EU’s aid and investment in Vietnam intact
The chief operating officer of the European External Action Service, David O’Sullivan, visited Vietnam from February 29 to March 2 against the backdrop of rising relations between the European Union (EU) and Vietnam. O’Sullivan met local media in HCMC before he concluded his visit last week. Following are his responses to The Saigon Times Daily’s questions during the press briefing.
The Saigon Times Daily: Is the euro zone debt crisis impacting the EU’s investment activity in Vietnam?
- David O’Sullivan: I think the EU’s actions to cope with the crisis is not to decrease imports and investment but to increase trade and investment, and increase our engagement with developing economies, particularly Asia that is a major source of growth of the global economy, so we want more trade and investment.
How about its official development assistance for Vietnam? Is it affected?
- No, not at all. Despite the crisis, development assistance commitments of the EU and its member states are firm. The EU is the largest donor of development assistance, making up 55-60% of total development assistance in the world.
Indonesia seems to be emerging as a competitor in attracting investment from Europe. What is your view?
- Of course, Vietnam faces competition from other countries, but you have many advantages. Labor cost here is still low. It’s your great competitive advantage. European investment in ASEAN is, in general, much lower than their investment anywhere else, so there’s room for European investors to increase investment in Vietnam and other ASEAN countries. Cost of labor is a very important element in a decision on investment, at least when we’re talking about industries where labor cost is a major component. I’m thinking about textile and assembly. But of course, there’re many factors influencing an investment decision; that is the cohesion of Vietnam’s system; that is the question of the security of investment. There’re also issues related to corruption that makes the investment difficult. So Vietnam needs to work out all of these elements to become an attractive investment destination. Of course, all the time, what Vietnam has to do is to move up the value chain and use low labor cost as an advantage in the beginning.
If a free trade agreement on which the EU and Vietnam may launch talks in early April is reached, will the EU recognize Vietnam as a market economy?
- Market economy status is a very technical issue. It’s only related to the tracking of anti-dumping cases. It’s a very small portion of trade, less than 1%. There are a number of criteria we need to fulfill, mainly relating to the involvement of the State in the economy before we grant the market economy status to your country. And if Vietnam satisfies the criteria we can grant it the status tomorrow. We are in discussions with the Vietnamese Government on the issue, and we certainly hope that by the time we conclude the FTA negotiations it’s possible to announce that Vietnam meets the criteria. But I do emphasize that there’s no direct link between the market economy status issue and the FTA negotiations.
Reported by Thu Nguyet