Vietnam joined the World Trade Organisation (WTO), which supported a dramatic rise in Foreign Direct Investment (FDI). The ratification of the EU-Vietnam Trade Agreement deal known as EVFTA earlier this year shows further increased commitment from Vietnam to expanding market access and opportunities in trade and investment to foreign investors. Ever since its first sign off in June 2019 this FTA has been paving the way for increased trade between the EU and Vietnam and the first results are positive.
The EVFTA has most definitely contributed to the unparalleled growth Vietnam has experienced, reaching an average GDP growth of 6.6% over the past two decades. The anticipation for 2020 is that the EVFTA will support Vietnam in realizing the countries export growth target of 7-8% compared to 2019 despite this year’s Covid-19 struggles.
What are the ins and outs of the agreement and what can we expect from it?
Broadly explained, now that the EVFTA is in effect the EU will lift 85% of its tariffs on Vietnamese goods and gradually cut the rest of its tariffs over the next seven years. Vietnam will lift 49% of its import duties on EU exports, phasing out the rest over the next 10 years. It will also increase export turnover to the EU by around 20% this year and 44% by 2030.
On a more practical level the trade agreement enables European companies to bid for Vietnamese public contracts in the infrastructure sector including roads, ports and railways but also in the state owned power distribution system and public hospitals. The FTA also ensures that European companies have much better access to the Vietnamese services sector, such as business, environmental, postal/courier, banking and insurance services. In this agreement Vietnam has also committed to open up investment opportunities in a variety of manufacturing sectors.
If you want to learn more about what the EVFTA means for your business in or with Vietnam http://www.netherlandsandyou.nl is a good site to visit. Here a clear overview is given of all the different areas in which the EVFTA benefits both Vietnamese and European businesses and where new business opportunities may lie.
Vietnam is incredibly open and optimistic about foreign investment and the opportunities brought by increasing integration in international markets.
If you are interested in doing business in Vietnam, call or e-mail us at any time to learn more. Clockwork Vietnam helps clients from all over the world with their expansion into this country. Our comprehensive understanding of the international business environment in Vietnam and its constantly changing regulatory and compliance requirements can help your business act faster, more effectively and with better control over costs.