The Vietnam - EU Free Trade Agreement (EVFTA) has set high expectations for the growth of bilateral trade by the Government and enterprises of Vietnam as well as EU countries, thereby Vietnamese enterprises have motivation to recover after the Covid-19 pandemic.

Vietnamese enterprises need to promote brand promotion through online forms
and electronic transactions. Photo: H. Anh. 

Great motivation for enterprises to recover

The Covid-19 pandemic has been making a negative impact, reducing the global economy, including Europe and Vietnam. International trade even recorded negative growth in the first months of 2020.

According to the General Department of Customs, by the end of the second quarter of 2020, total import and export turnover of the country toppedUS$240 billion, down 1.4% from the same period last year. Import-export turnover between Vietnam and Europe was nearly US$30 billion, down 5.8%; in which the value of goods exported to the EU fell by 8.9%, but imports increased by 5%.

In that context, the EVFTA will be a great driving force for Vietnamese enterprises to promote opportunities for recovery and integration after the pandemic.

The European Union with 27 member countries, a total population of about 500 million people and annual income per capita of about US$32,900 will help Vietnamese enterprises diversify markets, promote imports and exports, promoting enterprises recovery rapidly recovery after the pandemic.

VoThi KhanhTrang, Head of Research, Savills Vietnam, said that the EVFTA taking effect at this time would be a great opportunity for Vietnam to attract investment amid the trend of transferring lobal production.

To seize the opportunity to quickly recover from the pandemic, Vietnamese enterprises need to promote branding via online forms and electronic transactions, instead of direct contact and promotion of trade promotion.

Regarding the EVFTA implementation roadmap, the time for Vietnam to implement the commitments is only seven years, of which many terms and agreements will be implemented within two to three years of signing the agreement.

This is a challenge for Vietnamese enterprises to understand and ensure correct implementation of the commitments on the quality of goods exported to the EU.

The limitations of most Vietnamese enterprises are small scale and resources, many goods have not met good quality, models are less diversified, prices are high, lack of connection to domestic production and distribution chains.

Enterprises will also face technical barriers on trade and rules of origin in Europe when countries in the EU have to compete with import goods with preferential treatment from Vietnam.

Integration approach of Vietnamese enterprises

The entry of goods from European countries to Vietnam will also pressure domestic manufacturers to constantly improve product quality unless they lose market share at home.

To take advantage of the EVFTA, Trang said that domestic enterprises should exploit and promote available advantages as well as find ways to turn challenges into opportunities.

They should focus on key products that are the strength of Vietnamese enterprises such as agricultural products and food and learn the needs and consumption behavior of European people.

Besides, strengthen links between production and distribution to tighten the supply-demand relationship, seek opportunities and promote new distribution channels, contribute to improving the quality, image and strength, competition of Vietnamese goods. In addition, it is necessary to cooperate with foreign partners to take advantage of technology, management and the market, enhancing the ability to participate in the global value chain.

Enterprises need to build and create domestic and regional supply chains for themselves, especially countries that have signed trade agreements with both the EU and Vietnam to take advantage of tariff preferences from the EVFTA.

In addition, specific support and guidance from the State play an important role in building measures to protect domestic firms in the direction of establishing technical barriers and strictly controlling the activities of foreign enterprises, and stepping up the dissemination and propaganda of regulations according to the EVFTA's commitments.

In this regard, at the recent conference on deploying EVFTA Implementation Plan, Minister of Planning and Investment Nguyen Chi Dung said promoting the implementation of solutions to improve the competitiveness of the economy and enterprises is one of the most important solutions to determine the success of the agreement.

To support and enhance the competitiveness of Vietnamese enterprises, the Ministry of Planning and Investment has submitted to the Prime Minister the approval of the National Programme to support SMEs to start up, create, and join industry clusters and value chains in 2021-2025, at the same time, promptly put into operation the National Innovation Centre with a full range of outstanding technical and institutional skills to support SMEs to startup and create.