Implementing the Party and State’s policy of proactive and active international economic integration, Vietnam has gradually expanded and deepened its relations with other countries, participated actively and responsibly in shows. herds, international organizations. In particular, in recent years, Vietnam has stepped up the negotiation and signing of Free Trade Agreements (FTAs) with many important and potential partners.
So far, Vietnam has participated in 16 FTAs, including 7 FTAs signed as ASEAN members (CEPT / AFTA and FTA with partners China, Korea, Japan, India, Australia and New Zealand. and Hong Kong); 4 FTAs signed as an independent party with partners: Chile, Japan, Korea, Asia-Europe Economic Union, most recently the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and FTA with the European Union (EVFTA), 4 FTAs are under negotiation (Regional Comprehensive Economic Partnership – RCEP, FTA with European Free Trade Bloc – EFTA and FTA Vietnam Male – Israel).
The participation in FTAs has brought Vietnam intertwined opportunities and challenges. Along with the roadmap for implementing market access commitments, it can be seen that all sectors and activities of the economy are directly or indirectly affected by FTAs. In which, attracting FDI into Vietnam will have many opportunities but also many difficulties and challenges. This is demonstrated in the following aspects:
Opportunities and advantages:
First, FTAs contribute to strengthening trade relations between Vietnam and partners, removing trade barriers to participate more deeply in global production and supply chains, thereby creating more favorable conditions. for Vietnam to attract FDI from partners. With the signed and negotiating FTAs, by 2020 Vietnam will have free trade relations with 55 partners, of which 15 are members of the G20. The active negotiation of signing FTA in recent years has helped Vietnam improve its economic and trade relations with other countries, through which foreign investors start to pay more attention and attention to the Vietnamese market. That opens the prospect of investment and business cooperation between Vietnam and foreign investors. By November 2018, 129 countries and territories had invested in Vietnam with a total registered capital of 337.8 billion USD. In which, leading investment partners such as Korea, Japan, Singapore … are also key trading partners in the effective FTAs.
Second, although the contents of commitments in FTAs are mainly related to the issue of opening the goods market and cutting tariffs, there are provisions directly related to the opening of the service market, investment and policies for foreign investors. This has been shown more clearly in the FTAs that have been negotiated and signed since 2012, especially the new generation FTAs such as the Vietnam-EU FTA and the CPTPP. In the fields of committed investment, Vietnam and its FTA partners both affirm the application of important principles such as non-discrimination between domestic and foreign investors, not applying some measures. affecting investors, … Besides, Vietnam is expanding more and more fields that allow investors of FTA partners to invest in business in Vietnam. Commitments to open the service and investment market wider for partners, along with commitments to protect investment, guarantee the interests of investors who are and will create attractiveness to attract investment. investment from FTA partner countries to Vietnam in the coming time.
Third, commitments to open goods markets through the removal of tariff barriers and granting each other preferential rules of origin in FTAs that Vietnam has signed or is negotiating do not only open up. new investment and business opportunities for Vietnamese enterprises, but also for foreign investors investing and doing business in Vietnam. With those commitments, opportunities to expand export markets for Vietnamese export products are increasing, so foreign investors are and will flock to Vietnam to take advantage of this opportunity. We can also see clearly that in recent years, the FDI sector has prepared carefully to implement the FTAs that Vietnam has signed. That is also one of the reasons why more than 70% of Vietnam’s exports over the past time have come from FDI enterprises.
Fourth, the most important thing that makes FTAs help Vietnam more opportunities to attract foreign investment is the impact of FTAs on Vietnam’s economic institutions and business environment. The implementation of FTA commitments requires the Government of Vietnam to further strengthen the review and improvement of the legal system, and develop new policies and mechanisms to create a favorable business and investment environment. domestic and foreign enterprises, thereby increasing and promoting the attraction of FDI into Vietnam.
Over the past time, we have amended, supplemented, and issued more laws such as the Investment Law, Enterprise Law, Bidding Law,…. towards more transparency and openness. In addition, the Government of Vietnam also actively promotes the reform of administrative procedures and improves the business environment, typically implementing a series of Resolution 19 / NQ-CP on major tasks and solutions improve business environment, improve national competitiveness. This demonstrates the spirit of self-reform, associated with internationally recognized popular evaluation criteria, to proactively remove unreasonable barriers to business production and business activities of enterprises. Thanks to the Government’s reforms, Vietnam’s business and investment environment is becoming more and more competitive and recognized internationally: Vietnam increased 9 places in 2016 and increased 14 places in 2017 (to 68/190 ) according to the World Bank business climate rating. These results have made Vietnam more and more attractive to international investors.
* Difficulties and challenges:
Besides the clear opportunities that open up when Vietnam joins a series of FTAs, there are also many difficulties and challenges, shown in the following points:
Excluding some of the partners in ASEAN, most of Vietnam’s FTA partners have a higher level of economic development than Vietnam. This means that when joining the FTA, we have accepted to step into a fair and competitive playing field. Faced with fierce competition pressure in the context of globalization, only strong and capable firms to compete with foreign ones can survive. This is the time to purge weak and uncompetitive businesses in the market. Therefore, the agreement opens up many opportunities but also many challenges for small and medium enterprises.
Besides, if domestic enterprises do not improve their production quality, they will not be able to penetrate other markets. Developed countries have very high technical, hygiene and product quality requirements, if not “standardized”, our products cannot meet the requirements. Thus, even if the agreement opens up opportunities, we cannot grasp it.
There are also human resources and enforcement challenges that are also very large, requiring amendments and supplements to complete the legal system and organization of the human force to well implement commitments and master Act to avoid disputes and be willing to participate in litigation in lawsuits, avoid trade sanctions and protect domestic production.
It can be affirmed that the negotiation, signing and implementation of FTAs have been and will create great conditions and opportunities for Vietnam in attracting FDI not only from FTA partner countries but also from many countries. in the region and around the world. However, besides the opportunities, there will also be many difficulties and challenges, especially for Vietnamese small and medium enterprises.
To take advantage of opportunities and overcome challenges, it requires state agencies and the business community to firmly grasp the commitments of Vietnam and their partners to properly implement and take timely action. to improve competitiveness for themselves and for the economy.
For the Government agencies, it is necessary to implement well the institutional reform to enhance the macro competitiveness. This is a very important and decisive issue for fast and sustainable development. Good institutions ensure openness, transparency and a stable policy environment, an open business environment will create favorable conditions to attract investment and facilitate people and businesses to develop production and business, especially export development. In addition, along with receiving clear benefits from attracting FDI, such as promoting technology transfer, creating more jobs and improving workers’ qualifications, helping industries and sectors. Taking part more deeply in the global value chain, Vietnam also needs to consider gradually overcoming the difference between FDI and domestic enterprises in taking advantage of FTAs, expanding markets and enhancing export value. import.
For businesses that are the power maker in the market, it is necessary to strengthen links with stakeholders and are interested in investing in technology innovation, management models and business strategies to lower costs. production, improving the quality and competitiveness of products. Especially, for exporting enterprises, it is necessary to have a firm grasp of FTA on contents related to their fields of activity, tax reduction schedules and regulations on standards and quality of goods of partners to enjoy endow.
By doing this, two processes: joining FTAs and attracting FDI are complementary and positively contribute to the sustainable development of the economy.
Source: Foreign Investment Agency