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Free trade agreement will benefit Viet Nam, Europe
Viet Nam News speaks with Alain Cany, chairman of the European Chamber of Commerce in Viet Nam, about trade ties between Viet Nam and Europe at a time of global economic turmoil.
How does the global financial crisis affect trade between Europe and Viet Nam?
There is no doubt that the financial crisis has caused an impact on trade ties between Europe and Viet Nam. As we all know, Europe is very much affected by the crisis and the first impact is probably the reduction of orders for imported textiles, garments, shoes and furniture. I don’t have an exact figure for the first four months of this year but the impact is certain and there is nothing we can do about that.
However, personally I believe that the impact will diminish over the next few months because stock now has been falling in Europe. Viet Nam is a good manufacturer of relatively cheap goods and Europe will buy those. Viet Nam will be a good source of supply. So I remain confident that soon, exports to Europe might recover, not because Europe is recovering from the crisis, but because Viet Nam will be able to supply the right products with a cheap price and good quality.
I think this is really Viet Nam’s target. I’m very pleased to know that the Viet Nam National Textile and Garment Group (Vinatex) is taking measures to improve their quality, productivity and bring new products to customers. That’s good and encouraging.
What is the most effective way to increase trade ties between Viet Nam and Europe?
Viet Nam should strongly continue to implement WTO’s commitment. It’s good that the country is a member of WTO and the commitment’s implementation is very important. Europe is watching implementation in some key sectors, such as distribution so I really recommend that the Vietnamese government accelerate the process.
For me, Europe still finds Viet Nam attractive. On the Vietnamese business side, I think they should reduce costs to improve productivity. Furthermore, we have talked also about a free trade agreement (FTA).
It’s very important for both sides to sit together to find a way to sign an FTA as soon as possible. I know it’s very difficult to sign an FTA between Asia and Europe but definitely much easier to sign an FTA between Viet Nam and Europe. I’m sure that most Vietnamese manufacturers will benefit from the agreement. We should work very hard on that. Eurocham, together with the European Commission and Delegation, should try to convince leaders and business community of Viet Nam to go in that direction.
However, one thing we should pay attention to is the trade deficit between Asia and Europe, 232 billion euros. It’s huge and the figure doubles every five years. Europe likes trading with Asia no doubt because Asia is dynamic, able to produce relatively cheap goods. But Asia should take initiative to welcome more European investment because if we continue to increase the trade deficit, one day Europe might create protectionist measures, which would not be good.
What about the low rate of European investment in VN?
Actually, Europe has invested a lot in Viet Nam with a total of US$7 billion so far. That means Europe is No 2 after Japan. Some other countries have registered investments bigger than we have, but Europe will not permit it. The figure from Europe is less impressive but is real. As chairman of Eurocham, I would like the figure to increase and I am very pleased to invite more European companies to invest in the country.
For the last three months, a lot of European CEOs from different sectors - heavy industry, electricity, energy and distribution - told me they want to increase their investment in Viet Nam. And they often mentioned to me that they were cutting their investments in China, but increasing, even doubling, their investment in Viet Nam. The global crisis has slowed down the process and investors might wait for the next few months to increase their investment into the country.
Personally, I’m extremely positive because it’s not a promise, it’s a reality. Viet Nam is still very attractive for most European companies. What they have invested in Viet Nam so far is still very small, one-tenth of what they have done in China and their plan is to double, or even triple, that.
What should Viet Nam do after the world recovers from the crisis?
Viet Nam’s strength remains the same as before. Viet Nam is a dynamic country with stable government and young population. But the country should improve productivity. Many people have mentioned that the economic system in Viet Nam is deficient. It’s the right time for Viet Nam to improve it.
It should be the government’s initiatives but it should also be the private sector’s initiatives. We should change the mentality, the way of doing business, avoid project delay, and eliminate corruption, non-transparency and unnecessary intermediaries. This will improve efficiency, productivity and organisation. All will make Viet Nam more competitive. Of course it takes time, but the country can do it step by step. But everything should start right now.
VietNamNet, VietNamNews
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