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Loc Troi Group has a contract to export fragrant rice to the EU right after the EVFTA took effect

Nearly US$700 million of export goods are enjoyed preferential

According to the Ministry of Industry and Trade, since the EU - Vietnam Free Trade Agreement (EVFTA) took effect (from August 1), organisations have granted nearly 15,000 sets of certificates of origin (C/O) of the EUR.1 form with a total turnover of nearly US$700 million to 28 EU countries.

The main items that have been granted the C/O form EUR.1 are footwear, seafood, plastic and plastic products, coffee, textiles, bags, suitcases, vegetables, bamboo- rattan knitted products, agricultural products, and electronics. Of which, many shipments have arrived, cleared customs and enjoyed preferential taxes in the EU, which showed businesses’ interest level and the importance of this market for Vietnam's exports.

Since the beginning of August, seafood exports have increased by about 10% compared to July; the export turnover to the EU market increased by 1.7% from the same period in 2019, of which shrimp exports in August increased by 15.7% over the same period (achieved the highest growth rate since the beginning of this year).

Rice exported to Europe also showed positive signs when prices increased by US$80-200 per tonne depending on each type compared to the time before the EVFTA took effect. Additionally, many other items like telephones and components, machinery, equipment and spare parts, textiles, footwear, seafood, furniture and coffee also received a great expectation for increasing export turnover to the EU market in the future.

Achieving the above results is thanks to the early preparation of many businesses, in addition to the support of the authorities. Pham Thai Binh, General Director of Trung An High-Tech Agriculture Joint Stock Company, said before the EVFTA had taken effect, the company was ready to export goods to the EU by building clean, organic rice fields according to the EU’s and US’s standards. In addition, the unit has invested more than ten German silos (storage towers) containing dry rice, which can reserve about 30,000 tonnes to ensure the supply and quality of products required by partners.

As a result, Trung An company has recently signed a contract to sell 3,000 tonnes of rice to three German customers with two varieties of fragrant rice, ST20 and Jasmine. In particular, the price of ST20 rice is above US$1,000 per tonne, Jasmine rice is about US$600 per tonne, much higher than the price before the EVFTA came into effect (about US$800 per tonne for ST and US$520 per tonne for Jasmine).

Huynh Van Thon, Chairman of the Board of Directors of Loc Troi Group, said Loc Troi has prepared seeds, growing areas, and workers for the next season, and worked with EU partners to grasp on quantity, type and other requirements. At the end of September, 129 tonnes of Loc Troi’s fragrant rice went to the EU under the EVFTA.

Vina T&T Company is also one of the companies that have exploited the EVFTA well in the past two months because they have sent fruit shipments to the EU every week. Nguyen Dinh Tung, General Director of Vina T&T, the firm has received many offers from EU businesses. However, because of the complex pandemic in Europe, the payment was mainly deferred and the company had difficulty in appraising customers, so the contract signing was limited.

“In the future, if the pandemic is controlled, the amount of fruit exported to the EU will surely increase strongly due to high demand from EU customers for tropical fruits. Moreover, thanks to the EVFTA, Vietnam's fruit prices are at a very good competitive level compared to the same kinds from other countries such as Thailand and the Philippines,” said Tung.

Improve quality to conquer the market

With the initial results of the past two months, it is expected that export turnover to the EU will record a breakthrough in the near future.

Pham Van Viet, Vice Chairman of HCM City Garment and Textile Association, said a number of large firms that had prepared for the EVFTA recorded growth of 20-30% in the first two months of the deal taking effect. Typically, Viet Thang Jean Company exported to the EU in August and September has grown up to 30% compared to before the EVFTA took effect. Viet said the EU market was facing difficulties due to the pandemic, so the consumption of textiles and clothing was not high. This has greatly affected the efficiency of the EVFTA’s implementation. However, businesses need to prepare in advance to immediately seize opportunities when the pandemic is under control. To do this, they also need support from the State to connect with EU customers. There should be financial support policies for textile enterprises to invest in supply chain and digital transformation.

Tran Quoc Toan, Deputy Director of Import and Export Department - Ministry of Industry and Trade, said the EU was a market with very high technical barriers, especially in terms of phytosanitary, traceability, quality control, food safety and hygiene, and packaging specifications. Therefore, to benefit from the EVFTA, businesses need to invest in raw material areas and innovate packaging technology and post-harvest preservation.

Nguyen Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, said the current area of fruit tree planting in Vietnam was more than 1 million hectares, but only about 7.2% has achieved safety certificates. Therefore, it is necessary to expand the area of safe cultivation to increase the output of fruit to meet the standards of export to demanding markets, including the EU.

Meanwhile, at the Handicraft and Wood Industry Association of HCM City (HAWA), online exhibition and trade solutions have been deployed to support businesses to connect with foreign partners. Through the online exhibition platform HOPE developed by HAWA, many Vietnamese wood companies have signed contracts with EU customers. In the future, HAWA will promote online marketing channels to help businesses better exploit foreign markets during the pandemic.

In August, Vietnam's export turnover to the EU market reached US$3.25 billion, up 4.65% compared to July and up 4.2% over the same period, bringing the export turnover from Vietnam to the EU market to nearly US$23 billion. In September, the export turnover to this market continuously maintains its strong momentum, up 14.4% over the same period.