It is necessary to create synergy between Vietnamese businesses at home and abroad

Deputy Prime Minister Trinh Dinh Dung spoke at the Forum. Photo: VGP/Xuan Tuyen

Deputy Prime Minister Trinh Dinh Dung gave this message when speaking at the Forum with the topic "Vietnamese businessmen in Russia - Prospects for Vietnam-Russia cooperation in the context of the Vietnam-Eurasian Economic Union Free Trade Agreement (Vietnam-EAEU FTA) taking effect" taking place on the afternoon of September 18 (local time) at the Hanoi-Moscow Trade Complex.

At the Forum, the biggest concern of the Vietnamese business community in Russia is the main contents of the Vietnam-EAEU FTA. In our own words, ministries and branches need to clarify the benefits and challenges that this Agreement creates for the businesses of overseas Vietnamese. The Ministry of Industry and Trade and other ministries and branches have spent a considerable amount of time introducing these contents.

The government built a beautiful, modern “stadium”

In general, Vietnam and the EAEU will grant each other a level of market opening for goods, accounting for about 90% of tariff lines, equivalent to over 90% of bilateral trade turnover.

Specifically, according to the commitment on import tax in the Agreement, Vietnam's import tariff schedule includes 9,471 tax lines. Right in 2016, up to 4,959 tariff lines will be cut to 0% as soon as the Agreement takes effect, accounting for 52.4% of the total tariff schedule.

By 2018, there will be an additional 144 tariff lines cut to 0%, increasing the total number of 0% tariff lines in the Agreement to 5,103 lines, accounting for about 54% of the total tariff schedule. By 2018, the number of 0% tax lines will account for about 75.5%.

According to Deputy Minister of Industry and Trade Hoang Quoc Vuong, the Vietnam-EAEU FTA is expected to bring great benefits in terms of trade in goods. The countries participating in the EAEU, especially Russia, are a large market that is still relatively closed to foreign goods (through high tariff barriers). Specifically, despite joining the WTO, the average import tax rate into Russia is still high, especially on agricultural products. The Vietnam-EAEU FTA can clear this high tariff barrier.

Vietnam is the EAEU's first FTA partner to date. In fact, the EAEU region has negotiated FTAs ​​with a number of countries but failed to make progress and was stalled or canceled. Therefore, if an FTA is signed with this region, Vietnamese goods will have a special advantage.

In addition, the product structure between Vietnam and EAEU countries is relatively complementary, not directly competitive. Therefore, the traditional adverse effects of opening the Vietnamese market to partners through FTA will be limited.

Business representatives contribute opinions at the Forum. Photo: VGP/Xuan Tuyen

Another very important point is that currently the network of Vietnamese people living, studying and working in Russia is relatively large, businesses can take advantage of the experience and relationships from this network to access this market.

Besides the above advantages, the Vietnam-EAEU FTA also creates many challenges for businesses. According to commitments in this Agreement, Vietnam will have to open its domestic market to about 90% of products from EAEU countries, especially products that this region has export strengths such as livestock, machinery, equipment, and means of transport. Therefore, in theory, opening up will create significant competitive pressure for domestic manufacturing industries.

However, according to the Ministry of Industry and Trade, this "risk" is not considered too worrying. In fact, many of these products cannot be produced in Vietnam but must be imported. With directly competitive products, Vietnam is currently opening up under existing FTAs ​​or is expected to open up in upcoming FTAs. Therefore, the impact on domestic enterprises of this Agreement, if any, is not too big a shock.

The Ministry of Industry and Trade also said that challenges will be the driving force to improve competitiveness for Vietnamese enterprises that are not doing business effectively.

After a frank and open discussion with Deputy Prime Minister Trinh Dinh Dung and representatives of ministries and branches, Mr. Do Xuan Hoang, Chairman of the Vietnamese Businessmen Association in Russia, affirmed that it can be said to FTAEAEU, "The Government has built for the domestic business community and Vietnamese businesses in Russia a big, beautiful, modern stadium. The business's job is to compete well," Mr. Hoang said.

And Vietnamese Ambassador to Russia Nguyen Thanh Son affirmed that this is a special Agreement, which will certainly create great opportunities for domestic enterprises and Vietnamese enterprises in Russia.

"Domestic businesses and Vietnamese businesses abroad must proactively seek each other to expand cooperation and business. Regarding difficulties and challenges, there is no other way than businesses must do business transparently, and especially need to stop unfair competition between domestic businesses in the same field," Ambassador Nguyen Thanh Son said.

Deputy Prime Minister Trinh Dinh Dung visited booths at the Hanoi-Moscow Trade Complex.
Photo: VGP/Xuan Tuyen

Businesses must seize opportunities

Speaking to Vietnamese businessmen in Russia, Deputy Prime Minister Trinh Dinh Dung affirmed that the FTA with EAEU has opened up a space to enrich domestic and Vietnamese businesses abroad, especially in Russia.

According to Deputy Prime Minister Trinh Dinh Dung, Vietnam has expanded trade relations with more than 240 countries and territories; Signed over 10 FTAs, Trans-Pacific Partnership Agreement (TPP); has concluded FTA negotiations with the EU and is negotiating the final stage of FTA with the European Free Trade Area (EFTA).

In particular, with the immediate reduction of more than 50% of tariff lines to 0%, the FTA with EAEU will open up great opportunities for promoting trade, investment, and services between Vietnam and member countries.

“This is a great opportunity for both domestic businesses and Vietnamese businesses abroad to expand production and business, enrich businesses, the host country and contribute to the development of the homeland and the country,” said the Deputy Prime Minister.

In addition, the Agreement also has full agreements on trade facilitation conditions (such as product quality inspection, technical and customs barriers...) to ensure effective promotion of trade, investment and service relations between Vietnam and countries in the EAEU.

Deputy Prime Minister Trinh Dinh Dung also said that with the rapid reduction in the number of tariff lines, the Vietnam-EAEU FTA will also have impacts on the business model of the Vietnamese community in Russia.

“People need to actively convert business activities from market economy to business in commercial, manufacturing and service centers, consider the possibility of directly importing goods from Vietnam to Russia or acting as agents for domestic enterprises,” said the Deputy Prime Minister.

Deputy Prime Minister Trinh Dinh Dung also suggested that businesses of overseas Vietnamese need to have closer connections with domestic businesses to create synergy.

“The Government will be responsible for working with businesses to overcome difficulties and develop production and business,” the Deputy Prime Minister affirmed.

Deputy Prime Minister and the delegation laid flowers at Ho Chi Minh Square in Moscow.
Photo: VGP/Xuan Tuyen

Previously, on the evening of September 17, the Deputy Prime Minister and the Government delegation visited the Vietnamese Embassy in Moscow.

On the morning of September 18, the Deputy Prime Minister and his delegation laid flowers at Ho Chi Minh Square in Moscow./.