A
Free Trade Agreement (FTA) between Vietnam and EU will boost economic reform
and support development in Vietnam, says David O’ Sullivan, Chief Operating
Officer of the European External Action Service.
Speaking at a press conference in HCM City on
March 2, he said free trade and trade liberalization are important for both
economies.
Against the backdrop of persistent
macroeconomic challenges that Vietnam has been facing currently, it is
important to keep the market open, he said.
The FTA can help both sides avoid trade
protectionism, especially when Vietnam continues to increase exports in the
coming years while waiting for an increase in domestic consumption.
Sullivan said he will press for progress in
the negotiation of a mutually beneficial EU-Vietnam FTA, which would also act
as a catalyst for Vietnam’s economic liberalization strategy.
The EU is already an important trading and
investment partner of Vietnam but there is more potential to be realized.
Towards this, “we would like to see negotiations progress for a comprehensive
free trade agreement between the EU and Vietnam,” he said.
“We have been discussing with Vietnamese
authorities for a number of years and we are now ready to move forward. We hope
negotiations for the FTA between Vietnam and EU will be announced at the
EU-ASEAN business summit taking place in Phnom Penh on April 1,” he said.
Typically, the negotiation can take about 2-3
years. They will cover a full range of topics related to trade and investment
relations.
With the ASEAN region and particularly Vietnam
marked for dynamic economic growth, the EU is keen to strike a win-win co-operation
deal with Vietnam, Sullivan said.
He said Vietnam is a country with enormous
potential and significant economic achievements in recent times, and it can do
better in the coming years.
“The EU’s economic crisis does not restrict
import-export, or reduce investment, but it has increased trade and engagement
with the world, particular with ASEAN-a major source of economic growth-We want
more trade and investment,” he said.
While cheaper labour costs in Vietnam is a
very important element for investment decisions, there are many other
influencing factors such as corruption and investment guarantees.
“Vietnam needs to work on all elements if they
wish to be an attractive destination to investors. What Vietnam wants to do is
move up the value chain, so they need to use the labour cost advantage in the
beginning to build up their capacity and added value to make their economy more
competitive,” Sullivan said.
Besides, Vietnam still faces challenges
including high inflation and increasing exports of low cost items, which can
damage the economy, he added.
VNS
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