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Predictable, friendly business environment needed: EuroCham chairman
By Le Hoang
Thursday,  Feb 20, 2020,17:56 (GMT+7)

Predictable, friendly business environment needed: EuroCham chairman

By Le Hoang

Nicolas Audier

The Saigon Times spoke with Nicolas Audier, chairman of the European Chamber of Commerce in Vietnam (EuroCham), on opportunities to attract investment and high-quality goods from the European Union, following the European Parliament's ratification last week of the free trade agreement (EVFTA) and the investment protection agreement (EVIPA) between Vietnam and the European Union.

The Saigon Times: What is the significance of the European Parliament ratifying the EVFTA and the EVIPA to businesses in the European Union and how so?

- Nicolas Audier: This is a historic decision. The EVFTA is the most comprehensive and ambitious free trade agreement ever concluded between the European Union and a developing nation, and just the second such deal agreed with an ASEAN member state, after Singapore. For the first time, this agreement will give Vietnam privileged access to Europe’s consumer market of around 500 million people, while opening up Vietnam’s fast-growing market to European investors and enterprises.

To make the most of the EVFTA and EVIPA, do you think European businesses will flock to Vietnam to seek investment and trade opportunities?

- Trade and investment between Vietnam and the European Union have seen a strong increase over the last decade. The latest figures show that bilateral trade reached over EUR50 billion in 2018, with almost EUR40 billion of it being Vietnamese exports to Europe and just over EUR10 billion being European exports to Vietnam. This positive increase can be attributed to Vietnam’s strong economic growth and the gradual opening of its market since Doi Moi (reform) around three decades ago.

Now that the EVFTA has been ratified by the European Parliament, all that remains is for Vietnam’s National Assembly to vote in favor of the deal. Once the EVFTA enters into force, it will begin to phase out tariffs and non-tariff barriers to trade. Some tariffs will be eliminated the moment the EVFTA enters into force, while others will be reduced over the agreement’s decade-long implementation period. This will lead to an increase in trade and investment, as without tariffs, our products will become more competitive and attractive in their respective markets.

In your opinion, in which areas can Vietnam attract significant capital from the European Union? In what way might European investment assist economic development and the labor force in Vietnam?

- The EVFTA will increase investment from the European Union across all sectors and industries, as the gradual elimination of tariffs and barriers to trade will open up Vietnam’s market and make it more attractive to investors from the bloc. Of particular interest will be Vietnam’s service sector and government procurement since, in the EVFTA, Vietnam has gone over and above the World Trade Organization’s baseline and opened up additional sectors for investment.

European experts have predicted significant economic benefits for Vietnam once the EVFTA is ratified in the National Assembly and enters into force. The increase in trade and investment should see Vietnam’s economy grow by around 8% more than it would have otherwise done without the EVFTA over the agreement’s decade-long implementation period. In practical terms, this translates to an increase of around 3% in the wages of workers as well as an increase in household incomes.

What are EuroCham’s recommendations for Vietnam to attract more investment from the European Union?

- European investors want a predictable, stable and business-friendly trade and investment environment. We welcome the Government’s recent liberalization of its market and modernization of the legal framework, better aligning the country’s legislation with international standards and streamlining business conditions. The Government’s reforms, including signing free trade agreements such as the EVFTA with major economies around the world, show that Vietnam is open for business.

In order to attract more investment from the European Union in the future, we encourage the Government to go further and faster on this path of reform. In our annual Whitebook, now in its 12th edition, we share the insights and recommendations of our more than 1,000 members. This report outlines concrete, sector-specific solutions to the challenges that international businesses face, which – if implemented – will help attract even more foreign investment in the future. Some examples include maintaining a competitive tax environment by not increasing the Special Consumption Tax on wines and spirits, improving and streamlining the regulatory framework around public-private partnerships and improving arbitration.

Negotiations began as long ago as 2012, and EuroCham supported the EVFTA through 12 rounds of dialogue. Since the agreement was concluded in 2015, it has lobbied hard to persuade MEPs of the benefits of the EVFTA not just for trade – essential though this is – but also for the livelihoods, opportunities and living standards of people in Vietnam.

Once it enters into force, the EVFTA will begin to phase out almost 99% of tariff lines and barriers to trade between Vietnam and the European Union. Tariffs on two-thirds (65%) of EU exports and 71% of Vietnamese exports will be eliminated the moment the agreement enters into force, with the rest being phased out over a decade-long implementation period. The EVFTA also includes important provisions on environmental protection and labor rights, ensuring that Vietnam’s continued economic growth does not come at the cost of its natural heritage and keeping Vietnam on the path of stronger standards at work.

 

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