According to Dr. Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), the EVFTA is expected to be one of the important driving forces and ways for businesses and the economy, including Vietnam, to endure the pandemic as well as regain growth momentum.

Dr. Vu Tien Loc, Chairman of the VCCI

VCCI Chairman Dr. Vu Tien Loc spoke about the opportunities of the Vietnamese economy and enterprises for the Free Trade Agreement between the European Union (EU) and Vietnam (EVFTA) at the webinar: "EVFTA - One Year of Implementation: A promising start and a prosperous future", organized by VCCI in collaboration with the European Chamber of Commerce in Vietnam (EuroCham) on August 27.

The VCCI Chairman said that the EVFTA has carried a lot of businesses' expectations about trade-investment relations between Vietnam and the EU in general as well as opportunities for each enterprise in particular.

In the past 400 days since taking effect on August 1, 2020, the EVFTA has shown meaningful contributions as a way to "salvage" economic development between the two sides and for the growth of Vietnam.

The VCCI Chairman said that in the first seven months of 2020, Vietnam's exports to the EU dropped continuously with a total decrease of 5.9% compared to the same period in 2019, the same decline in demand in the EU in the economic shutdown due to the pandemic. But the situation completely changed in the last five months of 2020, under the impact of the EVFTA, while the EU's total imports from the world still decreased by 20%, imports from Vietnam to this market increased by 3.8%.

According to data from the Ministry of Industry and Trade, in the first seven months of 2021, goods exports to the EU reached US$22.5 billion, up 15.6% over the same period last year.

In the opposite direction, the EVFTA also strongly promotes imports from the EU into Vietnam, with products such as electronic components, raw materials, machinery, and equipment being the strength of the EU and also an important input source for Vietnam.

If in 2020, Vietnam's imports from the EU increase by 4.3% (higher than the 3.7% growth rate of imports from all sources), then in the past seven months, Vietnam imported US$9.7 billion from the EU, an increase more than 20% over the same period last year.

In particular, the rate of export turnover using preferential tariffs under the EVFTA of Vietnam also reached the highest level compared to the first year of implementation of any other FTA.

According to the Ministry of Industry and Trade, in the last five months of 2020, this rate is 14.8% (VCCI observations show that this rate is two times higher than the ATIGA usage rate, seven times higher than the AIFTA rate, two times higher than taking advantages of new markets of CPTPP in the first year). But by the first half of 2021, this rate has increased to 29%.

Regarding investment, as of June 2021, the EU has 2,221 projects (an increase of 142 projects over the same period in 2020) from 26 out of 27 EU countries still valid in Vietnam with registered investment capital of US$22,216 billion (an increase of US$449 million over the same period in 2020).

However, the fourth wave of the pandemic is having a strong impact on enterprises, so according to Dr. Vu Tien Loc, the EVFTA can contribute and be a meaningful aid to businesses in their efforts to overcome the pandemic if it effectively exploits the appropriate aspects.

For example, the tariff advantage in the EVFTA can attract EU customers to return to Vietnam after the peak of the pandemic. Currently, besides Vietnam, the EU only has FTAs ​​with three economies in Asia, Japan, Korea, and Singapore, in which there is no direct competitor to Vietnam.

“If exports to the EU through the EVFTA can be kept thanks to the price advantage, especially in the field of agricultural and aquatic products, the potential profit from export activities will be a motivation for enterprises to continue investing in restoring production after the pandemic, attracting workers back as well as promote the recovery of raw materials," the VCCI Chairman stated.

In addition, according to Mr. Loc, the advantages from tariffs in importing machinery, equipment, technology, and raw materials for production from the EU under the EVFTA can help enterprises save costs and increase productivity, improve competitive efficiency when it is back on track.