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|Bosch managing director Guru Mallikarjuna|
Starting in August 2020, the long-awaited EU-Vietnam Free Trade Agreement (EVFTA) has finally came into effect, which would have direct impacts on Vietnam’s economic development and its strategic position in the global economy.
This ambitious trade deal grants Vietnam almost unfettered access to the EU’s over 700 million-people economy by eliminating the majority of tariff and non-tariff barriers after 10 years, thus boosting Vietnam’s exports to the EU by 18 per cent or Є15 billion by 2035.
According to Vietnam’s Ministry of Industry and Trade (MoIT), the EVFTA would contribute to the annual GDP growth of up to 3.2, 5.3, and 7.7 per cent in five, 10, and 15 years of implementation, respectively.
Furthermore, expanding bilateral trade in intermediate goods and services with the EU is a prime opportunity for Vietnam, especially for local small- and medium-sized enterprises (SMEs) to enhance their strategic position in the global value chain (GVC).
Now with added endorsement from the agreements, European firms, Bosch included, could prioritise working wth local SMEs and locally sourced labour, goods, and services to maximise local spending and building up business capacity and supplier networks within the country.
|Support from global tech giants like Bosch would make Vietnamese’ economy more competitive and innovative|
Additionally, the EVFTA is likely to offer far-reaching benefits for Vietnam’s economic competitiveness by accelerating the country’s commitment to comply with international standards and through foreign-invested enterprises’ technology spillover effect.
In order to meet the EU’s strict requirements, it is imperative that Vietnam commits to decisive institutional reforms to strengthen and standardise rules, especially in areas of the environment, investment protection, labour standards, and intellectual property.
|Bosch in Vietnam is at the forefront of digitalisation process in key areas that it operates, notably mobility and factory automation.|
Therefore, EVFTA contributes to the creation of a fairer, more balanced and sustainable economy of Vietnam. The country’s youthful population becomes a strategic advantage, especially when coupled with a clear direction for their developing and upskilling.
Bosch’s offering of TGA – a German-standard vocational training of Technical Industrial Apprenticeship in collaboration with local partner LILAMA2 – is part of its strategic roadmap and commitment to strengthen Vietnam’s labour capacity in response to market development.
In addition, Bosch in Vietnam collaborates and participates in diverse student and entrepreneurial initiatives as sponsors in both funding and expertise to grow the country’s labour resources.
Moreover, with the EVFTA, Vietnam stands in front of the substantial inflow of the EU’s quality foreign investments, products, and services. European technology spillover and know-how transfer would together promote the development of the local private sector, thus making the Vietnamese economy more competitive and innovative.
Bosch in Vietnam is at the forefront of the digitalisation process in key areas that it operates, notably mobility and factory automation. Thus, the company is at an advantageous position to transfer the technical know-how from developed to developing nations, especially when the German industry is known for its systematic and cost-effective approach to industrial transformation.
The EVFTA was concluded in an eventful year with COVID-19 bringing serious damage to the global economy and Vietnam is no exception. It is highly expected that potential benefits of this trade deal would help Vietnam to bounce back strongly.
For this to happen, within the framework of the agreement, Bosch and other European firms in Vietnam would be the forefront agents to drive this collaboration between the two trading blocks.