Viet Nam's exports accelerated from US$5.4 billion in 1995 to around US$364 billion in 2023, mainly fuelled by the signing of free trade agreements, both bilaterally and multilaterally. In 1995, Viet Nam joined ASEAN Free Trade Agreement (ATFA), the first FTA between Viet Nam and foreign partners since the country began Reform policy in 1986, ushering in a new era of regional and international economic integration.

Viet Nam's exports to ASEAN soared remarkably, from US$996.9 million in 1995 to US$32.5 billion in 2023, in which Thailand, the Philippines and Indonesia were the biggest importers of Vietnamese goods.

To date, Viet Nam has signed and implemented 16 FTAs involving more than 60 foreign partners, including the biggest economies in the world, such as the U.S., Japan, China, EU, the UK, and Russia.

Exports to these above FTA signatories grew by 20 percent on average annually, according to the Ministry of Industry and Trade. In 2022 alone, exports to the EU increased by more than 20 percent year on year to US$47.5 billion thanks to the EU-Viet Nam Free Trade Agreement (EVFTA) which came into effect August 1, 2020 while exports to the UK rose by 45 percent from 2021.

Dominik Meichle, Chairman of Eurocharm Viet Nam shared that EVFTA has enhanced Viet Nam's export competitiveness. Viet Nam and Singapore are the only two ASEAN member States to have strike a trade deal with the EU.

Trade with Japan also grew dynamically, increasing to US$42.7 billion in 2021 from US$16 billion in 2009 when the Viet Nam-Japan Free Trade Agreement (VJFTA) took effect.

For the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), trade between Viet Nam and Canada soared by 170 percent, said Ms. Mary Ng, Canadian Minister of Export Promotion, International Trade and Economic Development.

Exports to other CPTPP signatories such as Japan, Singapore, Malaysia, and Mexico also grew positively over the past five years since the agreement came into effect.

Last year, Viet Nam became one of the 20 largest trading economies globally and gained a trade surplus of more than US$28 billion. Its economy was valued at US$430 billion while per capita income increased to US$4.284.

Regarding investment, the EVFTA has consolidated Viet Nam as an attractive destination for European investors, with the EU emerging as Viet Nam's 6th biggest foreign investor with 2.450 projects capitalized EUR28 billion, noted Dominik Meichle.

Foreign direct investment inflows to Viet Nam broke new records in 2022 and 2023, with the registered capital amounting to US$36 billion and disbursed volume reaching all time-high of US$23 billion in 2023.

In the first five months this year, foreign direct investment rose to three-year high of US$7.9 billion, up 27.5 percent against the same period last year.

Not fully exploited

Though exports to major markets have grown remarkably, the FTAs have not fully exploited, according to a report submitted to the Government.

The rate of taking advantage of incentives reached around 5 percent for the CPTPP, 26 percent for the EVFTA and nearly 24 percent for the UK-Viet Nam Free Trade Agreement (UKVFTA).

The biggest gains come to foreign-invested enterprises while many Vietnamese businesses do outsourcing for foreign partners. In 2023 alone, FDI enterprises account for 70 percent of Viet Nam's total export value.

Surveys by the Viet Nam Chamber of Commerce and Industry (VCCI) in 2016, 2020, and 2022 show the number of enterprises unaware of FTAs tends to increase and 61.2 percent of the respondents in 2020 say they have heard about FTAs.

The rate of businesses fully understanding about commitments in FTAs increased to 26.1 percent in 2022 from 12.4 percent in 2016.

It is worth noting that 93.9 percent of the respondents say they have heard or know the EVFTA at different levels, making it the most known among 16 trade deals. In addition three out of every ten enterprises say they know quite well about the commitments in the EVFTAs that relate to their business operations.

The share of Vietnamese textile and garment exports in FTA markets remains modest and unchanged over the last three to four years, about 4 percent in the EU, 2 percent in the UK, 13 percent in Canada and 14 percent in Mexico, said Ngo Chung Khanh, Vice Director-General of Multilateral Trade Policy Department under the Ministry of Industry and Trade.

High outsourcing rate, origin of input materials along with technical standards are among biggest barriers for Vietnamese enterprises.

Source: VCCI

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