EU – Vietnam Free Trade Agreement as opportunity for Polish exportsPublished: 18.01.2016
Free Trade Agreement between the EU and Vietnam is slated to come into effect at the turn of 2017 and 2018. An increase in competition for this market among the EU states is only a matter of time - which is why Polish exporters should begin to tighten their relations with Vietnam as soon as possible, according to experts from Akcenta, a payment institution realizing international transactions and FX exchange for companies.
“Currently, the value of Polish exports to Vietnam is low, but this is exactly why one is very happy about their growth which has recently measured 40-50%. It is worth to invest in building one's position in this country right at this moment, and at least attempt to get ahead of the EU competition,” Akcenta Poland's CEO Radoslaw Jarema says.
The potential of the Vietnamese market has been noticed not only by the EU, but also by the Polish authorities: the market has been classified as one with potential for the Polish exports as it has been selected for the program “Activating exports on selected markets.” Polish exporters of domestic specialty foods and from selected other industries could benefit from the initiative.
Poland needs to step up cooperation with the Association of South-East Asian Nations (ASEAN), to which Vietnam belongs, deputy Prime Minister Mateusz Morawiecki said in December 2015. “We want Poland to become a trading hub between the CE and the ASEAN countries, and also the ASEAN's gate to the EU,” he said.
Morawiecki reminded that Poland presently records a deficit of USD 2.8 bln in trade with the ASEAN and a better balance in the trade exchange is desirable. Poland and the region have a lot to offer to the ASEAN members such as cheaper high-quality goods as well as access to the EU market, he underlined.
The development of cooperation with the ASEAN will be one of the government's priorities, Morawiecki also said.
Polish apples already exported to Vietnam
Thanks to the efforts of Polish institutions, Poland managed to sign an agreement with the Vietnam last year, which has opened the way for Polish apples exports. “It is a clear success, considering that the procedure took only a year and we are the only EU country except for France which can export apples there. But there remains a lot to be done,” Akcenta's head Radoslaw Jarema says.
Goods that dominate among Poland's exports to Vietnam include dairy products, such as powdered milk and whey, and fish fillets as well as medicines and pharmaceutical products, according to analysts. In turn, Poland imports from Vietnam mainly electronics (especially mobile phones), footwear, apparel and accessories, coffee, pepper as well as cast iron and steel products.
“A better balance of trade exchange with fast developing Asian countries is possible to achieve, because those markets keep growing. China is flooding the world with its goods, but other Asian states are importing more and more. Mass production is moving there and demand for many goods is growing, not only those for industry, but also for private consumptions,” Jarema says.
In order to get ahead of competitors, who will be striving as much as Poland to enter the Vietnamese market, Poland should seek its advantages and unique resources, in Jarema's opinion. Also links and ties established with entrepreneurs who are representatives of the Vietnamese minority in Poland may be of importance.
Medicines and machines a chance for Polish firms in Vietnam
Medication producers should become more interested in Vietnam as the Vietnamese are increasingly often looking for quality and safe products, according to analysts from the Polish Institute of International Affairs (PISM). Demand is also noticeable in the field of various types of machines, including mining (Vietnam is the ASEAN's second-biggest coal producer) and farming equipment.
Demand may also increase in the segment of construction machines in view of the government's plans to allocate as much as USD 56 bln for infrastructural projects by 2025. Further, cooperation potential is emerging in the so-called green technologies, especially those related to water and wastewater management as well as renewable energy sources.
Vietnamese economy attracts foreign capital
Vietnam's GDP rose by 6.68% in 2015, easily exceeding the government's target for 6.2% growth. This places Vietnam among the swiftest-growing economies in South-Eastern Asia in 2015. Vietnamese exports increased by 8.1% in the last 12 months (by December), while imports rose by 12%.
Foreign investments in Vietnam grew by 17.4% over the past year to a record USD 14.5 bln. Annual inflation measured 0.63% in 2015, the lowest in 14 years. In 2014, Vietnam's economy expanded by just below 6%, above the 2013 rate of 5.42%.
The EU and Vietnam agreed on the basic provisions of the free trade agreement in early August 2015. Under the agreement, Vietnam will lift over 99% of duties for EU goods of which the majority (65%) will be dropped at the time of the agreement entering into effect, while the remainder - in the subsequent transition period of up to 10 years.
The EU is to lift 99% of duties on trade with Vietnam within 7 years. The longest transition periods will be set in the case of apparel and footwear imports from Vietnam.
The agreement may come into force at the turn of 2017 and 2018, and will have to be approved by the EU states and ratified by the European Parliament.
Source - Polish Press Agency, Economic Service