The EU - Vietnam Free Trade Agreement (EUVFTA) has strengthened Vietnam's attractiveness for European investors, the Vietnam News Agency quoted a survey by the European Chamber of Commerce in Vietnam (EuroCham) as stating on July 31.

According to the EuroCham Business Confidence Index (BCI) survey conducted by Decision Lab, released as the EUVFTA approaches the fourth anniversary of its entry into force on 1 August 2024, the EU, already a major investor in Vietnam, has poured €28 billion (nearly $30.3 billion) into 2,450 projects, underscoring its continued confidence in the country's potential.

Notably, EU investors have added €800 million (nearly $866 million) in FDI between January and September 2023, bucking the global trend of declining FDI.

The EUVFTA has also significantly boosted Vietnam’s exports to Europe, surging from €35 billion (nearly $ 38 billion) in 2019 to over €48 billion (nearly $52 billion) in 2023, with growth particularly being pronounced in sectors such as electronics, textiles, footwear, agriculture, and seafood, according to the survey.

However, it noted that the increase in EU exports to Vietnam has been far more modest, rising from €11 billion to only €11.4 billion over the same period, adding to a substantial trade imbalance.

The BCI survey said that the EUVFTA has undoubtedly opened doors for European businesses, but challenges remain. However, it also pointed out a number of obstacles that European businesses face in fully leveraging the EUVFTA, including complex regulatory requirements and a lack of recognition for international standards by local authorities.

Additionally, a lack of understanding of the agreement among the stakeholders, combined with customs valuation issues and opaque clearance procedures, complicate trade, technical barriers, particularly in the areas of certification and product testing, also remain a significant hurdle, the survey said.

According to Chairman of EuroCham Vietnam Dominik Meichle, the survey shows that while progress has been made, challenges remain. He stressed the importance to continue working on simplifying procedures, aligning standards, and ensuring everyone understands how the EUVFTA works.

EuroCham is committed to cooperating with relevant stakeholders to streamline regulatory compliance, advocate for greater recognition of international standards, and develop comprehensive education and awareness programs on the EVFTA, EuroCham Vice Chairman Jean-Jacques Bouflet said.

It will also continue to push for solutions to technical barriers to trade, particularly in certification and testing, and advocate for further tariff reductions and streamlined customs procedures, the Vice Chairman of EuroCham added.

EuroCham Vietnam is actively championing the full ratification of the EU-Vietnam Investment Protection Agreement (EUVIPA) as a critical step in unlocking the full potential of the EUVFTA for attracting foreign direct investment. Meanwhile, EU institutions have already given their approval, the EUVIPA still requires individual ratification from all 27 EU member states, therefore EuroCham Vietnam is working tirelessly with European stakeholders to encourage the remaining states to follow suit.

Mr. Thue Quist Thomasen, CEO of Decision Lab, stated the findings highlight that while the EUVFTA is a powerful tool for economic growth, its success hinges on continued efforts to address regulatory complexities, technical barriers, and awareness gaps. He stressed that a targeted approach to support businesses, particularly SMEs, in navigating these challenges is crucial.