Policy clarification and adjustment are the best methods in which the nation can further integrate into global value chains, according to Ambassador of the EU to Vietnam Giorgio Aliberti, adding that the absence of being part of global supply chains and global trade activities would be a significant limitation for any country.

Ambassador of the EU to Vietnam Giorgio Aliberti (Photo: baodautu.vn)

The EU Ambassador’s remarks came during a meeting held with representatives from the Ministry of Industry and Trade, the Chamber of Commerce and Industry of Vietnam (VCCI), in addition to a large number of EU and Vietnamese enterprises.

The meeting was held on August 28 in Hanoi and was the first roundtable discussion to take place with the aim of going over the EU-Vietnam Free Trade Agreement (EVFTA) and the nation’s further integration into the post-novel coronavirus global value chain.

Ambassador Aliberti stressed that it is necessary to have a profound understanding of global value chains, opportunities, and challenges facing Vietnam. As the EVFTA represents a historic agreement in the relationship between both sides, the deal entered into force on August 1, with a proportion of tariff lines being cut immediately, thereby bringing about a range of economic benefits.

Furthermore, FDI could flow into the Vietnamese market will be even stronger if trade barriers are removed, the EU diplomat believes. Along with greater attracting FDI, the country also needs to calculate their retention rate of FDI enterprises.

Citing a World Bank report published in 2018 through a survey of more than 700 foreign corporate CEOs regarding how they make investment decisions, Ambassador Aliberti said that the CEOs judged free trade agreements (FTAs) like the EVFTA to be important, but not the most important factor. Indeed, 56% of CEOs believed that FTA tariff preferences are important, but the majority of them think that the transparency and policy stability of a country interested in attracting investment is a must, especially in terms of policy response and predictability, in addition to creating a favourable business investment environment.

Foreign experts working in the country also need to stay updated on regulations in the nation, although many Vietnamese policies, decrees, and circulars have yet to be updated in English, making their accessibility challenging whilst policy understanding remains very limited.

Although the nation currently does not need to make all major policy changes, policy adjustments must be in line with EU regulations, because this is a factor that financiers from the EU are very concerned about. Indeed, clarifying and adjusting policies is the best way for the country to further integrate into global value chains, the EU diplomat said.

Trade turnover between the nation and the EU in recent decades has witnessed significant growth, representing a 13.7-fold increase over the decades following 2000. Most notably, Vietnamese exports to the EU over the past five years also recorded impressive growth of 30%, with the EU being the country’s second most important market prior to the signing of the EVFTA.

At present, the consumption of domestic products by FDI enterprises in the nation is not high. This can be seen clearly through the fact that Japanese enterprises in the country only purchase approximately 30% of goods domestically, while the large input source largely comes from China and other markets. This is a key reason of the need to further promote FDI attraction from Europe in an effort to improve the quality of products made in Vietnam.