The EVFTA is anticipated to provide a boost to the country’s economic growth, in addition to opening up opportunities for local businesses to penetrate the EU, a potential market of 508 million consumers with a GDP of US$18,000 billion.
Ha Duy Tung, Director of the Department of International Cooperation under the Ministry of Finance, said the country has implemented a series of FTAs with a range of markets since the 1990s. The EU alone is a huge market for key Vietnamese export products as it will be eliminating more than 85% of tariff lines as soon as the trade deal comes into effect.
Tung noted that the EVFTA represents a very high level of commitment in comparison to other trade deals as the majority of key Vietnamese export items such as leather, footwear and garments have a tariff reduction roadmap implemented within a seven-year period.
Ngo Chung Khanh, Deputy Director of Multilateral Trade Policy Department under the Ministry of Industry and Trade, said that the trade pact is predicted to help raise the country’s export turnover to the EU by 42.7% in 2025, growing to 44.37% by 2030.
Moreover, the EVFTA is poised to contribute to raising the country’s GDP by an average of between 2.18% and 3.25% annually in the 2019 to 2023 period, 4.57% and 5.30% in the 2024 to 2028 period, and 7.07% and 7.72% in the 2029 to 2033 period.
Khanh went on to emphasis that, although the EU is currently one of the largest export markets for local goods, the country’s market share in the bloc remains modest. Explaining the reason, Khanh said the competitive capacity of Vietnamese goods, especially their prices, is still limited.
With strong commitments to the EU market set to come into effect, the trade deal is expected to increase the price competitiveness for domestic goods, helping to boost mutual trade relations and expand markets for Vietnamese products.
In addition, Khanh said Vietnam is forecast to attract foreign direct investment (FDI) from the EU thanks to the former’s commitment to creating a more conducive investment climate.
The EU is predicted to pour investment into a number of areas that are its strengths, such as services, finance, automobiles, manufacturing and processing, information technology, high technology, processed agricultural products, and foodstuffs in the near future, Khanh added.
Sharing the view, Nguyen Hai Minh, Vice President of the European Chamber of Commerce in Vietnam (EuroCham), stated that FDI will keep pouring in, but the shifting of investment flows, especially among EU businesses, is unlikely to take place as fast as expected.
“I have met many EU businesses, who are both operating and not operating in Vietnam, and found that they are exploring investment opportunities in Southeast Asia and beyond,” said Hai. “The problem is that they have yet to decide on which market to invest in. I think Vietnam is one of the primary options, but the investment shifting process will take time.”