2.1.

FTAs - customs advantages accessing EU and US markets

CTPPP, EVFTA and EVIPA
Despite the lack of investment instruments and the current FOL in Vietnam, it
is crystal clear that Vietnam is worth their investment in the eye of foreign
investors due to its activeness in the participation in international agreements.
The EVFTA, CTPPP, and EVIPA (Investment Protection Agreement with the
European Union) were signed by Vietnam in just a period of three years, from
2018 to 2020. The agreements with the world’s largest trading bloc – the EU –
have cemented Vietnam’s position as a potential destination for corporate
giants from all over the world. While Vietnam is the only SEA country having
successfully concluded an FTA with the EU, Malaysia and Vietnam are the two
SEA representatives in the CTPPP. Thus, from an international trading and
investment perspective, Vietnam is unmatched when it comes to partnership
and openness of market access. From a domestic perspective, Vietnam has
made its move by ways of replacing the Law on Securities to ease the last FOL
in public listed companies at 49 percent and allow the 100 percent FOL for
non-critical business sectors.
On another note, the Investor State Dispute Settlement (ISDS) provision under
the CTPPP and EVIPA also plays an important role in Vietnam’s investment
attractiveness since it provides the investors with high standards of legal
certainty and enforce-ability and protection. Under that provision, for
investment related disputes, the investors have the right to bring claims to the
host country by means of international arbitration. The arbitration proceedings
shall be made public as a matter of transparency in conflict cases. The final
arbitration award is binding and enforceable without the local courts’ review of
its validity. The Government of Vietnam has to fully implement this
commitment within five years from the entry into force of the EVIPA.
See: VIETNAM FROM A FRONTIER MARKET TO AN EMERGING MARKET
– WHAT YOU MUST KNOW – Duane Morris Vietnam
Also see: Investor State Dispute Settlement between Foreign Investor and Host
State under CPTPP Agreement and EVIPA Agreement | LinkedIn

In recent years, investment capital from many foreign investors, especially

Chinese investors, has shifted remarkably into Vietnam, thanks to Vietnam’s
deep economic integration with other nations. Companies from other countries
who are not members of the FTAs that Vietnam has adopted make use of
Vietnam as a base for their goods to be exported to FTA member states’
markets. For example, a company from a non-FTA member state may partially
or wholly move its manufacturing stage to Vietnam. By installing the last part
of the product in Vietnam, they try to obtain the preferential certificate of
origin in order to export “Made in Vietnam” goods to EU, Japan, and other
countries. The export enterprise is dissolved shortly after the target is achieved.
As the manufacturing of products like electronics involve thousands of
components, investigations by customs officers become more complicated, and
requiring closer scrutiny. Positively, Vietnam is working on its regulations to
build a better framework to regulate products made in Vietnam.

The Ministry of Industry and Trade has issued Circular 03/2019/TT-BCT dated
22 January 2019, which came into force on 8 March 2019, regulating the rule
of origin in implementation of CPTPP. In comparison with other FTAs signed
by Vietnam, Circular 03/2019/TT-BCT stipulates new points including rules of
origin; formulas for calculating NAFTA Regional Value Content (RVC); rules
of origin for refurbished goods and recycled goods; and Production
Surveillance Reporting (PSR).

In short, EVFTA and CPTPP will create opportunities for enterprises to

promote comprehensive partnership and trade cooperation between Vietnam
and others provided adequate regulations are also in place. The signing of
CPTPP and EVFTA reflect Vietnam’s ability to become a global
manufacturing centre in years to come.

See: Benefits and challenges for import and export industry from the adoption
of FTAs in Vietnam | ZICO Law

No. FTA Status Parties

FTAs in effect
1 AFTA Effective since 1993 ASEAN
2 ACFTA Effective since 2003 ASEAN, China
3 AKFTA Effective since 2007 ASEAN, South Korea
4 AJCEP Effective since 2008 ASEAN, Japan
5 VJEPA Effective since 2009 Vietnam, Japan
6 AIFTA Effective since 2010 ASEAN, India
ASEAN, Australia , Ne
7 AANZFTA Effective since 2010
Zealand
8 VCFTA Effective since 2014 Vietnam, Chile
9 VKFTA Effective since 2015 Vietnam, South Korea
Vietnam, Russia, Belaru
10 VN – EAEU FTA Effective since 2016 Amenia, Kazakhsta
Kyrgyzstan
Vietnam, Canada, Mexic
Peru, Chile, New Zealan
Effective since 30/12/2018,Australia, Japan, Singapo
CPTPP (previously
11 came into effect in VietnamBrunei, Malaysia, The U
known as TPP)
since 14/01/2019 (signed t
Accession Protocol on Ju
16, 2023)
12 AHKFTA Effective in Hong KongASEAN, Hongkong (China)
 (China), Laos, Myanmar,
Thailands, Singapore and
Vietnam since 11/06/2019
Effective since August 01,
13 EVFTA Vietnam, EU (27 members)
2020
Effective since May 01,
14 UKVFTA Vietnam, The UK
2021
ASEAN, China, Korea,
Effective since January 01,
15 RCEP Japan, Australia, New
2022
Zealand
Negotiations commenced in
December 2015, completed
16 VIFTA Vietnam, Israel
in April 2023. Officially
signed on 25/07/2023
See: TTWTO VCCI - Vietnam's FTAs as of August 2023 (wtocenter.vn)

“Free trade agreements will enable Vietnam’s economic development to

continue to shift away from exporting low-tech manufacturing products and
primary goods to more complex high-tech goods like electronics, machinery,
vehicles and medical devices.
This can occur first, by the country boosting its export competitiveness by
diversifying its sourcing partners through larger trade networks and cheaper
imports of intermediate goods from partner countries. For example, recent trade
agreements like the RCEP and EVFTA extend Vietnam’s trade integration
partners well beyond Asia, allowing Vietnam to take advantage of the reduced
tariffs, both within the ASEAN Economic Community (AEC) and with the EU
and US to attract exporting companies to produce in Vietnam and export to
partners outside ASEAN.
Second – through partnership with foreign firms that can transfer the
knowledge and technology needed to make the jump into higher value-added
production. An example of this is the Vinfast electric automobiles
manufactured by Vietnamese conglomerate Vingroup. While Vietnam is touted
as a low-cost manufacturer, the pioneer player Vingroup has cooperated with
global MNCs such as Intel (USA), LG (South Korea) and Contemporary
Amperex Technology Company (China) to produce components for e-cars.
Vinfast’s gains represent how Vietnam can develop its own products from
transfer of know-how and technology. Such sophisticated business practices
and technology will help boost Vietnamese labor productivity and expand the
country’s export capacity.
Vietnam’s entry into these trade deals will also ensure alignment with national
standards ranging from employee rights to environmental protection. Both the
CPTPP and EVFTA require Vietnam to conform to the International Labor
Organization’s (ILO) standards. The ILO has noted that this is an opportunity
for Vietnam to modernize its labor laws and industrial relations systems. The
standard of product quality, manufacturing, and employee rights guaranteed in
these agreements will allow Vietnam to become a manufacturing hub and
expand as an exporting base.”
See: Vietnam’s International Free Trade Agreements - Vietnam Guide | Doing
Business in Vietnam (vietnam-briefing.com)

2.2. TAX and CUSTOM INCENTIVES

- TAX:
+ CIT:

See: Trading Economists

See: Doing business in Vietnam 2022-2023: Deloitte Vietnam: Tax: Articles
(2023a) Deloitte. Available at:
https://www2.deloitte.com/vn/en/pages/tax/articles/vietnam-doing-
business-2022-2023.html.

+ VAT:
There are three rates of VAT:

See: Doing business in Vietnam 2022-2023: Deloitte Vietnam: Tax: Articles

(2023a) Deloitte. Available at:
https://www2.deloitte.com/vn/en/pages/tax/articles/vietnam-doing-
business-2022-2023.html .

The current VAT rate is still 8% until the end of 30 June 2024 (Giảm thuế
GTGT 2% năm 2024: thuvienphapluat.vn)

+ PIT:
See: Doing business in Vietnam 2022-2023: Deloitte Vietnam: Tax: Articles
(2023a) Deloitte. Available at:
https://www2.deloitte.com/vn/en/pages/tax/articles/vietnam-doing-
business-2022-2023.html.

- CUSTOMS:
See: Doing business in Vietnam 2022-2023: Deloitte Vietnam: Tax: Articles
(2023a) Deloitte. Available at:
https://www2.deloitte.com/vn/en/pages/tax/articles/vietnam-doing-
business 2022-2023.html.

2.3. STRATEGIC LOCATION

See: Why invest in Vietnam | Crowe Vietnam

See: Make in Vietnam | 2023 Edition - KPMG Vietnam
“ First of all, there are opportunities from international cooperation and
competition. The increase in international competition and cooperation in
Southeast Asia is contributing to increasing the “gateway” and “anchor”
position of Vietnam in geo-political and geo-economic competition among
major countries, especially between the US and China. China is pushing ahead
with the BRI project, considering Vietnam one of the foremost important
strategic junctions in its neighboring foreign policy towards Southeast Asia.
And the US considers Vietnam one of the topmost important areas of the Free
and Open Indo-Pacific Strategy (POIP), expects Vietnam to become its
“anchor” in competition with China in this region. In the new context, other
countries and entities such as Japan, Russia, India, Korea, Australia, and EU
countries also see the importance of Vietnam in their geo-political and
economic strategies in the Southeast Asian region”
See: Tran Khanh. Vietnam’s Geographical Power in History and Geographic
Strategic Considerations of Vietnam Today and in Coming Time. Journal of
Public Policy and Administration. Vol. 6, No. 2, 2022, pp. 85-93. doi:
10.11648/j.jppa.20220602.14

2.4. RISING DEMAND FOR CONSUMER GOODS

2.5 . COMPETIVE FIXED COST
2.6. GOVERNMENT PLAN TO DEVELOP LOGISTICS AND
INFRASTRUCTURE
According to Decision 36/QD-TTg by the Prime Minister dated 11 January
2024 on National Master Plan on information and communication from 2021 -
2030, vision to 2050:
“Postal network:
- By 2025: Establish 3 Regional Post Centers nationwide ensuring an average
processing capacity of over 11,000 tons of mail per day; average service
coverage of 350 km. Establish 14 Regional Post Centers nationwide ensuring
an average processing capacity of over 4,500 tons of mail per day; average
service coverage of 115 km.
- By 2030: Construct 3 - 5 Regional Post Centers nationwide, establish new
Regional Post Centers, upgrade 1 - 2 Regional Post Centers to Regional Post
Centers. Regional Post Centers have an average processing capacity of over
5,000 tons of mail per day.

Digital infrastructure:
- By 2025:
+ Fixed broadband network meets national quality standards (QCVN) with the
goal of universal coverage to all villages, hamlets, ensuring 100% of
households capable of accessing fiber optic when needed with 90% of users
able to access fixed internet, averaging 200 Mb/s; 90% of economic-social
organizations such as businesses, manufacturing facilities, schools, hospitals,
offices in urban areas can access the internet with an average speed of 1 Gb/s;
Mobile broadband network meets national quality standards (QCVN) with a
target minimum download speed of 40 Mb/s for 4G and 100 Mb/s for 5G
networks; 100% of the adult population owns a smartphone; Vietnam ranks
among the top 50 leading countries in the Information and Communication
Technology Development Index (IDI) of the International Telecommunication
Union (ITU).
+ Establish and deploy national data centers, at least 03 national-level multi-
purpose data center clusters, regional multi-purpose data center clusters, and 1 -
2 regional data centers.
- By 2030:
+ Fixed broadband access network infrastructure is invested in, upgraded to
ensure 100% of users can access at speeds above 1Gb/s. 5G mobile broadband
network covers 99% of the population, aiming to develop advanced next-
generation mobile networks. Develop an additional 4 - 6 international
submarine fiber optic cables. + 100% of state agencies, state-owned
enterprises, and over 50% of the population use cloud computing services
provided by domestic businesses.

Information technology application infrastructure:

- By 2025: Prioritize resource concentration on development towards doing
first, doing well, focusing on national-scale digital platforms serving multiple
applications, services, acting as shared digital platforms for various economic
and social sectors, serving essential societal activities in the digital
environment.
- By 2030: National-scale digital platforms are perfected, smoothly operated to
meet the requirements of the Digital Government, Digital Economy, Digital
Society. All citizens have access to and use advanced digital services with high
quality and suitable tariffs.

Network information security, cyber security for Digital Government, Digital

Economy, and Digital Society:
- By 2025: Ensure 100% of information systems of state agencies are secured
according to information system security levels; 100% of ministries, central
agencies, provincial-level People's Committees implement network information
security according to the 4-layer model; 100% of end devices of state agencies
are installed with network information security solutions.
- By 2030: Vietnam becomes one of the leading centers for ensuring network
information security, cyber security in Asia. Vietnamese digital technology
enterprises utilize open-source technologies for technology autonomy and
development, taking charge of the network information security, cyber security
market in Vietnam, contributing significantly to ensuring network information
security, cyber security for Digital Government, Digital Economy, and Digital
Society.

Information technology industry:

- By 2025: Establish and implement 12 - 14 information technology
concentrated zones and members of the software park chain in localities
nationwide, creating concentrated information technology zones in some areas
to ensure linkage in research, technology mastery, and production of digital
technology products meeting the requirements for the development of Digital
Government, Digital Economy, Digital Society.
- By 2030: Establish 16 - 20 information technology concentrated zones and
members of the software park chain. Attract investment, vigorously develop
concentrated information technology zones in Ho Chi Minh City, Hanoi, Da
Nang, Hai Phong, Can Tho, and some areas with strong development in the
information technology industry. Upgrade, expand connections of concentrated
information technology zones in some localities in the region into large
concentrated information technology zones, including research and
development centers of major international technology corporations”.
See: “Quy hoạch hạ tầng thông tin và truyền thông thời kỳ 2021 – 2030, tầm nhìn đến
năm 2050” (mic.gov.vn)