(MPI) - Small and Medium Enterprises (SMEs) are getting highly integrated into the global supply chain. The internationalization of Vietnamese SMEs, especially through international trade and connection to global supply chains, is supported by the international trade agreements in which Vietnam is a party. In that context, the Delegation of the European Union to Vietnam held a Round-table Conference "Small and Medium Enterprises and the EVFTA Agreement" on March 26th, 2021. This is the last event in a series of three roundtables organized by the Delegation since 2020.
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Deputy Minister Tran Duy Dong speaking at the conference. Photo: MPI |
Deputy Minister Tran Duy Dong said at the conference that the enterprises always played a special role, being the growth motivation and making important contributions to the national socio-economic development. The Vietnamese business community has made a breakthrough, contributing to the liberation and increase of productivity, mobilizing resources for socio-economic development, maintaining economic stability and growth, improving the export turn-over, raising budget revenue and playing an important role in solving social problems over the past two decades.
Currently, 800,000 enterprises are operating in Vietnam, of which SMEs account for 97%, contributing 45% of GDP, 31% of total budget revenue and attracting more than 5 million employees. In all circumstances, SMEs are always dynamic, creative, responsive and flexible to overcome all difficulties and challenges, making an important contribution to the socio-economic development of the country.
The successful conclusion of the negotiation and the signing and ratification of the EVFTA Agreement has been a long way with the efforts and high political determination of the Party, National Assembly and the Government of Vietnam. EVFTA is considered a comprehensive, high-quality and interest-balanced agreement for both Vietnam and the European Union.
The European Union will eliminate import duties on 99.2% of tariff lines after 7 years from the effective date of the EVFTA Agreement, equivalent to 99.7% of Vietnam's export turn-over. For the remaining 0.3% of export turn-over, the EU commits to give Vietnam tariff quotas in the quota import tax to 0%.
Research by the Ministry of Planning and Investment shows that if the commitments on tariff and non-tariff reduction are fully implemented, Vietnam's economic growth will be improved in the short, medium and long terms. EVFTA is expected to increase Vietnam's GDP by an average growth rate of 2.18 to 3.25% (for the first 5 years of implementation), 4.57-5.30% (for the next 5 year period) and 7.07-7.72% (for the 5 year period after). Regarding exports, EVFTA is forecast to raise Vietnam's export turn-over to the EU by about 42.7% in 2025 and 44.37% in 2030 compared with the absence of the Agreement.
The EVFTA Agreement also poses many challenges to Vietnamese enterprises besides the opportunities, especially SMEs. The economic integration process indicates that Vietnamese enterprises are still having difficulty in participating in the regional and global value chains due to their limited competitiveness. Many reasons have been pointed out, including three following reasons. First, small enterprises have difficulty in mobilizing resources to invest in technology, high-quality human resource management and training, and have no investment strategy for long-term development. Second, Vietnamese enterprises are still limited in mutual cooperation and support to become long-term partners, towards the common development goals. Third, some enterprises, especially SMEs, still have short-term awareness without a long-term vision and strategic thinking.
Facing the opportunities and challenges brought by the EVFTA Agreement, the Government and the Ministry of Planning and Investment have taken specific actions to support Vietnamese enterprises. Immediately after the EVFTA Agreement took effect on August 6, 2020, the Prime Minister issued Decision No.1201/QD-TTg on the approval for the implementation plan of the Free Trade Agreement between the communal Socialist Republic of Vietnam and the European Union (EVFTA) including 5 main groups of solutions as follows: information propagation and dissemination about EVFTA Agreement and markets of EU countries; construction of legal documents; competitiveness improvement and human resources development; guidelines and policies for trade unions and labor organizations at enterprise establishments; and policies on social security, environmental protection and sustainable development.. Each of these working groups is built with detailed content and activities assigned to each Ministry and line ministries with a specific roadmap.
As the state management agency for enterprises, the Minister of Planning and Investment signed Decision No. 1400/QD-BKHDT on September 15, 2020 promulgating the Agreement’s Implementation Plan to organize fully and effectively perform the tasks assigned in the Prime Minister's Decision No. 1201/QD-TTg dated August 6, 2020 with four main tasks and solutions, including information propagation and dissemination about the Agreement; organization of investment promotion activities; guidance on the implementation and application of Vietnam's commitments under the Agreement; development of legal documents and policies to implement the Agreement and improvement of institutions, policies and laws and measures to enhance Vietnamese enterprises’ competitiveness to take advantage of the benefits of the Agreement.
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Photo: MPI |
In order to support SMEs to participate more effectively in the value chain as well as sectoral clusters, the Ministry of Planning and Investment has actively coordinated with ministries, line ministries and local authorities to promote the implementation of such specific solutions as: Effectively implementing the Law on Support for Small and Medium Enterprises, with the focus on building a program to support small and medium enterprises to participate in the value chain in the period of 2021-2025. The program content includes support for market, production and business links, brand development, technical standards, motrology and quality, credit finance, pilot production, etc. The Project Linkages for small and medium enterprises (LinkSME) sponsored by the United States Agency for International Development (USAID) is implemented with the aim to support enterprises to improve their competitiveness and fully participate in the global production networksand value chains.
The Ministry of Planning and Investment suggested the foreign enterprises in general and EU enterprises in particular, strengthen cooperation with local enterprises to create market and buying opportunities from Vietnamese enterprises. The Ministry also recommended the delegation of the European Union study and coordinate with the Government of Vietnam to implement programs and projects to support Vietnamese enterprises to maximize benefits from the Agreement and implement well the commitments to become a reliable partner of EU enterprises. At the same time, the Ministry promised to closely coordinate with ministries, line ministries, local authorities and associations including the Vietnam Small and Medium Enterprises Association to effectively implement policies and solutions to support business development, and SMEs to improve capacity, taking advantage of the FTA’s benefits, participating in chainlinks, perfecting the fair business and investment environment, creat the most favorable conditions for the investors and enterprises of all economic sectors./.
Ministry of Planning and Investment