The EU-Vietnam Free Trade Agreement (EVFTA) will create opportunities for Japanese companies to continue expanding operations in Vietnam and boost exports to the EU, according to chief representative of the Japan External Trade Organisation (JETRO) in Hanoi Takeo Nakajima.

Workers produce mechanical components at the factory of the Japanese-invested
Nidec Tosok Vietnam Co. Ltd in Tan Thuan Export Processing Zone, Ho Chi Minh City
(Photo: VNA)

In a recent interview granted to the Cong Thuong (Industry & Trade) newspaper, the official said exports to the EU currently account for only 2.8 percent of overseas shipments by Japanese businesses in Vietnam, and another 65 percent are destined for the Japanese and ASEAN markets.

Therefore, when the EVFTA, recently ratified by the European Parliament, takes effect, it will create a big push for Japanese firms in Vietnam as tariffs on almost all commodities will be slashed to zero percent, Nakajima said, noting that many Vietnamese products will have more chances to compete in the EU market.

Many Japanese businesses will become interested in and orient their export to the EU in the time ahead since they look forwards to lower tariffs on exports to such a large market and on import of materials, components and spare parts from Europe, according to him.

A JETRO survey shows that 50.4 percent of Japanese enterprises in Vietnam have made use of FTAs and investment protection agreements, and the rate is likely to increase.

However, he pointed out that although Vietnam has signed various FTAs, the adaptation of domestic laws to those deals is still relatively slow, so businesses are unable fully capitalise on those agreements.

Nakajima said to help companies optimise advantages created by the EVFTA or other FTAs, Vietnam should fine-tune domestic laws soon. Its Government also needs to assign a single agency responsible for implementing the pacts because the involvement of many parties may lead to overlapping information, thus confusing businesses.

Up to 35.6 percent of Japanese companies in Vietnam haven’t made use of FTAs, and 10 percent are considering whether or not they should do that, he noted, highlighting the need to increase the introduction of FTAs to them and listen to their opinions so as to support them in taking advantage of the deals.