A factory of An Giang Fisheries Import Export JSC. (Photo: VNA) According to a report by the Ministry of Industry and Trade, tradebetween Vietnam and the UK reached 6.8 billion USD in 2022, up 3.3%year-on-year.
Vietnam’s exports to the UK played a major role in the achievementwith goods like textiles, electronics, and agricultural products highly appreciatedfor their quality and affordability by UK consumers.
On the other hand, Vietnam’s imports from the UK slightly declinedas Vietnam focused on developing its own domestic industries and reducingreliance on imported goods.
The trade pact has opened up multiple opportunities for both UKand Vietnamese companies.
UK firms are actively seeking partnerships and investmentopportunities in the Vietnamese market. Vietnamese companies, on the otherhand, have gained greater access to the UK market, introducing more locallymade products to UK consumers.
The UK is known for its diverse import requirements and highconsumer purchasing power.
Vietnamese enterprises will have an opportunity to gain access tothis market under preferential and competitive conditions, with nearly 100% ofVietnamese goods exported to the UK being exempt from import tax after sixyears.
The commitments made in the UKVFTA will enable businesses toaccess new sources of raw materials and reduce dependence on traditional importmarkets, enhancing Vietnam’s participation in regional and global supplychains.
The UKVFTA also helps create a more favourableenvironment for British companies to invest in Vietnam, which will result inincreased FDI inflows, technology transfer, and knowledge sharing.
Speaking at a recent meeting in Hanoi, Prime Minister Pham Minh Chinhsaid Vietnam would create the most favourable conditions for British investorsto expand trade and investment in the country.
The trade deal has helped not only to boost bilateral tradebetween Vietnam and the UK but also swing the door wide open for the investmentof UK companies in Vietnam, he said.
The PM proposed that both nations continue taking advantage ofpreferences from the trade deal to improve bilateral economic, trade, andinvestment cooperation.
He called on UK investors to invest in Vietnam’s manysectors such as green growth, digital transformation, start-ups andinnovation, education and training, and pharmaceutical manufacturing.
As of December 2022, the UK has invested in a total of 507projects in Vietnam, with a total investment of nearly 4.2 billion USD, ranking15th out of 141 countries and territories investing in Vietnam.
In 2022 alone, the UK invested in 53 new investment projects in Vietnam,with a registered capital of 64.33 million USD.
Challenges
Despite the opportunities presented by the UKVFTA, experts havewarned that local firms will face tough competition from foreign rivals.
The removal of trade barriers and tariff reductions will make iteasier for UK companies to enter the Vietnamese market and compete directlywith domestic firms.
Vietnamese firms may face challenges in understanding the rulesand regulations of the UK market, including customs procedures, documentationrequirements, and compliance with trade rules.
Local firms, especially small and medium-sized enterprises (SMEs),may lack the financial and logistical capabilities to expand their exports tothe UK market.
Apart from tariffs, non-tariff barriers such as technical barriersto trade, intellectual property rights, and sanitary and phytosanitary measurescan pose challenges for Vietnamese firms.
Complying with these requirements and regulations can betime-consuming and costly.
Local enterprises will need to focus on enhancing theirproductivity and efficiency, improving their product quality and branding, andseeking ways to innovate in order to remain competitive.
The Government can also play a crucial role by providing supportand incentives to local businesses, helping them to adapt to the increasedcompetition and take advantage of the opportunities presented by the free tradeagreement.
The UKVFTA, which took effect early 2021, eliminates tariffson 99% of all goods traded between the UK and Vietnam over the long term,providing a significant advantage to Vietnamese exporters.
The trade pact allows Vietnam to diversify its export destinationsand reduce its reliance on a few key markets.
The agreement also includes provisions to simplify customsprocedures and reduce bureaucratic barriers, making it easier for Vietnameseexporters to access the UK market.
The trade deal also covers services and investment, allowingVietnamese service providers to access the UK market through improved marketaccess and regulatory transparency.
The agreement is expected to have a significant impact on thegrowth and competitiveness of Vietnam’s export-oriented industries acrossvarious sectors such as textiles and garments, electronics and electricalequipment, agricultural and seafood products, automobiles and automobile parts,and others.
Vietnamese firms operating in sectors such as finance,telecommunications, tourism, and education can also benefit from improvedaccess to the UK’s service market./.
VNA
