2019 – Vietnam and EU have signed the Free Trade Agreement and Investment Protection Agreement. European investors have found their favorable business conditions?

On June 30, 2019, Vietnam – EU officially signed the EU – Vietnam Free trade agreement (EVFTA) and the Investion protection agreement (IPA). This is an important agreement for Vietnam, a vibrant and promising market with more than 95 million potential customers, after the signing CPTPP in 2018. Moreover, Vietnam has had some other FTAs with separate countries (Chile, Korea, Japan) and regions (Asean).


For EU, the FTA with Vietnam is the second signing that the EU has made with a Southeast Asian country, after Singapore. EU said EVFTA is the “most ambitious” FTA that the EU has ever signed with a developing country, which will remove nearly 99% of tariffs between the EU and Vietnam.
In the first phase, EVFTA will remove 65% of EU import tarrifs on Vietnam, while the remainder will be deleted in a 10-year period. On the contrary, at the beginning of the validity period, 71% of the tariffs on Vietnamese goods exported to the EU will be removed, and the next phase will be in 7 years.
Minister of Industry and Trade Tran Tuan Anh said that EVFTA is a very significant agreement, playing an important role in Vietnam’s integration strategy. The agreement not only aims to reduce taxes, but also to other issues such as public procurement, intellectual property rights, investment dispute resolution and management of state-owned enterprises as well as towards the next wave of reform. Vietnam hope to reach the high capital and technical science of the EU market and participate in the global value chain at the highest level.

For European businesses, it is the opening of opportunities to increase direct investment in the public market or the synchronization of import and export processes. According to the study of the Ministry of Planning and Investment, the EVFTA Agreement will increase import turnover from EU at 15.28% by 2020; 33.06% in 2025 and 36.7% in 2030.
With the EVFTA Agreement, there will be a reduction in tariff barriers; however, there are many other significant aspects such as environmental issues, improvement of administrative procedures and synchronization with the European side. EVFTA gives European businesses more favorable conditions to participate in Vietnam’s public market (medical or infrastructure projects). These are all things that European businesses in Vietnam are waiting for.

In addition, Vietnamese labor cost is relatively low while Vietnam has been rapidly moving towards manufacturing industries with high technology content such as telephones, electronic products, instead of traditional export industries such as garment or agriculture. Therefore, European businesses can invest directly through mergers and acquisitions or deploy new projects in areas such as beverages, automobile tires, tires, and construction materials.
The presence in Vietnam also allows them to develop their business in neighboring markets such as Cambodia, Malaysia, Indonesia or Korea.

(Source: information is collected from the VGPs, Vn Economy)

For your information, we are looking for suppliers and manufacturers from Europe to provide high quality goods and services for Vietnamese partners, please contact VBB Vietnam, email: lan.nguyen@vietbiz-vbb.com

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