Vietnamese logistics companies try to take advantage of EVFTA potential

Vietnam’s logistic will have a great benefits from The EU-Vietnam Free Trade Agreement (EVFTA) but both the government and the enterprises themselves still need to take further actions to take advantage of the opportunities.
September 05, 2020 | 12:54
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Photo: Le Toan/ VIR

Tran Viet Huy, the managing director of Tracimexco - Supply Chains and Agency Services JSC (TRA-SAS), told VIR that the EU-Vietnam Free Trade Agreement (EVFTA) will provide opportunities to all players in the logistics market as trading and investment will increase noticeably.

However, more competition will be created for Vietnam’s third-party logistics players to tap into the potential of the EVFTA. In particular, local players will need to transform themselves to meet the high standard of European counterparts.

To take advantage of opportunity, TRA-SAS is doubling investment into logistics facilities in some potential segments this year. They also invest more in high-skilled workforce which is competitive factor in current business environment to avoid to be lagged behind.

Nicolas Audier, chairman of EuroCham, said that Vietnam’s logistics sector and its maritime trade will gain noticeable benefits from the EVFTA. This agreement will help Vietnam to boost trade with EU but it is impossible to increase flow of goods if there are no supporting industries like transport networks, supply chains, logistics infrastructure and the companies who facilitate these essential commercial activities.

In theory, the elimination of tariffs should help the enterprises to save operational costs and fees for enterprises and utilizing its capital for business growth strategy.

But, they still face with barriers relating to high logistics cost, manual process and immature logistic network though Vietnam’s import-export and customs procedures have seen significantly improved thanks to modernization recently. If Vietnam would like to take advantage of the EVFTA, those things should be solved.

Last month, EuroCham signed an MoU with Vietnam Maritime Administration which is of the most important factors in unlocking the full potential of the EVFTA, according to EuroCham.

After just over a year of implementation, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has contributed more than $3.9 billion to Vietnam’s trade surplus. Along with the newly-introduced EVFTA, these are major economic achievements requiring important reform.

Yet, according to the Vietnam Chamber of Commerce and Industry (VCCI), up to 77% Vietnamese enterprises are not fully aware of the CPTPP and the EVFTA. Therefore, the enterprise themselves need to understand the benefits of the EVFTA. Under the terms of the EVFTA, 70 % Vietnamese exports will enter the EU’s member states duty free, while remaining tariff lines will be reduced gradually within seven years.

Russell Reed, the managing director of UPS Vietnam and Thailand, noted that business owners should keep up to date on the prevailing tariffs applicable to their business to take advantage of savings and competitive pricing.

The agreement also simplifies entry of goods procedures including customs clearance into the EU, but businesses should also be aware of the FTA’s customs requirements such as product origin, food safety and technical standards, and the continued applicability of import and sales VAT.

UPS have launched some initiatives to help Vietnamese-based businesses optimize supply chains and react more quickly in a continually-evolving trade environment. With more FTAs in the region being negotiated, and an EU-ASEAN FTA potentially on the cards, the most successful companies will be those that seize competitive advantages offered by the deals to unlock new cross-border trade prospects.

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