The government reported substantial growth in bilateral trade with the EU
The government reported substantial growth in bilateral trade with the EU

A recent government report sent to the National Assembly highlighted that trade turnover and foreign direct investment (FDI) from European Union (EU) countries have soared since the EU-Vietnam Free Trade Agreement (EVFTA) came into effect on August 1, 2020.

Accordingly, as of the end of September, there were 2,242 projects from all but one EU countries in Vietnam, an increase of 164 projects on-year. Total registered capital was $22.24 billion, a rise of $483 million on-year.

The Netherlands ranked first with 382 projects and a total investment of $10.4 billion (accounting for 46.5 per cent of total EU investment in Vietnam). France ranked second with $3.62 billion, followed by Germany ($2.25 billion).

Some big EU corporations highlighted by the report for their success are Shell Group (Netherlands), Total Elf Fina (France and Belgium), Daimler Chrysler (Germany), as well as Siemens and Alcatel Comvik (Sweden).

The government said that EU investment focuses on industries like high-tech, and services (post and telecommunications, finance, office leasing, retail), green energy, supporting industry, food processing, high-tech agriculture, and pharmaceuticals. FDI from the EU is anticipated to increase remarkably with high-quality capital.

To welcome investment from the EU, numerous localities have been preparing clean land banks in and around industrial zones while developing infrastructure and human resources (especially high-quality human resources). They are perfecting and carrying out mechanisms and policies to mobilise FDI, simplify administrative procedures, and remove obstacles in business and investment.

Some improvements have also been reported in Vietnam-EU trade turnover since the implementation of the EVFTA, despite the pandemic. The total two-way trade turnover has reached $54.6 billion over the one year it came into effect, up 12 per cent on-year, including $38.5 billion of exports from Vietnam to the EU and $16.2 billion from the EU to Vietnam.

Particularly, in the first seven months of 2021, two-way trade turnover was $32.4 billion, up about 18 per cent on-year, including $22.81 billion in export value from Vietnam, an increase of 17 per cent on-year. The main export items of Vietnam to the EU included phones and components, computers, electronic products and components, footwear, textiles, garments, machinery, equipment and appliances, spare parts, as well as iron and steel products.

Meanwhile, import turnover from the EU reached $9.6 billion in the period, up nearly 19 per cent on-year. Major import items included computers and products, electronic products, machinery and equipment, tools, spare parts, pharmaceuticals, and chemical products. Some imported items reported high growth rates such as chemical products (33.6 per cent), food livestock and raw materials (62 per cent), materials of textile, apparel, leather, shoes (41 per cent), vehicles and spare parts (44 per cent), wood and wood products (27 per cent).

The government said that exports in some important categories like textile, coffee, iron and steel products were not as high as expected, and local corporations are struggling to approach the EU as they are unable to meet the requirements of the high-standard market while the protectionism and application of trade remedies and non-tariff barriers in the EU are rising. At the same time, numerous local businesses remain indifferent, not learning about the EVFTA.

The EVFTA was signed on June 30, 2019, and took effect on August 1, 2020.

By Nguyen Huong
Source: VIR