Formalized on August 1, the EVFTA enables Vietnam to promote trade and investment, especially form new supply chains. The agreement allows textile-garment, leather-footwear and seafood businesses to export products to the EU. Ministry of Industry and Trade’s Agency of Foreign Trade reveals, authorized agencies granted 7,200 certificates of origin (C/O) form EUR.1 for goods exports to the EU worth $227 million, including footwear, seafood, plastics and plastic products, coffee, textiles and garments, bags, suitcases, fruits and vegetables, and rattan and bamboo products. Importers included EU countries with seaports and distribution centers - Belgium, Germany, the Netherlands, and France.

While opportunities are available for businesses to participate in value chains, Vietnam’s support industries remain underdeveloped. The number of Vietnamese companies joining the global value chain is small. As per a study by the Japan External Trade Organization (JETRO), Japanese companies in Vietnam buy about 32.4 percent of input goods and services they need from Vietnamese suppliers, compared to 67.8 percent in China, 57.1 percent in Thailand, and 40.5 percent in Indonesia. Vietnam has about 20 automobile assembly companies but has only 81 level-1 suppliers and 145 level-2 and level-3 suppliers. The average revenue of Vietnamese manufacturing enterprises was only $2.9 million per year, while businesses still need to have an annual minimum turnover of $5 million in order to join the EU market.

Local firms are not willing to make greater investments to join the global value chain, says Ngo Chung Khanh, Deputy Director, Multilateral Trade Policy Department.