|Seminar: Taking advantage of EU imports and investments in the EVFTA|
Create competitive advantage
Giving opinions on the above issue at the seminar: Taking advantage of EU imports and investments in the EVFTA organized by Industry and Trade magazine on December 6, Do Huu Hung, Department of European and American Markets (Ministry of Industry and Trade), said that not only favourable for exports, the EVFTA also helped Vietnamese businesses benefit greatly when importing from this market.
According to the Ministry of Industry and Trade, by immediately eliminating 85.6% of tariff lines between Vietnam and the EU, many industries of Vietnam will have advantages thanks to reducing the cost of importing raw materials for production, contributing to improving competitiveness for Vietnamese enterprises to participate more deeply in the global value chain.
After two years of joining, the EU’s import growth into Vietnam has been high in the main groups of machinery, equipment, products – electronic components, and raw materials. Machinery, electronic components, and electronic products accounted for 24% of Vietnam’s import turnover in the 10 months of 2022. Machinery and equipment also accounted for more than 18%. Additionally, there are raw materials for Vietnam’s production needs, accounting for more than 10% (mainly chemical products).
Hung assessed that Vietnamese enterprises had taken advantage of the EVFTA to import equipment, machinery, and raw materials from the European market. Thanks to the equipment, machinery, and good quality raw materials of the EU, many businesses have created products with added value, thereby increasing export turnover to Vietnam.
From the business perspective, Dinh Van Hien, Chairman of the Board of Directors cum General Director of DKNEC Group JSC, said that the enterprise has 23 partners in Germany, France, Sweden, and Denmark. Before the EVFTA, the import tax rate for components and assembled equipment (Incompletely Knocked down – IKD) was very high. However, thanks to the tax reduction from the EVFTA, the price of IKD components and equipment is low, reducing from 1-10% import tax. This has helped the business have a competitive advantage in manufacturing many products and then exporting to several countries.
Highlights to attract investment from the EU
Not only import, regarding investment, according to Nguyen Anh Duong, Head of the General Research Department, Central Institute for Economic Management (CIEM), statistics also showed that the average capital size of newly registered projects from the EU has tended to increase in recent years and US$12 million/project is higher than the general average and compared to the period before the EVFTA. This showed that the EVFTA has initially helped Vietnam attract more quality investment capital, in line with the policy of the Politburo on new orientations to attract foreign investment.
He also said that additional capital from the EU was from investment capital and government-to-Government channels. That is, the EU and the Governments of the EU member countries have also provided technical assistance to Vietnam to improve its capacity to meet the standards of trade and investment that the EU needs.
“We all know that the game with the EU is not only a story of low costs but also a story associated with standards, with a sense of contributing to sustainable development. Therefore, investment cash flow and EU’s support have transferred skills and helped Vietnamese businesses and agencies adjust their behaviour in a more compatible and modern direction,” said Duong.
Moreover, Dao Thu Trang, Head of the Market Development Strategy Consulting Department German Chamber of Industry and Commerce (AHK Vietnam), said German businesses and the German business community in Vietnam always considered Vietnam as a potential investment environment with a strategic geographical location, a developed economy, a stable political society, and a young population. Therefore, the EVFTA is the highlight to attract investment from the EU to Vietnam. Furthermore, German investors always want to cooperate with local Vietnamese businesses, boosting the localization content by up to 30%.
|EVFTA gives a stronger boost to Vietnamese exports to Germany|
To attract investors more effectively, Trang suggested that the Vietnamese Government should make more efforts to increase competitiveness, increase the transparency of the investment environment, and improve the competitiveness of local and Vietnamese enterprises; prioritize the development of reputable and sustainable supply chains, and promote the production of raw materials to meet the rules of origin set out by the EVFTA. EU businesses also recommend that the Vietnamese Government have strategies and policies to develop skilled human resources to help European investors feel secure for long-term and sustainable development in the Vietnamese market.