Ninth session of Vietnam’s National Assembly to end
The ninth session of Vietnam’s 14th National Assembly (NA) draws to a close today, after a month-long debate over the country’s socio-economic development and state budget. NA deputies discussed issues ranging from post-pandemic economic recovery to the effectiveness of judicial work and boosted personal income tax deductions for individuals and dependents, retroactively in effect for 2020.
Most notably, the session saw the ratification of the EU-Vietnam Free Trade Agreement (EVFTA) and EU-Vietnam Investment Protection Agreement (EVIPA). The EVFTA aims to eliminate tariffs on goods traded by 99% over the next decade and is projected to boost exports to the EU by nearly 50% within the same timeline. The EVIPA will cover portfolio investments and enshrine investor-state dispute settlement mechanisms.
These agreements could see Vietnam partially occupy the manufacturing gap left by China in the destructive wake of COVID-19. It could also enable the EU to reduce its dependence on Chinese goods and services. However, without the requisite market size and supply chain capacity to emulate China’s scale of production, a switching effect remains a pipe dream for Vietnam. Expect Hanoi to prioritise the nation’s pandemic-induced GDP contraction; the EVFTA, coupled with the government’s stellar response record thus far, could expedite the IMF’s projection of 7% growth recovery in 2021.
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