EVFTA and supporting industries sector in Vietnam
EVFTA is a “Driving factor” for the development of supporting industries sector in Vietnam.
The fact that European Union Vietnam Free Trade Agreement (EVFTA) has been ratified by Vietnam’s National Assembly has paved an open highway for the development of every sector, ranging from Industry, Agriculture, Services in Vietnam. Enterprises from supporting industries in Vietnam have been given more opportunities to “speed up” in the context of entering international market.
The advantages that EVFTA could bring to Vietnam
Vietnam, a member of ASEAN, together with Singapore, are two nations who have signed a Free Trade Agreement of great importance and scale with EU. Vietnam signed FTA with EU later than Singapore, and the commercial benefits that this FTA can bring could be up to 50 billion Euro (equivalent to 56 billion USA).
Singapore has become one Dragon of Asia and has been able to steadily keep that title partially because it has effectively utilize the many opportunities created after its FTA with EU.
And EVFTA has been giving Vietnam more opportunities to become a nation of rapid economic growth that can be compared with Singapore. What Vietnam government and enterprises should do is to effectively utilize opportunities and overcome obstacles.
Benefits that EVFTA can bring to Vietnam:
- Diversified exporting markets: EU will become 01 of two biggest exporting markets for Vietnam. The divesified exporting market will make products made in Vietnam less to be dependent on any specific market. And goods from Vietnam will be present and be traded widely in many places worldwide.
- Spur Vietnam enterprises to manufacture and export products of international standards, advancing it competitiveness compared with other countries.
- Strengthening and firmly positioning the important geopolitical roles of Vietnam in the region, strongly advance Vietnam’s position in the region and the world.
- Terms and conditions about import and export taxes between two parties Vietnam and EU have been made less strict or been completely removed, creating a boost for development. This is a good signal for Vietnam, a nation of negative trade balance which means it imports a greater value than it exports.
- Products that are expected to have great potential for development in European market, such as: textile, wood production, IT, Oil, supporting industries etc.will enjoy the preferential tax rates as they are cut to lower rate in the years to come.
- The tax rates cutting applicable to goods imported from EU will help many Vietnam enterprises have chances to use modern machines and technologies for production. In reality, many Vietnam enterprises do not have enough financial capability to change to new technologies and change to more advanced production methods.
Smart Vietnam in the context of EVFTA execution
Supporting industries sector manufactures and distributes products essential to many other industries, agriculture. Supporting industries sector has the high importance that can deeply affect the development of an economic system. Normally, supporting industries sector will be of great helps to main production industries, such as in the case of Smartphone manufacturing that needs a lot of supporting industry firms to make phones.
In fact, supporting industries in Vietnam have not developed much as expected. But EVFTA execution will bring a golden opportunity to develop for supporting industry firms.
Smart Vietnam – an enterprise specialized in supporting industry that includes below business lines:
- Plastics injection mold machining: Design and make molds, precise components for molds.
- Plastic Injection Products: make parts, components or complete plastics products of high precision.
- Sheet metal fabrication: design and fabricate products, components from sheet metal with high precision.
- Produce and trading fasteners.
All of products in each business line of Smart Viet Nam has been made orienting towards international standards. This is to show that Smart Vietnam are always ready to finish the company’s targets. EVFTA is an opportunity for Smart Viet Nam to develop and spur Supporting industry in Vietnam to a higher new height.