UKVFTA opens doors for UK businesses in Việt Nam

August 11, 2022 - 09:30
The UK-Việt Nam Free Trade Agreement (UKVFTA), which officially took effect on May 1, 2021, has helped not only boost the bilateral trade between the two markets but also bring the door wide open for the investment of UK companies in Việt Nam. Việt Nam News talks to CEO of HSBC Việt Nam Tim Evans and Nitin Kapoor, Chairman and General Director of AstraZeneca Việt Nam and Asia Area Frontier Markets, about their plans for business in Việt Nam.

By Mai Hương & Việt Thắng

The UK-Việt Nam Free Trade Agreement (UKVFTA), which officially took effect on May 1, 2021, has helped not only boost the bilateral trade between the two markets but also bring the door wide open for the investment of UK companies in Việt Nam.

Việt Nam News talks to CEO of HSBC Việt Nam Tim Evans and Nitin Kapoor, Chairman and General Director of AstraZeneca Vietnam and Asia Area Frontier Markets, about their plans for business in Việt Nam.

How is your company doing business in Việt Nam? How will the UKVFTA help expand your business here?

Tim Evans, CEO of HSBC Vietnam. VNS Photo

Evans: HSBC has been the leading international bank operating in Việt Nam for more than 150 years. As a bank with trade finance in our DNA, our mission has always been to be a bridge between local companies looking to transact internationally and international companies looking to transact locally.

We are a full-service bank that deals with domestic and international companies, financial institutions and individuals. We aim to ensure that we drive cross-border business opportunities for all our customers.

As the leading trade bank, we welcomed the UKVFTA, which will definitely be a solid catalyst for boosting trade between both countries and also signals Việt Nam’s continued rise as an active participant in global trade. Since the UKVFTA was activated, we have witnessed an increase in import-export volumes between Việt Nam and the UK.

In 2021, Việt Nam’s exports to the UK rose by 16.4 per cent, while the UK’s exports to Việt Nam recorded a rise of 23.6 per cent compared to 2020.

In the first half of 2022, Việt Nam’s exports to the UK have reached US$2.91 billion. I believe this to be a success given the world’s challenges since the UKVFTA was signed. More can be done, and financial institutions such as HSBC have a vital role in connecting local and British businesses and facilitating bilateral cooperation.

Việt Nam has signed many free trade agreements, of which the UKVFTA is one. All of these FTAs are helping open new markets. They also lead to an easing of cross-border transactions, increasing capital funds flowing in and thereby helping promote foreign direct investment into Việt Nam. FTAs also create a more favourable environment for investors, leading to the Vietnamese financial services sector reforming to capitalise on the opportunities ahead.

Nitin Kapoor, Chairman and General Director of AstraZeneca Vietnam and Asia Area Frontier Markets. VNS Photo

Nitin: AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development, and commercialisation of prescription medicines in Oncology, Rare Diseases and BioPharmaceuticals, including Cardiovascular, Renal & Metabolism, and Respiratory & Immunology.

Based in Cambridge, UK, AstraZeneca operates in over 100 countries, and our innovative medicines are used by millions of patients worldwide.

Established in 1994 and becoming a foreign-invested company in 2020, AstraZeneca Vietnam is investing $310 million (VNĐ7 trillion) into the country from 2020 to 2030 to reduce the burdens of non-communicable diseases, develop local talent, and uplift the domestic biopharmaceutical manufacturing capabilities.

As a British-Swedish company with a local entity in Việt Nam, we recognise that the UKVFTA is bringing about several benefits in the healthcare and pharmaceutical sector, including ensured import/export rights, reduced tariffs, increased protection and enforcement of intellectual property rights, especially of pharmaceutical patents, internationalised standards and technical regulations, and enhanced transparency of policies on government procurement and reimbursement for pharmaceutical products and medical devices.

These effects are significant at this time when AstraZeneca has committed to investing $90 million into technology transfer and local contract manufacturing of our key non-communicable disease medicines in Việt Nam.

How do you evaluate Việt Nam’s plans to implement the agreement involving institutional reform, legal documents, and incentive policies?

Evans: Việt Nam currently has 15 effective FTAs with different countries/economic blocs worldwide, including the UKVFTA. All these FTAs have set a clear pattern for Việt Nam to improve its investment and business environment, attracting foreign investors.

It is not the FTAs alone that have made Việt Nam an appealing FDI destination. It is the FTAs combined with Việt Nam’s economic fundamentals, a stable government that continues to incentivise foreign investors, a resilient and hardworking labour force, cost competitiveness and a stable currency that have all contributed to making Việt Nam the investment destination that it is.

Việt Nam’s law on investment, which has been in effect since January, also aims to provide more incentives to attract further foreign investment.

I am pleased that Việt Nam’s investment is not just pursuing unfettered economic growth but is now requiring that this growth be aligned with global sustainability and climate change goals. Việt Nam is now actively positioning itself to attract “Green FDI”. The country is driving the economy towards green growth, sustainability and lower greenhouse gas emissions through the National Green Growth Strategy 2021-30.

The Government is also implementing the National Action Plan for 2021-30 to help implement their Green Strategy, with specific targets for each sector. The State Bank of Việt Nam is also implementing an Action Plan for the Banking Industry to implement the National Strategic Plan on Green Growth and the Scheme on Green Bank development in Việt Nam by 2030. The objective is to drive the growth of “green credit” so that funds can be channelled to environmental projects, promoting green manufacturing, services and consumption, etc.

Việt Nam is an extraordinary FDI success story. Given HSBC’s international footprint, being able to tell potential foreign investors from around the world about the Việt Nam story is one of the more enjoyable aspects of my job as CEO of HSBC Vietnam.

It is exciting to be part of this amazing time in Việt Nam, where tomorrow always looks better than today. The future is bright, and it is in no small part down to the number of free trade agreements that have been signed.

Nitin: We are delighted to see Việt Nam’s actions to realise its commitments under the UKVFTA in the last 1.5 years since the agreement took effect. Various legal documents and guidance have been issued to facilitate the implementation of the trade pact. In particular, Decision No. 721/QĐ-TTg issued in 2021 has formulated a comprehensive implementation plan, complemented by Decision No. 1425/QĐ-TTg defining the roles and responsibilities of relevant ministries.

Việt Nam has also been collaborating with the UK to hold several high-level and technical dialogues to review and optimise current regulations, as well as organise several workshops for businesses to understand better and maximise the benefits of the agreement.

In addition, the preferential tariff schedule for all goods was timely instructed through Decree 53/2021/NĐ-CP issued in 2021. As a result of this great progress, there was an immediate increase in trade values and newly approved FDI projects between the two countries in the first year of UKVFTA implementation.

What are potential cooperation opportunities between Vietnamese and UK businesses in your sector after UKVFTA? Do you have any proposals for the two governments?

Evans: There has already been significant cooperation between the UK financial sector and Việt Nam. The two main British foreign banks in Việt Nam have been in the country for over 100 years each, both are locally incorporated, and both are full-service banks.

We can continue to work with Việt Nam on its ambitious green agenda and the transition to net zero. We can bring our expertise from other parts of the world to Việt Nam and share it with Việt Nam and the corporate sector so that together we can ensure that the country remains a very attractive foreign direct investment location and one that is committed to addressing the challenges around climate change.

We can also continue to work with the Vietnamese Government on promoting the Việt Nam story overseas and helping to build the brand of the country internationally.

We have proved already that we are in Việt Nam for the long haul. We believe in the future of Việt Nam and the Vietnamese people. We appreciate that we are guests in this wonderful country, but we also know that we can help make a positive contribution by working together.

Nitin: Healthcare is a highly collaborative industry because innovation doesn’t mean isolation. At AstraZeneca, a partnership is at the heart of how we make health happen by uniting diverse organisations and minds with one shared goal.

Over the past three decades in Việt Nam, AstraZeneca has run several impactful programmes in collaboration with the Ministry of Health and healthcare partners to promote disease awareness, prevention and early detection. Amongst them are the Healthy Lung Programme to improve the quality of outpatient management of asthma, COPD and lung cancer; the Young Health Programme to prevent and reduce NCD risk behaviours amongst young people; and the CaReMe programme to transform the cardiovascular-renal-metabolic care ecosystem.

AstraZeneca is also cooperating with the World Economic Forum, London School of Economics, and Health Strategy and Policy Institute – Việt Nam Ministry of Health in the Partnership for Health System Sustainability and Resilience to holistically reinforce the Vietnamese health system so that it can guard against future risks. The UK has also been part of this programme since 2020.

We believe that in the future, with the vital support of trade pacts such as the UKVFTA, more and more cross-border and cross-sectoral partnerships between UK and Việt Nam businesses will grow and thrive in the healthcare sector, to make a tangible and meaningful impact on people in both countries. — VNS