Israel – Việt Nam Business Forum in Hà Nội prior to the signing of the VIFTA in 2023. Photos courtesy of the Embassy of Israel

Yaron Mayer*

As we reflect this week, I feel immense pride in marking a significant milestone, the first anniversary of the Việt Nam – Israel Free Trade Agreement (VIFTA) officially entering into force on November 17, 2024.

VIFTA is a vibrant symbol of the friendship and growing trust between our two nations. For Israel, this is only our second free trade agreement in Asia and the first with a Southeast Asian country. This fact affirms Việt Nam’s position as a key and rapidly growing partner for Israel in this dynamic region.

Over the past year, even amid complex global geopolitical volatility, including conflicts that have impacted international supply chains, our bilateral economic relationship has demonstrated incredible resilience. VIFTA has not only helped maintain but also provided a new impetus, enabling the total trade turnover between Việt Nam and Israel to exceed the US$3 billion mark in the first 10 months of 2025. This is evidence of our capacity for resilience and sustainable cooperation.

Shining achievements in the first year of implementation

The first year of VIFTA implementation has yielded positive results with a visible shift in the structure and flow of goods.

The first is tariff reduction. VIFTA has brought about deep tariff reductions, offering gradual and immediate competitive advantage to exporters. For example, tariffs on Israeli agricultural products dropped sharply, such as on dates, a major Israeli export, which were immediately reduced from 30 per cent to 0 per cent upon the Agreement's entry into force. This makes high-quality Israeli products more accessible to Vietnamese consumers.

Israeli companies having B2B meet-up with potential clients in a business connecting seminar in Hà Nội.

Conversely, VIFTA facilitates deeper penetration of Việt Nam's key export products, such as fruit, nuts, textile, footwear and smartphones, into the Israeli market. Notably, the Agreement allocated a duty-free quota of up to 1,000 tonnes of tuna per year for Việt Nam. This is a vital stepping stone in enhancing the international competitiveness of Việt Nam's agriculture and fisheries sectors.

Next is the boost for advanced industries. According to Israel's Minister of Economy and Industry, Nir Barkat, VIFTA is a 'leap forward' and Israel is bringing 'innovation and unique technological advantages' to the Vietnamese market. Sectors that have benefited greatly over the past year include electronics, medical devices, chemicals and especially fresh agricultural products. Computer components constitute the largest share of imports from Israel to Việt Nam. Increased cooperation in these sectors has helped Việt Nam access high-quality Israeli components and advanced manufacturing solutions, thereby enhancing quality products made in Việt Nam.

Unlocking opportunities and vision

VIFTA is more than a trade instrument; it is a mechanism that generates long-term collaboration opportunities for both nations. Israeli technology will find its match in Việt Nam's potential manufacturing market. Việt Nam is accelerating legal reforms on technology transfer, such as the amendment to the Law on Technology Transfer currently under review by the National Assembly, which provides tax incentives and capital support for businesses investing in research and development (R&D) and technology infrastructure. This determination has created a massive demand in Việt Nam’s information and communications technology market. This is the ideal "playground" for established Israeli companies and startups in AgriTech, WaterTech, cybersecurity and more.

Another breakthrough is Israel's adoption of the 'What is good for Europe is good for Israel' principle. This rule means that Vietnamese exports meeting stringent European standards will be automatically accepted in the Israeli market. This is a golden opportunity for Vietnamese enterprises to drive quality, creating a dual leverage effect that helps them not only reach Israel but also penetrate other demanding international markets.

Infrastructure connectivity will make a difference in the bilateral relationship. One of the biggest steps forward for the future is the plan to open a direct flight route connecting Israel and Việt Nam, anticipated to be operational in early 2026. The direct flight will reduce the large physical barrier, not only powerfully boosting tourism, education and people-to-people exchanges but also facilitating faster transport of high-value goods, creating a new vitality for the bilateral relationship.

Challenges and an improvement roadmap

Although VIFTA has had an impressive start, we cannot ignore the challenges that must be overcome to maximise the Agreement's potential. The biggest challenge remains the dissemination of information and user guides for small and medium-sized enterprises (SMEs) on both sides. Many small businesses, especially Vietnamese exporters, may not be fully aware of the rules of origin, preferential customs procedures or the specific benefits of participation. Both sides are working on specialised programmes, exchanges and developing guidance materials to support SMEs. However, a joint mechanism could be established to promptly address emerging issues and provide assurance to investors.

Israel is ready to bring specialised technical assistance programmes, share quality management experience and technology in agriculture, food processing and industrial production, and thus help Vietnamese businesses meet international standards faster.

Moving forward, we must act together to bring the Việt Nam – Israel relationship to a new level. We need to step up technology and innovation investment. We can look to shifting the focus from mere commodity trade to investment in strategic areas such as digital transformation, green energy and smart city development. Israel and Việt Nam can help each other solve challenges in climate change, water resource management and food security through advanced technology and experience.

We also need to actively promote student, expert and startup exchange programmes. High-quality human resources are key for Việt Nam to master new technologies from Israel, and for Israel to apply valuable lessons from Việt Nam's strengths in agriculture, such as cultivation and new variety adaptation.

VIFTA is just the beginning. In the years to come, I am confident that this Agreement will become a solid foundation for us to not only achieve the goal of doubling bilateral trade turnover but also build a comprehensive partnership, moving together towards prosperity, sustainability and growth for both our peoples. — VNS

* Yaron Mayer, Ambassador of Israel to Việt Nam