Vietnam - Local Firms Need To Improve Capacity When Joining EVFTA.

Legal News & Analysis - Asia Pacific - Vietnam - FDI

15 July, 2019

 

Improving corporate governance capacity is a major challenge for businesses, especially small-and-medium sized enterprises (SMEs) when joining the EU-Viet Nam Free Trade Agreement (EVFTA), requiring the Government to have policies and mechanisms to facilitate their operation.
 

Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry (VCCI) made the statement at the dialogue on EVFTA and IPA: opportunities for businesses held in Ha Noi on Monday, one day after the historic signing of the EVFTA and Europe-Viet Nam Investment Protection Agreement (EVIPA) between Viet Nam and the European Union.

 

Loc said SMEs should be considered the main subject and given priorities in the EVFTA.

 

“The EU is a market with high standards so businesses must improve to meet technology, governance and social responsibility, as well as developing sustainably,” he said.

 

EVFTA and EVIPA with the highest standards would create pressure and motivation for institutional reform, create a fair business environment to gradually internationalise businesses, especially SMEs.

 

He said Viet Nam is considered to be the country with the lowest level of development compared to other countries in the region that have signed FTAs with the EU, especially in corporate governance.

 

If local businesses want to integrate more deeply and take advantage of the opportunities provided by this agreement, it is necessary to ensure a quality labour force through the training of talents. At this time, the EU will not only be a trading partner but should be considered a mutual partner because they have the world's leading corporations with international standards.

 

“The EVFTA signing means that competition would be fierce. However, it will not be too serious because the internal forces of Vietnamese enterprises have been gradually strengthened. In fact, Viet Nam has opened the door to many strong competitors in FTAs such as Japan, South Korea, Australia and New Zealand,” he said.

 

The chairman said that the Government should have a policy to support enterprises in technology renovation and capacity building because the difficulty will lie in the issue of compliance costs to meet very strict standards in this agreement in terms of working environment, rules of origin, hygiene and technical barriers.

 

Sharing the ideas, minister of Industry and Trade, Tran Tuan Anh affirmed that EVFTA and EVIPA have special meanings when marking Viet Nam as the second country in ASEAN and the first developing country in the region to sign an FTA with the EU – an FTA with high standards. In particular, EVFTA is expected to have many positive contributions to export growth as well as the process of market diversification and export products for Viet Nam.

 

“In addition to the open market commitments, EVFTA also adjusts many other issues such as opening up markets for services, investment and procurement of government agencies; ecommerce; intellectual property rights; State-owned enterprises and sustainable development,” Anh said.

 

EVFTA is the best and most ambitious agreement that the EU has signed with Viet Nam.

 

“The agreement will create the most conducive environment, creating opportunities for businesses to access each other in all areas in the context of Industry 4.0. Both the EU and Viet Nam are delivering strong messages for trade liberalisation,” he added.

Nicolas Audier, Chairman of the European Chamber of Commerce in Viet Nam (EuroCham) said that one of EVFTA's strongest points was to promote the participation of businesses.

 

“We try to simplify the procedures to be able to support businesses, especially to attract European SMEs to invest in Viet Nam,” said Audier.

 

Before signing the EVFTA, there were also several European Commission projects to support European SMEs to invest in Viet Nam.

 

However, EVFTA will create a stronger push for European SMEs to come to Viet Nam. With the official signing of the EVFTA and EVIPA, there will certainly be more businesses from Europe to Viet Nam, because they understand that there is a solid legal tool to support them when they come to invest in Viet Nam, he added.

 

 

For further information, please contact:

 

Dang The Duc, Partner, Indochine Counsel

duc.dang@indochinecounsel.com