EVFTA Underpins Continued Growth Of Vietnam's Technology Market

Changes in consumer behaviour and market trends over the past years have forced us to rethink the role of technology.

 

As Vietnam steps into the post-pandemic era, experiences and learnings from the pandemic serve as a reminder of the importance of digital transformation and its crucial technology component.


Despite COVID-19's economic and social impact, Vietnam remains an attractive destination to European investors. According to the European Chamber of Commerce (EuroCham) 2021 White Book, Vietnam's stable macro-economic climate, with inflation in the single digits, continues to increase investor confidence in the country's the trade and investment environment.


Only adding to that, the EVFTA is paving the way for continued foreign direct investment (FDI) from the EU and is viewed as a means for shared recovery and economic rebound.


As the first comprehensive free trade agreement between the EU and a developing country in Asia, the EVFTA has positively impacted trade and investment exchange. While COVID-19 may have taken a toll on key export regions in southern Vietnam, the EVFTA has helped see Vietnam rise to become the EU's largest goods trading partner in the ASEAN and rank as one of the EU market's top 10 suppliers.


Today, the local technology market forecast is positive with exciting opportunities and changes lying ahead with the government prioritising technology-related FDI. This is consistent with Vietnam's digital economy and high-tech aspirations ushered in by the EVFTA indicates its potential as a platform to explore technology collaborations and strengthen partnerships between Vietnam and the EU.

That said, the realisation of this potential will come down to effectively utilising the EVFTA in a business environment with enhanced infrastructure, administrative procedures that are easier to navigate and with fewer uncertainties, and more means to facilitate cooperation. As for Vietnamese businesses, measures must be taken to improve operations and efficiency to meet higher EU standards.


Implementing initiatives

Vietnam's commitments under the EVFTA in the technology space cover a wide range of areas including, but not limited to, public services, trading, e-commerce, intellectual property, data, and climate change. Accordingly, the Vietnamese government has made efforts to reform relevant regulatory frameworks and policies as well as launch new initiatives.


In 2020, Decision No.749/QD-TTg approved the National Digital Transformation Program for 2025, with an orientation to 2030. The programme serves the dual purpose of developing a digital government, economy, and society, as well as establishing Vietnamese digital businesses with global capacity.


The programme's launch, which coincided with when the EVFTA took effect, is enabling Vietnam and the EU to identify opportunities for collaboration and mutual development. As part of the program's agenda, the Law on E-Transactions is currently undergoing updates and amendments to provisions, including but not limited to, digital signature, digital identity, and e-contracts, to support Vietnam's fast-growing digital economy and provide for adequate regulations.


In August 2021, the Ministry of Industry and Trade (MoIT) issued Decision No.1972/QD-BCT on the establishment of the Vietnam Domestic Advisory Group in accordance with the provisions of Article 13.15 of the EVFTA's Trade and Sustainable Development Chapter. The group, made up of Vietnamese associations and non-governmental/non-profit organisations legally established and operating in Vietnam that represent legitimate interests relating to trade and sustainable development, is tasked with gathering views, advising, and making recommendations as to implementation, ensuring compliance to commitments under the EVFTA.

Investment regulations are also undergoing reform to enable EU and Vietnamese businesses, especially technology-based investors, to reap benefits from the EVFTA and enjoy further incentives. For example, in October 2021, the Government issued Decision No.29/2021/QD-TTg on special investment incentives on investment projects, defined as per high-tech criteria, covering corporate income tax exemptions as well as land and water surface rent reductions. These kinds of incentives are what can further attract FDI, improve the business climate, and ultimately lead to more quality investments.


To deal with changes in tariffs and complete the tax reduction roadmap under the EVFTA, the Ministry of Finance is currently compiling a list of Vietnamese imports and exports in line with the ASEAN Harmonised Tariff Nomenclature to update technology, trade, and classify goods meeting market demand. Vietnam applies this and every five years reviews are done to ensure consistency with amendments to the Harmonised System.