Dutch at forefront of new EU investment activities
The National Assembly has begun scrutinising a plan to adopt the hallmark EU-Vietnam Free Trade Agreement, marking a milestone in the process of translating the deal into reality.
|Matthijs van den Broek, board member of the Dutch Business Association in Vietnam|
As countries are struggling to come to terms with the impact of the coronavirus, Vietnam has shown the world how to contain the spread of the virus successfully. Since January, it has closely tracked individual infection cases, closed schools, enforced local lockdowns, and introduced strict quarantine measures.
Vietnam has, rightfully so, received global praise for its timely and adequate response to the virus. Now that the economy is gradually being restarted, businesses are opening again and manufacturers are stepping up production. It is time to look ahead to the post-pandemic future. Vietnam is in the driver seat as far as establishing a new normal and regaining its growth path are concerned.
A true milestone for the Vietnamese economy is the EU-Vietnam Free Trade Agreement (EVFTA). Tentatively, the deal will take effect on July 1. In addition, the EU-Vietnam Investment Protection Agreement (EVIPA) will also be ratified by Vietnam. The EVIPA will not take effect until it has been ratified by all EU national parliaments.
The EVFTA will gradually over a period of 10 years remove most tariffs. The value of Vietnam’s exports to the EU is expected to rise 20 per cent in 2020 and 44 per cent in 2030. The EVFTA is likely to boost Vietnam’s GDP growth by 2.18-3.25 per cent in 2019-2023 and 4.57-5.3 per cent in 2024-2028.
Bilateral agreements on the protection of foreign direct investment (FDI) are being replaced by the EVIPA. This year, Vietnam holds chairmanship of the ASEAN, reaffirming its increasing importance in the 10-nation trade union.
Aligned with strengthening the ties with neighbouring states, Vietnam is pushing for more intra-ASEAN trade and investment. Next-door neighbours generally less-affected by the COVID-19 pandemic than further-away Europeans and Americans will be the first to pick up business with Vietnam. Moreover, an increased interest in Vietnam offering viable Southeast Asian manufacturing and supply chain options will further boost its economy.
The EVFTA may not only trigger aligning national policies with the ASEAN region and enhance the association’s integration efforts but also make it easier for European enterprises to operate cross-border in several ASEAN countries. Furthermore, the ratification and implementation of the EVFTA is a first step towards re-negotiating an EU-ASEAN FTA.
The Dutch Business Association in Vietnam (DBAV) welcomes the EVFTA and congratulates Vietnam with the ratification. It is looking forward to intensifying the already existing trade relations between both nations in the post-coronavirus era.
The EU is Vietnam’s fourth-largest trade partner and the Netherlands is the largest investor among EU nations. Dutch multinationals such as HEINEKEN, Friesland Campina, Damen Shipyards, Philips, De Heus, and Unilever among others have a long-time presence in the country and have become cornerstones of the Vietnamese economy. These Dutch multinationals see Vietnam as a key driver for growth with its steady-growing economy and even faster-growing middle-class.
Besides having these multinationals prominently represented in Vietnam, already for decades, the Netherlands has also been bringing their expertise in water management, agriculture, and smart logistics to the country. Emphasising a circular economic model and jointly creating smart cities, the Netherlands and Vietnam are teaming up in developing a more sustainable economy.
Vietnam can continue to count on Dutch support: the Netherlands is, for example, standing shoulder-to-shoulder with the Vietnamese in addressing the Mekong saltwater intrusion and land subsidence problem.
Furthermore, both nations, sharing an entrepreneurial spirit, co-operate closely on work-related topics such as social inclusion, gender equality, and labour rights. In this context, Vietnam adopted the new International Labour Organization-endorsed and EVFTA-triggered Labour Code in November last year.
Since mid-2019 the DBAV, in co-operation with Dutch private sector organisation NLinBusiness, has kick-started a professionalisation process whereby the association’s organisational structure is being upgraded, its executive team expanded, its services portfolio broadened, and its Hanoi presence strengthened so as to establish a true business hub.
The DBAV and NLinBusiness are not alone in this, and the diplomatic network of the Netherlands in Vietnam are closely co-operating in welcoming Dutch companies in Vietnam to help them succeed.
The DBAV also maintains close relationships with other international bilateral chambers of commerce in Vietnam and the European Chamber of Commerce, as well as the Vietnamese government and the nation’s business community. In the Netherlands, the Vietnam-Netherlands Chamber of Commerce offers a Dutch base for firms and entrepreneurs active in Vietnam.
In 2019, Vietnam welcomed a trade mission with over 70 firms from the Netherlands headed by Dutch Prime Minister Mark Rutte and other government ministers and business leaders. The DBAV is looking forward to partaking in, and facilitating, new trade missions as soon as circumstances allow. VIR
Matthijs van den Broek