Monday, 18 Dec 2017

EVFTA’s impact toward Vietnam's transportation sector

Updated at Friday, 24 Nov 2017, 16:22
The Hanoitimes - After coming to effect, the EU – Vietnam Free Trade Agreement (EVFTA) is expected to have a big impact to Vietnam’s macro economy, as well as each economic components, including the transport sector.
Firstly, the increase in trade and investment cooperation between Vietnam and EU’s members are expected to improve the flow of goods through transport models. The opening of the goods market, decentralization investment and services in EVFTA will be the prerequisite to increase demands for transport, logistics and storage. As such, these commitment will stimulate transport demands between Vietnam and EU, thus expand the logistics market and creating more opportunities for Vietnam’s transport enterprises. 
EVFTA will have big impact to Vietnam's transport sector.
EVFTA will have big impact to Vietnam's transport sector.
Secondly, commitment with regard to transport in the EVFTA willl also open new doors for two parties to access markets, creating advantages in the context when some other countries competing with Vietnam do not have FTA with EU. Besides, the EVFTA will create opportunities for Vietnam to access modern technologies, learning experiences from management and improving vocational skills and creating jobs in transport sector. As such, it will improve Vietnam’s competitiveness for enterprises to survive and develop.

Thirdly, EVFTA will create conditions for transport sector to attract investment from big foreign corporations in the context of limited financial resources for transport infrastructure development. With preferential treatments when taking part in EVFTA, participated countries will increase investment in Vietnam, including developing transport infrastructure, supporting the consistency in overall infrastructure development such as road, railway, seaport and airport. 

In addition to these above opportunities, transport sector will face certain challenges when EVFTA comes into effect. 

Firstly, the participation in EVFTA will create a competitive environment for Vietnamese enterprises, especially in logistics. This is not a new issue, due to enterprises have gotten used to commitment of opening markets in framework of WTO, ASEAN, as well as other FTAs, however, the competitive level is expected to be fiercer and more difficulties. 

Secondly, Vietnamese transport enterprises are mostly of medium and small scale, with low professionalism. As such, prepareness and capabilities to take advantage and facing challenges when taking part in the EVFTA, as well as new generation trade agreements are still low. Meanwhile, transport infrastructure have not met with the transport demand, resulting in high transport fee compared to other countries. 

Thirdly, Vietnamese transport enterprises’s awareness on commitment in the framework of EVFTA in spite of some improvements, but are limited and insufficient due to the complexity of the EVFTA. With this being said, information with regard to instruction has not been provided sufficiently to enterprises. Besides, policies and regulation in Vietnam are under the process of finalization to meet the FTA’s requirements, as well as to support enterpirses during the process of global integration. 

Fourthly, managerial capabilities of Vietnamese enterprises in global scale, especially human resources and access to financial resources are limited. This is also the biggest challenges for transport enterprises right after the EVFTA coming into force. Foreign enterprises, even some in South East Asia such as Singapore or Malaysia with experiences and financial resources will have advantages in competing with Vietnamese enterprises in term of quality and price. 
Ngoc Thuy
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