(MPI) - In the afternoon of June 30, 2019, in Hanoi, under the witness of Prime Minister Nguyen Xuan Phuc, Deputy Prime Ministers, representatives of ministries, departments and agencies of Vietnam and the Ambassador of the European Union (EU) to Vietnam Bruno Angelet, Ambassador of Romania to Vietnam Emil Ghitulescu, Minister of Planning and Investment Nguyen Chi Dung, European Commissioner for Trade Cecilia Malmström and Minister of Business Environment, Trade and Entrepreneurship of Romania Stefan-Radu Oprea signed EU-Vietnam Investment Promotion Agreement (EVIPA) between the Socialist Republic of Vietnam and the European Union.
Marking a new development step in the comprehensive partnership and cooperation relationship between Vietnam and the EU
The EVIPA whose negotiation is presided over by the Ministry of Planning and Investment to replace 21 agreements to protect and encourage investment that Vietnam has signed with 22/28 country members of the EU. This Agreement includes commitments to ensure the safety of investors' capital and assets such as fair and satisfactory treatment, adequate safety protection for foreign investors; pledges not to illegally expropriate and nationalize the assets of investors and make satisfactory compensation in case of expropriation and nationalization; commitment to compensate investors in case investors' assets are disabled due to unnecessary use of violence in the event of war; pledges to allow investors to freely transfer capital and profits abroad, and other investment protection commitments. These commitments in the IPA are formulated in more detail than in the bilateral investment promotion and protection agreements that Vietnam has signed with EU’s member countries, with clear criteria for each behavior that the state is not allowed to do, adding some exceptions to ensure the right to regulate the policy of host country.
IPA has supplemented a provision that recognizes the right to adjust the policy of the country that receives investment. Accordingly, each side affirms their management rights in their territories to achieve policy objectives such as protecting the public's health, safety, environment or public morals, protecting society or consumers, or promoting and protecting cultural diversity. These features are designed to ensure that IPA regulations are understood and applied consistently, helping to limit disputes occurring and in the event of an investment dispute, ensuring the agency that resolving disputes to apply these regulations in a transparent, consistent manner, compatible with the intentions of Vietnam and EU when negotiating the Agreement.
IPA also specifies the selection criteria and code of conduct of members of the judicial authorities when judging. When a specific investment dispute arises, the Head of each trial level will appoint the members to handle the dispute resolution process. These regulations help improve the fairness and consistency of dispute resolution, helping to limit the risk of errors. At the same time, it helps to improve the independence of dispute settlement agencies because the disputing parties are no longer allowed to select their dispute settlement agency, and the members must strictly comply with the code of conduct listed in the Agreement.
EVIPA helps protect and increase EU investment in Vietnam
Speaking at the Signing Ceremony, Minister of Planning and Investment Nguyen Chi Dung said that the signing of the Agreements on Trade and Investment between Vietnam and EU is an important event for all of us, marking a new development in the Comprehensive Partnership and Cooperation between Vietnam and EU, which was initiated in 2012, in line with the development orientation for the mutual prosperity of the two economies, showing the recognition and appreciation of EU for Vietnam’s position and role in the region and the international arena as a dynamic economy, ready to reform for integration. At the same time, the agreements signed today also have an essential meaning in promoting the economic connection between the ASEAN and EU economic communities as well as contributing to global economic development.
EVFTA and IPA are 2 new generation agreements with high quality and ensuring balance of interests of the parties. The signing of these agreements will contribute to accelerating Vietnam's reform and economic integration process, not only in traditional trade but also in institution, administrative procedures reformation, investment and business environment improvement, intellectual property, government procurement, labor, sustainable development, building Vietnam's economy on principles of market economy, the good international, especially EU, practices.
In the field of investment cooperation, following 21 bilateral agreements on investment promotion and protection between Vietnam and EU’s countries that have been signed and implemented over the past 30 years, the signing of IPA with a more comprehensive and balanced engagement for investment protection, along with significant commitments on opening markets for goods, services, investment, government procurement, intellectual property, etc. by regulations of EVFTA, will make an vital contribution to strengthening the trust of foreign investors in general, and EU investors in particular, in the attractiveness, safety, friendliness and higher competitiveness of the business and investment environment in Vietnam. At the same time, Vietnamese enterprises and people will have the opportunity to access, consume and benefit from European standard products and services with high quality and competitive prices from the economies of EU.
Minister Nguyen Chi Dung emphasized that Vietnam always highly values and appreciates the position, role, and potential of EU’s investors in terms of capital, technology, management, etc. Consequently, the Vietnamese Government has a foundation to firmly believe that the signing of the IPA will contribute to attracting high-quality investment from EU investors and creating immeasurable opportunities for Vietnamese investors to access the EU market. This is entirely consistent with the orientation of attracting foreign direct investment (FDI) in the coming time. Accordingly, Vietnam has a guideline of shifting the FDI attraction from quantity to quality, prioritizing projects with high added value, advanced technology, modern management, connecting global supply chains and having spillover effects, organic cohesion with the domestic economic sector, and in line with the process of restructuring the economy and innovating growth models, improving the quality, productivity and competitiveness of economy, ensuring the goal of sustainable development, environmental protection and social justice.
However, besides the above opportunities, according to Minister Nguyen Chi Dung, Vietnam is also facing several challenges in the implementation of the Agreement such as institutions, policies and management mechanisms; infrastructure system, technology level, and human resources; the capacity and competitiveness of Vietnamese enterprises, etc. Hence, to realize the opportunities and benefits from the implementation of these Agreements, along with solutions to develop quality human resources, continue developing infrastructure system, elevate the competitiveness of Vietnamese enterprises and the whole economy, the Government is directing to review, complete institutions and investment and business policies, accordingly, it will research, review and propose to submit to the National Assembly for consideration to amend, supplement or promulgate a number of important laws such as Investment Law, Enterprise Law, Law on Investment in form of Public-Private Partnerships, Land Law, Construction Law, Law on Environmental Protection, Labor Code and a number of Laws relating to tax, etc. to further simplify, create favorable conditions for market entry and implementation of investment and business activities of people and enterprises, including foreign-invested enterprises, and complete the mechanism and policies to attract the private sector to invest in the construction of infrastructure projects and the provision of public services, opening up capital resources for development investment.
At the same time, the Government also recommended Vietnamese enterprises to actively promote the application of advanced technologies and techniques to improve the quality of goods and services to meet Europe’s standards, enhance the competitiveness of products to enter the European market quickly and smoothly.
To actualize the above solutions, the Government of Vietnam wishes and requests EU to accompany and support Vietnam in the implementation process. Minister Nguyen Chi Dung believes that the above solutions will contribute significantly to improving the investment and business environment in Vietnam and ensure that these agreements are implemented in the fastest and most effective way.
According to a report presented to the Government on research to assess the impact of EVFTA and IPA on Vietnam by the Ministry of Planning and Investment, the two-way trade and investment from EU to Vietnam are forecasted to increase at a relatively high level, contributing positively to economic growth, creating jobs for the labor forces. State budget revenues can be improved and increased in the medium and long term. Besides the general impact on different aspects of the economy, the Agreements have different impacts on each sector due to different levels of openness, competitive advantage and capacity of each sector. Also, indirect impacts through the institutional reform pressure bring positive effects to the economy./.
Ministry of Planning and Investment