|Businesses have many opportunities to expand their markets thanks to new FTAs. Photo: N. Thanh|
A huge advantage, but challenge is not tidy
The launch of negotiations for the Vietnam – UAE FTA Agreement (CEPA) is expected to further promote joint cooperation in trade, investment and energy between the two countries. Although the UAE is a potential market, it is still more or less a new market for Vietnamese businesses.
Mr. Truong Xuan Trung, First Secret, in charge of the Vietnam Trade Office in the UAE, said that the UAE’s agricultural sector accounts for only 0.9% (mainly livestock and date cultivation), the industrial sector accounting for 49.8% (mainly crude oil extraction and processing) in the economic structure of the UAE, so the UAE is almost entirely dependent on imports of agricultural products; Seafood; processed foods; textile; leather shoes; machinery, equipment, tools and spare parts; phone; electronic products… to meet domestic demand. As a result, the UAE is considered an open market with virtually no barriers to trade.
However, the UAE is a very competitive market, which is also the biggest challenge for Vietnamese businesses. In addition, another challenge for Vietnamese businesses is to directly compete with businesses from some countries that they have signed CEPA with the UAE such as India, Indonesia, Israel and Turkey because businesses of these countries have enjoyed preferential treatment when exporting goods to the UAE, creating a competitive advantage for Vietnamese exporters.
In the field of energy cooperation, the UAE is one of the most important partners in the Middle East. Truong Xuan Trung said that the UAE has large oil and gas reserves, has a developed oil and gas extraction and processing industry, and has an important position and role in the world’s energy industry.
Also a potential market for Vietnamese goods, the conclusion of the Vietnam-Israel FTA negotiation recently assessed by experts will help diversify the market. Mr. Le Quoc Phuong, former Deputy Director of the Center for Industry and Trade (Ministry of Industry and Trade), said that, in terms of trade and investment scale, compared to signed FTAs such as with the EU, CPTPP, etc., the Vietnam FTA is – Israel is not large, but it means a lot in the future. The signing and implementation of the agreement helps to diversify, multilateralize and expand trade relations with West Asia and Southwest Asia – an area where we still have relatively limited relations and hope to be expanded. At the same time, diversifying investment sources in the context of the world economy is still difficult.
In particular, according to Mr. Le Quoc Phuong, Israel is an economy with high technology, especially technology in agriculture. Therefore, it is hoped that this FTA will not only help further open the trade relationship between the two countries, but also help attract investment in Vietnam’s high-tech agricultural sector, which Vietnam desperately needs and wants to develop but it is not commensurate with its potential.
Adapt to dominate the market
Although the opportunities from FTAs are great, in order to penetrate the market, businesses need to clearly grasp the consumption trends in the host country to quickly adapt.
The Vietnam Trade Office in the UAE said that to be able to further promote the export of Vietnamese goods to the UAE, Vietnamese businesses need to apply advanced science and technology in production, change production methods, management, minimizing intermediary costs, in order to reduce product costs and increase the competitiveness of Vietnamese products. In addition, because the UAE is an Islamic country, so Vietnamese businesses also need to learn about Muslim culture and consumer needs, build a Halal certification system for products, beverages, cosmetics, Islamic fashion… when exporting to the UAE.
According to Mr. Truong Xuan Trung, when CEPA is signed, the trade and investment relationship between the two countries is expected to continue to grow stronger. UAE is considered the financial and trade center of the Middle East, an important gateway to bring Vietnamese goods to the Middle East, Africa and Europe. In addition, the UAE has a strategic geographical position and a modern logistics system that will create favorable conditions for Vietnamese goods to access and expand to the global market.
According to Mr. Le Quoc Phuong, signing was difficult, to make good use of it, businesses must make a lot of effort. It can be seen that, recently, not all FTAs have been well utilized by enterprises. Besides, most of the FTAs we signed such as FTAs with the EU, Korea, Japan… in fact, FDI enterprises are taking advantage of better. The reason is that these enterprises come from developed countries, have experience in accessing markets, financial and human resources and own products that meet the technical standards of the FTA, etc. Therefore, domestic enterprises have not taken advantage of it as well.
Therefore, not only the Vietnam-Israel FTA but many other FTAs, businesses must carefully study the market; at the same time, the enterprise’s products must meet the requirements of standards and techniques. Currently, many FTAs require standards on environment, labor, use of human resources… but all of that; Vietnamese enterprises are still very weak. In addition, businesses must learn carefully to understand the content of FTAs, and learn about incentives on certificates of origin to make effective use of FTAs. At the same time, make good use of state support to innovate technology, and improve product quality…