EVFTA helps Vietnamese businesses expand to other markets

Ms. Nguyen Thi Thu Trang.

How do you assess the awareness and effectiveness of Vietnamese enterprises taking advantage of incentives from the EVFTA?

We have conducted a survey with more than 500 businesses about the results after two years of implementing the EVFTA, and the results are quite positive. Accordingly, in the past two years, Vietnamese enterprises have made good use of the EVFTA, 4 out of 10 enterprises said that they had obtained certain benefits from EVFTA.

The most common are tariff preferences for goods exported to the EU or for goods imported from the EU. Along with that, many businesses said they have enjoyed new opportunities from the EVFTA in linking and creating joint ventures with partners and in getting more orders, more revenue and profits from participating in the supply chain to serve import and export activities for the EU market.

We think that, compared to many other free trade agreements, it is clear that the EVFTA has brought very early and very significant opportunities for businesses. In addition, the EVFTA is not only a common FTA with the whole EU but also opens up opportunities for Vietnam to trade with all 27 EU partners, while we have never had such an FTA before, so these are the brand new benefits. Therefore, the survey of VCCI also shows that, out of 100 enterprises, more than 90 said that they know about EVFTA to different degrees and this rate is the highest among all FTAs ​​we have ever had.

Vietnamese businesses have also begun to pay more attention to and learn about business-related commitments that can be leveraged or can prepare for challenges related to the EVFTA. According to the survey, only 3 out of 10 businesses know to a relative extent about the EVFTA commitments related to them and there is 1 enterprise that knows these commitments well. This shows that businesses have had a cognitive starting point to know about commitments and from there to take appropriate actions.

Regarding taking advantage of tariff incentives for exporting goods to the EU, what should businesses pay attention to when by 2023, there will be no choice between the preferential tariff regime in EVFTA and the Generalized System of Preferences (GSP)?

Before the EVFTA, as a developed region, the EU built a universal preferential tariff regime for goods coming from developing countries, with limited competition. GSP is a unilateral preferential tariff program that the EU gives Vietnam and according to the commitment, this preferential program will end 2 years after the EVFTA comes into effect, that is, it will end at the end of the year.

Before the end, Vietnamese businesses have many incentives when they can choose one of two forms of tax incentives in the GSP and EVFTA, which one is more convenient to use.

According to the data published by the Ministry of Industry and Trade, the rate of taking advantage of GSP incentives is approximately 20% - a very high level compared to other agreements. Obviously, this is a stepping stone for businesses to familiarize themselves with the tax incentives in the EVFTA when GSP ends. In addition, an advantage is that although there are some differences, the incentives of GSP and EVFTA are not too different. Moreover, if the tax reduction schedule in the EVFTA is not as good as the GSP, in the commitment we have achieved the stipulation: if the previous tax rate is lower, the enterprise will still be entitled to under the GSP but the procedures and conditions on rules of origin must comply with the provisions of the EVFTA.

If businesses have the same initiative as they have been in the past 2 years in understanding the EVFTA, we have reason to believe that there will be a rather favorable transition from using GSP or EVFTA options to using only EVFTA.

In order to continue to take advantage of opportunities from the EVFTA, what do you think Vietnamese businesses need to do?

In the context that the world economy is still facing many difficulties and fluctuations, we must take advantage of opportunities from the EVFTA in particular and FTAs ​​in general to promote trade, import and export. However, businesses also need to change to be suitable and ready for the new requirements of the EU market.

Currently, we have a near-unique advantage in some products as not many of our competitors have trade agreements with the EU, but the situation may change in the near future as the EU continues to integrate with other partners, some of which may be competitors. Therefore, exporters need to pay attention to these issues.

In addition, businesses need to have a change in competitiveness based on quality, brand, design and other factors in which we have an advantage thanks to the EVFTA.

If businesses do well, it will create momentum for long-term development, keep the market stable, and at the same time, businesses that meet the requirements of the EU market will also be able to meet the requirements of nearly all other development partners. This will be an opportunity not only in this market but spread to other markets.