At the signing ceremony of the EVFTA (Photo: VNA)Hanoi (VNA) – Vietnam’s booming economywill see another surge of new investment after signing a free trade agreementwith the European Union (EU) that could hasten the exodus of manufacturers fromChina, according to analysts.
The South China Morning Post on July 3 quotedexperts as saying that Chinese firms looking to gain lower-tariff access to theEU market are likely to be incentivised to open production in Vietnam.
Adam McCarty, chief economist at Hanoi-basedMekong Economics, said the agreement will “speed up, slightly, the already fastmovement of factories from China to Vietnam”.
“The trade war adds a little to what washappening anyway, and this [free trade agreement] adds a little more. It isboth Chinese and foreign firms relocating to Vietnam,” he added.
“From the business strategy point of view,Vietnam is actually a good manufacturing location that people are looking atfor the advantage of the network of the [free trade agreement with the EU],”said Angelia Chew, founder of the Singapore-based consultancy AC TradeAdvisory.
“On top of the trade tension, we have Chineseclients that are looking for manufacturing relocation [to Vietnam] to mitigateincreased duties for goods made in China to the US. It is pretty exciting forcompanies investing into [Vietnam now] as well as existing companies inVietnam, they knew the [free trade agreement] was going to attract moreinvestment.”
Dr Cassey Lee, senior fellow at the ISEAS-YusofIshak Institute in Singapore, a research institution that specialises inSoutheast Asian studies, said the EVFTA would “help Vietnam diversify itsportfolio of inward foreign direct investment”.
The EVFTA and the EU-Vietnam InvestmentProtection Agreement (EVIPA) were signed in Hanoi on June 30. The agreementswill be submitted to the National Assembly of Vietnam and the EuropeanParliament for ratification.-VNA
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