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UKVFTA opens up more opportunities for businesses

From 1st January of 2021, the Free Trade Agreement between Vietnam and the United Kingdom and Northern Ireland (UKVFTA) officially took effect. It is expected that Dong Nai’s export to this market will increase and attract investment capital will also be better.


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Many Dong Nai businesses plan to expand their exports to the UK.
 

In 2020, Dong Nai’s import-export turnover to the United Kingdom and Northern Ireland has reached more than 100 million USD. This Agreement, which was signed and in effect at the time the United Kingdom and Northern Ireland left the European Union, will keep bilateral trade between Vietnam and Great Britain uninterrupted.

*A potential market

The UK and Northern Ireland are the 5th largest gross domestic product (GDP) in the world. The UK’s GDP in 2019 is about 3 trillion USD and per capita income is over 45 thousand USD per year. This is a country that imposes a rather high value-added tax on most goods and services. Therefore, the entry into force of UKVFTA will help Vietnamese goods enter the UK market to increase their competitiveness compared to similar goods from other countries.

According to the Ministry of Industry and Trade, in 2019, Vietnam’s trade with the UK was 6.6 billion USD, of which export reached about 5.8 billion USD and import reached 800 million USD. In the period 2011-2019, the import and export speed between the two sides increased by more than 12% per year, about 2% higher than the average growth rate of Vietnam with other countries.

Each year, the UK imports nearly 700 billion USD of goods from other countries, so Vietnam still has plenty of room to expand exports into this market. The UK is importing many items from Dong Nai and other provinces, cities with textiles, footwear, wood products, computers, electronics and components, cashew nuts, coffee, and pepper, etc.

Ms. Quan Ngoc Lien, Director of Hoan My Company Limited (Vinh Cuu District) said: “My company is exporting many goods to several European countries including the UK. The signing and entry into force of UKVFTA makes our production unaffected and can continue to enjoy tariff preferences. The agreement will help Vietnamese goods increase competition in the UK market. I have a plan to expand my exports to this market”. Although the UK is a big market, enterprises in Dong Nai have not exploited this market well.

The UK is one of the markets that Dong Nai businesses are aiming for because consumers have a high level of spending. Currently, taxes on many items have been gradually reduced to 0% under the roadmap of the agreement will be an opportunity for businesses to penetrate and expand product consumption in the UK. It is expected that 99% of import-export tariff lines will reduce to 0%.


t9.1.jpgTimber export also has many opportunities in the UK market.

*Expand to attract investment

By the end of 2020, the UK has invested in Dong Nai 7 projects with a total registered capital of nearly 378 million USD. UK businesses mainly invest in industrial production and most of them have advanced technology. The signing of UKVFTA will help Dong Nai increase the attraction of FDI in the industrial sector. Mr. Shiba Yuichi, Deputy Head of Sales Department, Sopet Gas One Co., Ltd. (Nhon Trach) commented: “The newly signed free trade agreements will help Dong Nai as well as other provinces and cities in Vietnam increase its attractiveness to foreign investors. The UK is a large economy in the world with a high per capita income, so FDI enterprises will widely invest in Vietnam to produce goods to sell to the above market to enjoy tax incentives”.

During the recent online conference of the Government with localities to assign tasks to 2021, PM Nguyen Xuan Phuc said that quickly signed multilateral and bilateral free trade agreements will help Vietnam increase its attraction to FDI investors. Therefore, in 2021, Vietnam will welcome a strong investment wave from FDI enterprises.

So far, Vietnam has had 15 signed trade agreements. According to world economic experts, Vietnam is one of the top countries in the world that businesses are interested in and want to invest in.

According to the Deputy Head of Dong Nai Industrial Zones Authority Le Van Danh, this province is urgently completing the procedures to expand and invest in new industrial zones in the area to have land and attract quality FDI inflows into Dong Nai.

Vi Quan


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