RSM Vietnam cooperates with the Ministry of Finance to help raise awareness of FTAs for businesses

RSM Vietnam cooperates with the Ministry of Finance to help raise awareness of FTAs for businesses

Until now, Vietnam has successfully signed four free trade agreements (FTAs), paving the way for the intensive global and regional integration of Vietnam’s businesses. Vietnam’s active participation in Free trade Agreements has created many new “playgrounds” for businesses. However, winning “the game” is only for those who can seize the opportunity and take advantage of it to rise and transform in the recovery period after COVID-19.

FTA – Great opportunities but still missed

In 2020, the European Parliament (EP) voted to officially ratify the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA), which marked the success of our 10-year negotiation effort between Vietnam and EU. The EVFTA has opened a new chapter for Vietnam’s economy with the opportunities to penetrate the market with 508 million people and a gross domestic product (GDP) of about US$ 18 billion.

Besides the EVFTA, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is also a new-generation FTA that has a direct impact on the development of Vietnam's material industry as the partners commit to open their markets considerably for some raw materials.

The most significant positive impact of joining new generation FTAs lies in the export and import aspects. Strong commitments to tariff cuts are expected to bring competitive advantages to domestic enterprises, hence contributing to the growth of export turnover. In terms of imports, the preferential import and export tax rates will help domestic enterprises access cheaper raw material sources.

Vietnam's effort to join FTAs is the right policy to help create favorable conditions for businesses to participate in “the game”, however, many potential opportunities are still being missed. FTAs are considered as a "highway" connecting Vietnam with the global markets, nonetheless, the advantages from FTAs have yet to be effectively utilized as expected. For example, the fact that Vietnam still relies on the processing industry; the wood processing industry still faces many "bottlenecks" as the products are mainly raw, there are not many high-value handicraft products; the steel industry is dependent on imported materials, or domestic enterprises in supporting industry still have difficulties in investing and developing the production line. The first and foremost reason for these limitations is that businesses have not paid attention to FTAs, which leads to the lack of a clear understanding of the preferential tax rates for each item and how to enjoy those preferential tax rates.

Ministry of Finance’s efforts to raise awareness of FTAs for businesses

For Vietnam to take advantage of the FTAs in the best way, the first thing to do is urgently communicating the benefits of FTAs to businesses so that they can understand and take action as soon as the agreement comes into effect. Therefore, the Ministry of Finance has surveyed the interest and the ability to access and use FTA information of enterprises. RSM Vietnam is one of the organizations that cooperates with the Ministry of Finance to carry out this survey, helping to convey the concerns of enterprises to the authorities, thereby facilitating the effective application of FTAs.

Mr. Nguyen Thanh Lam, Deputy General Director of RSM Vietnam said: “The fact that the Ministry of Finance consults with businesses on the level of interest and accessibility and use of information about the FTA is a strong step, demonstrating the State's determination to support enterprises in international integration. If we make the most of the benefits that FTA brings, businesses can confidently step into the "game" and overcome the challenges of fierce competition at "home" and even "away".

Within the framework of the USAID trade facilitation program, the Ministry of Finance is collaborating with United States Agency for International Development to compile and publish the handbook “Increased understanding and utilization of tariff commitments under Vietnam’s Free Trade Agreements”. Being a part of this project, RSM Vietnam will cooperate with the Ministry of Finance to organize a nationwide webinar with the topic “How to optimize the benefits of FTA for businesses”. This event is expected to give the audience a deeper insight into how to take advantage of FTA as well as an opportunity for enterprises to talk with the experts from the Ministry of Finance, the Ministry of Planning and Investment, Ministry of Industry and Trade.

The handbook “Increased understanding and utilization of tariff commitments under Vietnam’s Free Trade Agreements” is expected to be a manual for enterprises in Vietnam in the process of taking advantage of FTA to gain the global market share as well as create motivation for them to improve product quality, design and price.

To register for the webinar and receive the handbook, please scan the QR code or click on the link: https://www.rsmhanoi.com.vn/hoi-thao-fta-toi-uu-loi-ich-cho-doanh-nghiep

VietNam Economic News