Enterprises should take advantage of opportunities of Vietnam-EU free trade agreement

At Thai Binh Shoes Company in Di An town.

However, free trade agreement (FTA) also contains many challenges, requiring enterprises to turn challenges into opportunities.

Big opportunities

EU is one of the big goods importers of Vietnam, especially in footwear, apparel and aquatic and farm products. According to the General Department of Customs, from Jan. to Nov. 2014, export of these groups of goods to the EU increased sharply. Of these, aquatic product reached US$1.29bil, a 23.7% increase, apparel won nearly US$3bil, a 23% increase, footwear around $3.24bil, a 24.7% rise compared with the same period last year.

In 2014, Binh Duong province’s export continued to skyrocket compared with the common growth pace of the whole country. Specifically, the provincial export turnover reached more than US$17.74bil, a 17.5% against 2013 and surpassed 1% compared to the whole year’s plan. 17 out of 19 groups of exported goods increased compared with the previous year, 12 of which gained an increase of more than 10%, mainly in footwear, apparel, furniture and more.

The provincial department of Trade and Industry’s leaders said that the local export in 2014 shows many advantages, owing to stability of import input materials’ price and recovery of main export markets and more.

Pham Tuan Xo, chairman of Binh Duong provincial Export Association cum director of ICD TBS said that once the FTA between Vietnam and EU is signed, Binh Duong enterprises in particular and Vietnamese ones in general will enjoy many export opportunities. This agreement will simplify customs procedures, cut taxes and costs and time for enterprises.

Meanwhile, Nguyen Son, director of Ngoc Son crocodile and python Investment Joint Stock Company said that many companies of EU select Vietnam and consider Vietnam as the best investment destination. Vietnamese companies often lack of secret, technology and capital – available elements at EU companies with strong international potentials. In the other hand, labor cost in EU is very high while Vietnamese companies’ cost is relatively low plus advantages of labor quality as well as intellectual property protection right. As such, cooperation between EU and Vietnam will bring many interests, helping Vietnamese companies access knowledge and modern technology from the West and improve competitive capacity.

In addition, once EU’s goods is exported to Vietnam, this will create a domestic competition, bringing the best products with competitive price for Vietnamese consumers.

Actively overcoming challenges

Aside from opportunities of FTA, enterprises must encounter many challenges, requiring them to set out strategies for production and business, focus on modern technology and make up quality products to meet EU’s standards.

Pham Tuan Xo added that Vietnam’s legal regulations are under completion to meet goods standards of EU. Vietnamese enterprises should pay more attention to quality of commodities, intellectual property, green environment and more.

Once Vietnam and EU sign the agreement, Vietnamese enterprises will face a big pressure of competition right on the home ground. EU’s goods will be imported into Vietnamese easily and cheaply, owing to without import tax. This challenge will be a chance for local enterprises to focus on investing in quality of products as well as affirming their trademarks.

According to Nguyen Son, Vietnam is still an agricultural country, so we must modernize and industrialize equipment as well as attract more talents. However, production of small and medium enterprises remains limited, especially capital. In order to help enterprises develop and penetrate into the market, the State should have supportive policies for enterprises, especially capital source.

According to experts, based on opportunities and challenges from FTA, the State should set out proper steps and policies during negotiation, signing and implementation of this agreement in a bid to maximize profits bringing for Vietnam in general and enterprises in particular and minimize challenges.

Reported by P.LE – Translated by A.C