Vietnam to become sixth largest furniture exporter to the UK
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Changes in global trade relations are all expected to have a positive effect on Vietnam’s furniture manufacturers. The EU-Vietnam free trade agreement, the Comprehensive Progressive Tran-Pacific Partnership Agreement (CPTPP), and the current trade war between the US and China, are all expected to positively impact Vietnam’s furniture production market.
The UK has been the third-largest trade partner of Vietnam in Europe after Germany and the Netherlands in recent years. Vietnam mainly exports garments and textiles, footwear, wood, and wooden furniture, and seafood to the UK, while importing pharmaceuticals, machinery, and equipment from the UK
Experts say wooden furniture represents one of the key export industries that are anticipated to greatly benefit from the impending UK-Vietnam Free Trade Agreement (UKVFTA).
Once the trade deal comes into effect, a range of timber and wooden products are poised to enjoy a preferential tariff of 0% in line with the five-year roadmap from the current tax rate of between 2% and 10%, reported the VOV.
Most notably, there appears to be plenty of demand for Vietnamese wooden products as these items have tended to sell well in the UK market, largely due to their highly-competitive prices and high quality.
Several major companies operating in the wood industry in the UK have moved to establish production facilities, or have signed long-term partnership contracts with manufacturers operating in Vietnam, including IKEA, the world’s largest furniture retailer.
According to economists, the UKVFTA will not only help to increase the export of this commodity to the UK, but will also serve to create a favourable business climate that can attract FDI inflows into Vietnam, especially with regard to the local wood processing industry.
|The UK and Vietnam share mutual strategic commitments in global trade. Photo: Chanchao.tw|
Throughout the opening 11 months of the year, the timber and wooden product industry has witnessed robust growth of 14.1%, despite the facing a range of adverse impacts caused by the novel coronavirus (COVID-19) epidemic, grossing a revenue of nearly US$10.9 billion.
Data compiled by the International Trade Center (ITC) shows the leading exporters of wooden furniture to the UK market are currently China, Italy, Germany, Poland, and the United States.
According to the MoIT, the FTA between the EU and Vietnam (EVFTA), which has been effective from August 1, will not be applied to the UK after December 31, 2020. According to Liz Truss, the British Minister of International Trade, the UK and Vietnam share mutual strategic commitments in global trade and the liberalization of capital transactions and investment. Under the background that the UK will formally apply to join the Trans-Pacific Partnership Comprehensive Progress Agreement (CPTPP) in early 2021, the facilitation of UKFTA has taken an important step, said the chanchao.com.tw.
Both Vietnam and the UK hope to finalize the agreement as soon as possible to promote economic recovery after the COVID-19 pandemic. Meanwhile, the majority of the content in the UKVFTA are similar to those of the EVFTA, saving negotiation time for the deal.
The investment scale has yet to match the potential of the UK – one of the largest countries in terms of investing abroad with about 300 billion USD each year. The UKVFTA is expected to bring about more investment and cooperation opportunities for the two sides, supporting them in post-pandemic recovery.
Vietnam’s manufacturers have sought to consolidate their position on the global stage by becoming an ever more attractive option for foreign companies looking for offshore manufacturers. Currently, Vietnam has around 1,500 furniture exporters, with around 450 of them being FDI (foreign direct investment) companies, accounting for over 45% of furniture exports.
From humble beginnings 20 years ago, Vietnam’s furniture sectors is now the fifth largest in the world. If growth continues in the way that is envisioned, it is predicted that, within the next eight years, Vietnam will be the second largest producer of interior furniture in the world.
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