Save the date: from June 26th to June 28th, 2024, The EU-ASEAN Business Council announced a physical mission trip to Hanoi, Vietnam in collaboration with EuroCham Vietnam. Registered delegates will get the opportunity to meet with the important Ministries & Government Agencies.
In 2019, the European Union and Vietnam signed the EU-Vietnam Free Trade Agreement (EVFTA), which came into force in August 2020. The primary objective of this agreement is to strengthen the relationship between the two regions by enhancing tax policies for trade and bolstering the industrial processing and manufacturing sectors.
As one of the largest foreign investors in Vietnam, the EU has played a pivotal role in supporting the country's industrial development. With an investment stock of €8 billion as of 2021, the EU's presence is particularly strong in the industrial processing and manufacturing sectors. This investment has been a key driver of Vietnam's transformation into a manufacturing powerhouse in Southeast Asia, fueling the country's rapid economic growth.
The EVFTA has played a fundamental role in the development of Vietnam's economic growth and business development. By investing in Vietnam and bringing European businesses, the European Union has found valuable opportunities to expand and integrate into the dynamic supply chain of the Asian region. It is important to highlight that Vietnam is the second-largest recipient of European investment for foreign trade in Asia, after Singapore.
The agreement's provisions have had a tangible impact on trade flows between the EU and Vietnam. In 2022, EU-Vietnam trade in goods reached a staggering €64.2 billion, a testament to the agreement's success in eliminating 99% of all tariffs and reducing regulatory barriers. Key EU exports to Vietnam, such as machinery, appliances, pharmaceuticals, and high-tech products, have benefited significantly from the tariff reductions, while Vietnamese exports of electronics, textiles, and agricultural goods have also seen a surge.
The EVFTA's impact extends beyond trade, as it also opens up services and public procurement markets, providing European companies with greater access to Vietnam's rapidly growing economy. This, in turn, has encouraged more European firms to establish operations in Vietnam, further strengthening the industrial and manufacturing ties between the two regions textiles, and agricultural goods have also seen a surge.
The agreement's success is also evident in the growing number of European companies investing in Vietnam's renewable energy sector. As Vietnam works to transition its energy mix and meet its climate goals, the EVFTA has facilitated increased European investment in projects such as offshore wind and solar power, contributing to the country's sustainable development.
Germany, Spain, and Italy have been at the forefront of this investment surge. German companies like Bültel and Tatonka were among the first to establish a presence in Vietnam, while Spanish firms like Iberdrola and Italian companies like Piaggio have also announced major investments in the country.
Overall, the EU-Vietnam Free Trade Agreement has been a catalyst for industrial growth and investment, solidifying the EU's position as a key partner in Vietnam's economic transformation. By leveraging their complementary strengths and fostering deeper economic integration, the two regions are poised to reap the benefits of this strategic partnership for years to come, with the EVFTA serving as a model for the EU's engagement with the broader Southeast Asian region.
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