EVFTA to boost export growth by 5%
Vietnam, one of the region’s fastest-growing economies backed by robust export and foreign investment inflows, is forecast to enjoy an annual average export growth ranging from 5 to 8% between 2019 and 2023.
This forecast was made by the Vietnamese Ministry of Planning and Investment in a newly-released report that reviews the potential impacts of the EU – Vietnam Free Trade Agreement (EVFTA) and EU – Vietnam Investment Protection Agreement (EVIPA) which both sides inked in Hanoi on 30 June.
Vietnam Economic Times cited the report as saying that if domestic firms are fully aware of how best to utilize tariffs, non-tariff incentives, and favourable conditions in both politics and economy to increase their exports to EU markets, the country’s total export turnover could rise by 5.21 to 8.17% between 2019 and 2023, 11.12 to 15.27% in the 2024-28 period, and 17.98 to 21.95% from 2029 to 2033, the report indicates.
The ministry said that the export growth would be driven by local firms shifting to enjoy the higher benefits from the EVFTA in comparison with other trade deals as their export capacity remains limited.
Farm produce, manufacturing and processed categories, and apparel and footwear products in particular would top the list of beneficiaries of the EU’s tariff cuts as they are predicted to record impressive growth over the future.
Other beneficial industries include transport, finance and insurance, and other services.
In a medium and long – term approach, foreign direct investment inflows into the country would help boost exports to the trading bloc, largely due to tariff cuts and the elimination of non-tariff barriers.
Meanwhile, means of transport, machinery, telephones and components, processed food items, and drinks are poised to top the list of EU exports to Vietnam.
Nguyen Chi Dung, Minister of Planning and Investment, said the signing of both EVFTA and EVIPA will enable the country to deepen its economic integration and speed up administrative reforms relating to business climate, intellectual property, public procurement, and labor use.
The EVIPA is expected to help woo additional high-quality investment projects from EU enterprises. Given this, the Government has been reviewing adjustments and supplements to current laws on investment, enterprises, land management, environmental protection, and labor use.
Furthermore, legal and institutional systems would be perfected to lure additional investments from the private sector in infrastructure and public services, thus paving the way to furthering overall development.