{"id":76514,"date":"2024-06-08T16:20:00","date_gmt":"2024-06-08T09:20:00","guid":{"rendered":"https:\/\/neu.edu.vn\/baochinhphu-vn-part-2-identifying-internal-obstacles-and-missed-fta-opportunities-interview-participant-assoc-prof-dr-nguyen-thuong-lang\/"},"modified":"2024-06-08T16:20:00","modified_gmt":"2024-06-08T09:20:00","slug":"baochinhphu-vn-part-2-identifying-internal-obstacles-and-missed-fta-opportunities-interview-participant-assoc-prof-dr-nguyen-thuong-lang","status":"publish","type":"post","link":"https:\/\/neu.edu.vn\/en\/baochinhphu-vn-part-2-identifying-internal-obstacles-and-missed-fta-opportunities-interview-participant-assoc-prof-dr-nguyen-thuong-lang\/","title":{"rendered":"Baochinhphu.vn: Part 2: Identifying Internal Obstacles and Missed FTA Opportunities. Interview Participant: Assoc. Prof. Dr. Nguyen Thuong Lang"},"content":{"rendered":"

(Chinhphu.vn) – Signing and implementing FTAs have had many positive effects on expanding markets and increasing Vietnam\u2019s merchandise export value. However, we need to clearly identify the persistent limitations that have prevented and continue to prevent many FTA opportunities from being fully utilized, or have even caused them to be missed.<\/h2>\n
\n
\"Part<\/a><\/div>
<\/figcaption><\/figure>\n

Preference utilization rates stand at only around 5% under the CPTPP, 26% under the EVFTA and less than 24% under the UKVFTA<\/p>\n

According to Prime Minister Pham Minh Chinh, one priority for economic diplomacy in the coming period is to improve the quality, responsiveness and timeliness of research, information provision and strategic advice, identify trends and deliver timely policy responses to support socioeconomic management. Efforts must focus on new trends, shifts in policy and partners\u2019 new priorities\u2014\u201cwhat they need, rather than what we have.\u201d<\/p>\n

Speaking to the Government\u2019s online newspaper, Assoc. Prof. Dr. Nguyen Thuong Lang, School of Trade and International Economics, National Economics University (NEU)<\/strong>, cited figures from a Ministry of Industry and Trade report showing that, for the EVFTA alone, after three years of implementation, domestic enterprises had utilized only 26% of the agreement\u2019s preferences. Meanwhile, foreign direct investment (FDI) enterprises had utilized these preferences to a significantly greater extent.<\/p>\n

In 2023, disbursed FDI in Vietnam exceeded USD 23 billion, a record in 36 years of attracting FDI. Most of this FDI flowed into the export sector to capitalize on FTA opportunities. FDI enterprises account for over 70% of Vietnam\u2019s export value. Domestic enterprises account for less than 30% of the total.<\/p>\n

Domestic enterprises\u2019 use of FTA opportunities has mainly focused on traditional products that rely on low labor costs, such as textiles and garments and assembled industrial goods, or on favorable natural resources, such as agricultural and wood products. Moreover, these products have yet to fully realize their potential for higher added value through supply chain development techniques and professional marketing.<\/p>\n

According to the Institute of International Investment Studies (ISC), sectors associated with the development of international investment relations in the new period have achieved only moderate results, falling short of the economy\u2019s enormous potential, with activities mainly undertaken directly by foreign investors that are transnational corporations.<\/p>\n

\u201cOptimistic forecasts envision Vietnam as a global electronics manufacturing hub following the entry into force of a series of FTAs. However, domestic enterprises are unlikely to assume this role in the short term. FTAs have not been leveraged to provide sufficient impetus to generate a wave of innovation among domestic enterprises. The number of enterprises exiting the market remains quite large,\u201d Assoc. Prof. Dr. Nguyen Thuong Lang said.<\/p>\n

Sharing this view, finance and banking expert Dr. Doan Huu Tue said a recent report submitted to the Prime Minister on the implementation of the CPTPP, EVFTA and UKVFTA clearly noted that, although exports to major FTA markets such as the EU, CPTPP members and the United Kingdom had grown positively, their shares remained relatively modest and preference utilization rates had fallen short of expectations.<\/p>\n

\u201cPreference utilization rates stand at only around 5% under the CPTPP, 26% under the EVFTA and less than 24% under the UKVFTA. FDI enterprises still account for the majority of the export value of Vietnam\u2019s key products.<\/p>\n

Many enterprises have only been able to participate in certain stages of supply chains. Vietnamese goods still fall short in meeting quality, food hygiene and safety, and technical requirements, particularly as many import markets increasingly raise technical standards and non-tariff barriers. Vietnamese enterprises still mainly perform contract manufacturing to order and produce few distinctive processed products, resulting in low added value,\u201d Dr. Doan Huu Tue said.<\/p>\n

\n
\"Part<\/a><\/div>
<\/figcaption><\/figure>\n

Strict requirements for cultivation processes and product irradiation were overlooked, preventing these lychees from being exported to Japan<\/p>\n

Many Enterprises Remain Unfamiliar With FTAs<\/h2>\n

VCCI surveys in 2016, 2020 and 2022 on enterprises\u2019 interest in and proactive efforts to learn about FTA commitments showed that the proportion of enterprises that \u201cdid not know\u201d about FTAs tended to increase over time. The proportion that had \u201cheard of\u201d FTAs was 62.1% in 2020 and 55.8% in 2022.<\/p>\n

The proportion of enterprises with a fairly clear or very clear understanding of FTA commitments relevant to them increased from 12.4% in 2016 to 26.1% in 2022.<\/p>\n

Notably, according to the survey, as many as 93.9% of enterprises had \u201cheard of\u201d or had \u201cvarying levels of knowledge\u201d of the EVFTA. It was the best-known agreement among the 16 FTAs being implemented. At a deeper level, three out of every 10 enterprises had a \u201cfairly clear understanding\u201d and one had a \u201cvery clear understanding\u201d of EVFTA commitments relevant to their business operations.<\/p>\n

Nguyen Do Anh Tuan, Director of the Department of International Cooperation, Ministry of Agriculture and Rural Development, also cited an example of how a lack of market information had caused substantial losses for Vietnamese farmers and enterprises.<\/p>\n

\u201cAfter Vietnamese lychees were approved for export to Japan, many farming households rushed to grow high-quality lychees for export there, hoping to earn profits many times higher than in their traditional market, China. However, strict requirements for cultivation processes and product irradiation were overlooked, preventing these lychees from being exported to Japan.<\/p>\n

In addition, farmers were unaware that Japanese consumer demand for lychees was low. Traditionally, Japanese people only eat lychees as a dessert with Chinese meals; they do not habitually consume them as an everyday fruit.<\/p>\n

By contrast, Japan has demand for Vietnamese dried lychees and dried longans. Yet domestic enterprises lacked this information and did not invest in drying lines to enhance product flavor, extend shelf life and precisely meet Japanese consumers\u2019 needs,\u201d Nguyen Do Anh Tuan said.<\/p>\n

Dr. Doan Huu Tue also identified another difficulty that puts domestic enterprises at a disadvantage: indifference among leaders at various levels in many localities. Some localities still focus on traditional markets rather than stepping up expansion into new FTA markets under the CPTPP and EVFTA. Localities have also yet to clearly identify strategic products for targeted support mechanisms or develop their own FTA Index to change their thinking and practices in making it easier for enterprises to capitalize on FTAs. In addition, many localities have been slow to update their methods of supporting enterprises during FTA implementation.<\/p>\n

\u201cSupport methods must stem from enterprises\u2019 actual problems and establish mechanisms linking agencies from the central to local levels, and state agencies with business associations,\u201d Mr. Tue said.<\/p>\n

\n
\"Part<\/a><\/div>
<\/figcaption><\/figure>\n

The Japanese market has demand for Vietnamese dried lychees and dried longans<\/p>\n

Rules of Origin Barriers<\/h2>\n

Ngo Chung Khanh, Deputy Director of the Department of Multilateral Trade Policy, Ministry of Industry and Trade, said that the market share of Vietnamese textiles and garments in FTA markets had not increased over the past three to four years and remained low. For example, Vietnamese textiles and garments account for only 4% of the EU market, 2% in the United Kingdom, around 13% in Canada and around 14% in Mexico.<\/p>\n

This is because basic processing still accounts for too large a share of Vietnamese textile and garment enterprises\u2019 activities: cut, make and trim (CMT) accounts for as much as 65%, original equipment manufacturing (OEM) for brands around 30%, and original design manufacturing (ODM) only around 5%. In addition, to benefit from tariff reductions under FTAs, enterprises must demonstrate that production originates in Vietnam or other member countries of the agreement, from the yarn stage onward for the CPTPP and from the fabric stage onward for the EVFTA…<\/p>\n

Under the EVFTA, requirements for product materials are very stringent. Although enterprises may use materials imported from non-member markets accepted under the EVFTA, such as South Korea and Turkey, this poses a difficult dilemma for enterprises because of the high costs.<\/p>\n

Le Tien Truong, General Director of Vietnam National Textile and Garment Group, said that all FTAs emphasize rules of origin based on either fabric or yarn, rather than the simple cutting and sewing rules used previously. This presents both an opportunity and a challenge.<\/p>\n

The opportunity is that rules of origin encourage investment in materials or supporting industries, attracting investors to these areas. However, investment in materials is costly, materials management is difficult, and technical management requirements are higher than in other stages of the textile and garment industry. This therefore poses a major challenge for textile and garment enterprises in general.<\/p>\n

\n
\"Part<\/a><\/div>
<\/figcaption><\/figure>\n

Only around 25.9% of Vietnamese textile and garment exports to the EU are covered by preferential certificates of origin (C\/O)<\/p>\n

Difficulties Posed by Non-Tariff Barriers<\/h2>\n

Nguyen Khanh Ngoc, Deputy Director General of the European-American Market Department (Ministry of Industry and Trade), noted that by participating in FTAs, Vietnam benefits from tariff reductions covering up to 99% of tariff lines.<\/p>\n

Alongside these benefits, however, Vietnamese goods face a trend toward protectionism and increasingly stringent technical, labor, and environmental protection standards. Non-tariff barriers to imported goods in markets of countries that have FTAs with Vietnam are likely to increase.<\/p>\n

Discussing the difficulties posed by non-tariff barriers, Dang Phuc Nguyen, Secretary General of the Vietnam Fruit and Vegetable Association, said that although agricultural exports to South Korea have seen substantial improvements, Vietnam also faces many stringent animal and plant quarantine requirements and technical barriers involving the country’s very strict quality standards.<\/p>\n

Rice provides one example: after nearly four years of implementing the EVFTA, Vietnam is proposing adjustments to the list of fragrant rice varieties eligible for export to the EU at a 0% tariff within the quota. According to assessments by specialized agencies, there is considerable room for growth in rice exports to the EU, where average annual per capita consumption is approximately 6 kg and total annual rice import demand reaches around 3\u20134 million metric tons (according to the European statistical office, Eurostat). Meanwhile, Vietnam’s exports to the EU account for only a very small share.<\/p>\n

However, to enter the EU, Vietnamese rice must meet regulations on food hygiene and safety, pesticide and fertilizer residues, social standards, and other requirements. The rice must contain no colorings, flavorings, preservatives, or bleaching agents\u2026 Pesticide residues in rice must be below 0.01 mg\/kg, and EU importers and regulators will regularly conduct food safety and quality inspections\u2026<\/p>\n

Sharing his experience of successfully exporting rice to the EU market at high prices, Pham Thai Binh, Chairman of the Board of Directors of Trung An Hi-Tech Agriculture Joint Stock Company, said that the EU is a particularly high-end market, willing to import premium-grade rice at prices of up to USD 2,000 per metric ton. In return, however, it sets very high requirements for quality and food safety. Enterprises must therefore strictly comply with EU standards to secure high-value, long-term rice sales contracts.<\/p>\n

In addition to the barriers outlined above, enterprises also face external difficulties in taking advantage of FTAs.<\/p>\n

A VCCI survey found that enterprises were most concerned about market fluctuations and instability (46.8% of enterprises), limitations in their competitiveness (46.4%), and a lack of information on commitments and how to apply them (40.1%). Despite considerable improvements, shortcomings in state agencies’ organization of FTA implementation remain a barrier for around 28.2% of enterprises.<\/p>\n

Opportunities and challenges always go hand in hand. For enterprises, the difficult task is to \u201cknow themselves and others\u201d so they can seize opportunities, overcome challenges, and \u201cturn risks into opportunities.\u201d We need to clearly understand these opportunities and challenges and develop effective solutions so that FTAs truly bear \u201csweet fruit.\u201d<\/p>\n

Reporting team<\/strong><\/p>\n

Link: https:\/\/baochinhphu.vn\/bai-2-nhan-dien-cac-luc-can-noi-tai-va-nhung-co-hoi-tu-fta-bi-danh-roi-102240530162120134.htm<\/a><\/p>\n

This is an automated translation. If you notice any errors, please contact the Department of Communications, National Economics University at phongtruyenthong@neu.edu.vn<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

(Chinhphu.vn) – Signing and implementing FTAs have had many positive effects on expanding markets and increasing Vietnam\u2019s merchandise export value. However, we need to clearly identify the persistent limitations that have prevented and continue to prevent many FTA opportunities from being fully utilized, or have even caused them to be missed. Preference utilization rates stand at only around 5% under the CPTPP, 26% under the EVFTA and less than 24% under the UKVFTA According to Prime Minister Pham Minh Chinh, one priority for economic diplomacy in the coming period is to improve the quality, responsiveness and timeliness of research, information provision and strategic advice, identify trends and deliver timely policy responses to support socioeconomic management. Efforts must focus on new trends, shifts in policy and partners\u2019 new priorities\u2014\u201cwhat they need, rather than what we have.\u201d Speaking to the Government\u2019s online newspaper, Assoc. Prof. Dr. Nguyen Thuong Lang, School of Trade and International Economics, National Economics University (NEU), cited figures from a Ministry of Industry and Trade report showing that, for the EVFTA alone, after three years of implementation, domestic enterprises had utilized only 26% of the agreement\u2019s preferences. Meanwhile, foreign direct investment (FDI) enterprises had utilized these preferences to a significantly greater extent. In 2023, disbursed FDI in Vietnam exceeded USD 23 billion, a record in 36 years of attracting FDI. Most of this FDI flowed into the export sector to capitalize on FTA opportunities. FDI enterprises account for over 70% of Vietnam\u2019s export value. Domestic enterprises account for less than 30% of the total. Domestic enterprises\u2019 use of FTA opportunities has mainly focused on traditional products that rely on low labor costs, such as textiles and garments and assembled industrial goods, or on favorable natural resources, such as agricultural and wood products. Moreover, these products have yet to fully realize their potential for higher added value through supply chain development techniques and professional marketing. According to the Institute of International Investment Studies (ISC), sectors associated with the development of international investment relations in the new period have achieved only moderate results, falling short of the economy\u2019s enormous potential, with activities mainly undertaken directly by foreign investors that are transnational corporations. \u201cOptimistic forecasts envision Vietnam as a global electronics manufacturing hub following the entry into force of a series of FTAs. However, domestic enterprises are unlikely to assume this role in the short term. FTAs have not been leveraged to provide sufficient impetus to generate a wave of innovation among domestic enterprises. The number of enterprises exiting the market remains quite large,\u201d Assoc. Prof. Dr. Nguyen Thuong Lang said. Sharing this view, finance and banking expert Dr. Doan Huu Tue said a recent report submitted to the Prime Minister on the implementation of the CPTPP, EVFTA and UKVFTA clearly noted that, although exports to major FTA markets such as the EU, CPTPP members and the United Kingdom had grown positively, their shares remained relatively modest and preference utilization rates had fallen short of expectations. \u201cPreference utilization rates stand at only around 5% under the CPTPP, 26% under the EVFTA and less than 24% under the UKVFTA. FDI enterprises still account for the majority of the export value of Vietnam\u2019s key products. Many enterprises have only been able to participate in certain stages of supply chains. Vietnamese goods still fall short in meeting quality, food hygiene and safety, and technical requirements, particularly as many import markets increasingly raise technical standards and non-tariff barriers. Vietnamese enterprises still mainly perform contract manufacturing to order and produce few distinctive processed products, resulting in low added value,\u201d Dr. Doan Huu Tue said. Strict requirements for cultivation processes and product irradiation were overlooked, preventing these lychees from being exported to Japan Many Enterprises Remain Unfamiliar With FTAs VCCI surveys in 2016, 2020 and 2022 on enterprises\u2019 interest in and proactive efforts to learn about FTA commitments showed that the proportion of enterprises that \u201cdid not know\u201d about FTAs tended to increase over time. The proportion that had \u201cheard of\u201d FTAs was 62.1% in 2020 and 55.8% in 2022. The proportion of enterprises with a fairly clear or very clear understanding of FTA commitments relevant to them increased from 12.4% in 2016 to 26.1% in 2022. Notably, according to the survey, as many as 93.9% of enterprises had \u201cheard of\u201d or had \u201cvarying levels of knowledge\u201d of the EVFTA. It was the best-known agreement among the 16 FTAs being implemented. At a deeper level, three out of every 10 enterprises had a \u201cfairly clear understanding\u201d and one had a \u201cvery clear understanding\u201d of EVFTA commitments relevant to their business operations. Nguyen Do Anh Tuan, Director of the Department of International Cooperation, Ministry of Agriculture and Rural Development, also cited an example of how a lack of market information had caused substantial losses for Vietnamese farmers and enterprises. \u201cAfter Vietnamese lychees were approved for export to Japan, many farming households rushed to grow high-quality lychees for export there, hoping to earn profits many times higher than in their traditional market, China. However, strict requirements for cultivation processes and product irradiation were overlooked, preventing these lychees from being exported to Japan. In addition, farmers were unaware that Japanese consumer demand for lychees was low. Traditionally, Japanese people only eat lychees as a dessert with Chinese meals; they do not habitually consume them as an everyday fruit. By contrast, Japan has demand for Vietnamese dried lychees and dried longans. Yet domestic enterprises lacked this information and did not invest in drying lines to enhance product flavor, extend shelf life and precisely meet Japanese consumers\u2019 needs,\u201d Nguyen Do Anh Tuan said. Dr. Doan Huu Tue also identified another difficulty that puts domestic enterprises at a disadvantage: indifference among leaders at various levels in many localities. Some localities still focus on traditional markets rather than stepping up expansion into new FTA markets under the CPTPP and EVFTA. Localities have also yet to clearly identify strategic products for targeted support mechanisms or develop their own FTA Index to change their thinking and […]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[724],"tags":[],"class_list":["post-76514","post","type-post","status-publish","format-standard","hentry","category-economic-information","post-no-thumbnail"],"acf":[],"_links":{"self":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/posts\/76514","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/comments?post=76514"}],"version-history":[{"count":0,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/posts\/76514\/revisions"}],"wp:attachment":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/media?parent=76514"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/categories?post=76514"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/tags?post=76514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}