Most leather products like bags, suitcases, and sports shoes will be exempted from export duty when they reach the EU right after the EVFTA comes into force
According to Phan Thi Thanh Xuan, deputy chairwoman of the Vietnam Leather, Footwear and Handbag Association (Lefaso), the local business community simply cannot wait for the enforcement of the agreement (EVFTA) so that they can access the related tax incentives when exporting to the EU.
Particularly, the item categories currently making up 37 per cent of Vietnam’s total footwear export volume to the EU will immediately enjoy zero per cent tariff, whereas the remainder will see tariffs go down gradually from the current average 12.5 per cent to zero following roadmaps going from three to seven years.
The tariff on sports shoes will fall to zero per cent immediately from the current 17 per cent after enforcement, while handbags and suitcases will enjoy similar incentives, just the tariff on shoes with leather upper will be cushioned gradually based on a seven-year roadmap.
“The COVID-19 has left many labourers in the sector jobless as orders were either cancelled or postponed by business partners, leading to dwindling revenues. Now, with the EVFTA coming into force, each export order to the EU will reap extra income thanks to tax incentives,” Xuan opined.
Some businesses have reported unsold inventories piling up due to COVID-19 implications and recounted expectations that these stocks could clear once the deal comes into force and EU countries gradually contain the pandemic.
Each year, Vietnam posts nearly $19 billion from footwear exports, with sports shoes holding a big proportion in the sector’s total export value.
Lefaso figures show that the country reaped $6.1 billion from footwear and bag exports to the EU last year, a 9 per cent jump on-year, equal to 27.7 per cent of the leather and footwear industry’s total export value.
Of the sum, $5 billion came from footwear exports, up 7.6 per cent and $1.1 billion came from the exports of bags, wallets, suitcases, hats, and umbrellas to the EU, soaring by 15.9 per cent.
According to a report assessing the implications of the EVFTA, compiled by the Ministry of Planning and Investment, the EVFTA ratification would push up footwear exports to the EU. The sector expects to see doubled growth rate in exports to the EU by 2025, with the total export value of footwear jumping by around 34 per cent and that of the whole sector by 31.8 per cent.
Vietnamese exports to the EU are forecast to grow at 5-10 per cent in the first five years, with a projected 3 per cent annual hike in the sector’s total export value.
Diep Thanh Kiet, deputy chairman of Lefaso, however, assumed that to achieve sustainable development with high trade surplus, the local footwear and bag sector needs to invest intensively into mainstream segments and increase localisation rate to meet the origin standards of new-generation free trade agreements like the EVFTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
|EVFTA: A gateway into a USD 18 trillion market |
Global Risk Insights, a world-leading publication for political risk news and analysis, on May 29 ran an article analyzing the positive effects that the EU-Vietnam Free ...
|Vietnam enterprises ready to take advantage of EU market under EVFTA |
Vietnamese enterprises’ awareness of EVFTA has been heightened significantly, and they have prepared to grab business opportunities and find a foothold in the supply chain.
|EVFTA expected to bring 800,000 people out of poverty by 2030 |
The World Bank (WB) has predicted that the EU-Vietnam Free Trade Agreement (EVFTA) could help Vietnam’s GDP and exports grow 2.4 percent and 12 percent, ...
|Vietnam News Today: EVFTA submitted to National Assembly for ratification |
One of the most anticipated and significant deals namely EU- Vietnam Free Trade Agreement (EVFTA) has been submitted to Vietnam’s National Assembly for ratification this ...
|EVFTA - New gateway for market diversification and economic growth |
The European-Vietnam Free Trade Agreement (EVFTA) will play a critical part in bringing new opportunities for market diversification and help Vietnam to reduce its reliance ...
|Vietnam National Assembly to examine EVFTA ratification on May 20 |
The National Assembly (NA) expectedly ratifies the EU-Vietnam Free Trade Agreement (EVFTA), the first day of the 14th NA's ninth session, VNA cited the Ministry ...