New generation FTAs a driving force behind Vietnamese economic growth

New generation FTAs will serve as a driving force behind the nation's economic development in the coming time.

Despite these positives, the nation is facing plenty of challenges which requires greater efforts to overcome them moving forward.

According to data collected by the Ministry of Agriculture and Rural Development, the country’s raw cashew output last year stood at over 333,000 tonnes, 10% higher than seen in 2019. Export turnover reached a figure of US$11 billion, making up 8.2% of the local agricultural sector's overall export turnover.

Furthermore, the export volume also saw a sharp increase due to growing demand and the enforcement of major FTAs, thereby meeting global demand amid the complications of the novel coronavirus (COVID-19) pandemic.

Tran Van Hiep, a representative of My An Company Limited, says that after the enforcement of the EU–Vietnam Free Trade Agreement (EVFTA) and he Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), his company's exports exceeded the target set in the previous year. Although the COVID-19 pandemic has still had a huge impact globally, his business still believes that the export situation will see a better performance ahead in 2021.

“By the end of the first quarter and the second quarter of 2021, coinciding with the cashew crop in Vietnam, Cambodia as well as Africa, the purchase and sale of raw cashew nuts as well as the output of cashew will see high increases. At that time, sales will be brisk as foreign companies will increase their purchases from Vietnam,” states Hiep.

According to numerous economic experts, within the framework of further international integration, the country’s keen participation in FTAs will provide excellent opportunities for the nation to turn these agreements into a driving force to push forward further economic growth. Along with the opportunities gained from signing up to the FTAs, seeing local businesses dominating new markets internationally will not be an easy task.

Due to these difficulties, local firms must strive to meet a range of higher standards on quality, labour, environmental issues, and sustainable development, all in accordance to the requirements of importers.

Moving forward, domestic companies have no other choice but to enhance their capacity to compete with foreign competitors, thereby changing their way of thinking in the new context, while also taking competitive pressure as a driving force for innovation and development.

Tran Tuan Anh, head of the Party Central Committee’s Economic Commission and Minister of Industry and Trade, says that FTAs and new-generation FTAs require local enterprises to take the initiative. In addition, they will also see closer co-ordination between the State economic and private business sectors as this will ultimately see the country enjoy the full range of benefits from FTAs, he notes.