December 6, 2014
– Vietnam’s trade and investment climate has improved in the eyes of European investors, reported EuroCham White Book 2015. Yet much remains to be done to please entrepreneurs, said the fresh released document.
Upon entering the ballroom, Nicola Connolly, chairwoman of the European Chamber of Commerce in Vietnam (EuroCham) announced excitedly that the compliers had to re-write almost half of the content of the White Book because the petitions submitted previously have been tackled to a certain extent. However, Connolly said that to make European investors rest assured with their business here, Vietnam has to expend more efforts to set all those reforms in motion.
EuroCham’s White Book 2015 of Trade/Investment Issues and Recommendations is the seventh annual edition which sums up for the Vietnamese Government key issues affecting the business climate of European enterprises in Vietnam. The White Book explores major industries which EuroCham’s almost 800 members are working in-including agriculture and food safety, banking and finance, fast moving consumer goods, information technology, and tourism and hospitality.
In comparison with the previous launches of the White Book, the ambience at the press conference late on December 1, 2014 seemed to be less strained when European investors have noticed efforts by the Government to improve the business environment. “The press briefing was held late because we had to meet with representatives of government agencies,” said Connolly. “The two sides are trying to have a common voice in how to improve the business environment here.”
EU investors are more optimistic
Results of the 16th EuroCham Business Climate Index (BCI) survey show that business confidence, outlook and expectations for the future of European companies in Vietnam have extended the rising streak. In Q3 of 2014, the BCI rose from 66 to 74 on a 100-point scale, almost reaching the top level in Q1 of 2011, being the second highest score ever recorded.
Connolly explained that the high BCI is remarkably influenced by high expectancy from the business community that the negotiations for the EU-Vietnam Free Trade Agreement (FTA) could be completed in 2015. Moreover, plenty of corporate respondents to the poll said issues identified in previous months have indicated improvements.
Franz Jessen, ambassador, head of the EU Delegation to Vietnam, said the signing of the FTA will not only create opportunities for expanding investment and trade with the EU, but also help Vietnam’s gross domestic product increase by 15%, Vietnam’s export value to the EU jump by 30-40% and import value from the EU rise by 25-35%. Of those involved, textiles and garments, leather shoes, hi-tech agriculture and motor manufacturing will benefit the most from tariff cuts.
However, the FTA is not all. Nicolas Audier, head of the White Book 2015 team, said European investors have seen tremendous opportunities from the formation of the ASEAN Economic Community (AEC) in 2015 as this common market is visualized as a free trade area where commodities can move around freely and tariffs on goods are reduce to 0%. AEC will also allow the free flow of services, labor and capital.
“We do not invest in Vietnam as a single market but as the ASEAN market with more than 600 million consumers,” said Audier.
Aside from FTAs and the AEC, another plus for Vietnam’s investment environment is the upcoming Trans-Pacific Partnership agreement (TPP). An ambitious economic pact conceived by 12 negotiators, TPP expects to create a market generating US$28 trillion, accounting for some 39% of the global GDP.
More attempts needed
Over the past 12 months, EuroCham has observed efforts by the Vietnamese Government to implement reforms. However, much remains to be done to both secure the achievements and set investment and trade regulations in motion.
EuroCham Chairwoman Connolly said although Vietnam’s legal framework has been updated to conform to WTO standards, the implementation of commitments has lagged behind, especially when it comes to the local level. What’s more, Vietnam’s administrative and legal systems are too complicated, which has bred intransparency and inconsistency.
Take the pharmaceutical industry for example. Jan Van Acker with EuroCham’s Pharma Group, said currently Vietnam patients’ access to new medicines is some five years behind Malaysia, Thailand and the Philippines. The tardiness is a result of the prolonged clinical testing process in Vietnam. A quicker and simplified pace would both help Vietnamese faster approach new health services and eliminate unnecessary procedures for the corporate sector.
Complicated administrative formalities and overlapping management among government agencies also remain a big problem. Gabor Fluit, head of the Food, Agri & Aqua Business Sector, said food safety is a public concern. Yet the management is assigned to three ministries, namely the ministries of Health, Agriculture and Rural Development, and Industry and Trade. One agency should be totally responsible in this regard, Fluit said.
Ambassador Franz Jessen said EuroCham, the EU Delegation in Vietnam and the Vietnamese Government are working closely for the sake of a better business environment in this country.
(By Thuy Dung)