Hong Kong capital flows strongly into Vietnam: There is another breakthrough in AHKFTA

HSBC has just released an assessment report on the implementation of the ASEAN-Hong Kong Free Trade Agreement.

Specifically, the ASEAN-Hong Kong Free Trade Agreement (AHKFTA) came into effect on June 11, 2019 for Singapore, Thailand, Vietnam, Laos and Myanmar. HSBC assesses that the entry into force of this agreement has created a bright spot for the expansion of global trade freedom and at the same time has a positive impact on the Southeast Asian economy, especially Vietnam.

The trade agreement, signed between Hong Kong and the 10 member countries of the Association of Southeast Asian Nations (ASEAN) in November 2017, helps reduce tariffs on goods, boost the flow of services and investment between markets in the region and Hong Kong.

Countries will gradually cut tariffs in the coming years. Vietnam will eliminate import and export duties on 75% of goods listed in the tariff schedule within 10 years and reduce tariffs on about 10% of goods within 14 years.

The investment agreement within the framework of the agreement will ensure that service providers are treated fairly with domestic service providers in markets while minimizing restrictions on foreign investment in the service sector.

Mr. Pham Hong Hai, General Director of HSBC Vietnam, commented: "The Hong Kong-ASEAN Free Trade Agreement is a new step in efforts to ensure global free trade and a great success for ASEAN. specifically Vietnam. In the context of ongoing trade tensions, Hong Kong businesses are looking to expand investment opportunities and this Agreement opens up even more opportunities in Southeast Asia. The bilateral cooperation between Hong Kong and Vietnam has developed steadily over the years and the implementation of this new Agreement promises to open up more cooperation opportunities for these two markets."

ASEAN was Hong Kong's second-largest trading partner in the field of trade in goods in 2018 and the fourth-largest partner in trade in services in 2017. By the end of 2017, ASEAN ranked fourth among Hong Kong's direct outbound investment markets. ASEAN is Hong Kong's sixth-largest source of foreign direct investment worth about HK$628 billion.

Vietnam with the advantage of geopolitical factors is considered an attractive investment destination for foreign investors. The AHKFTA Free Trade Agreement will open up more business opportunities for the fastest-growing country in Southeast Asia, continuing to promote trade flows between Vietnam and Hong Kong.

In the first 5 months of 2019, Hong Kong ranked first among investment markets in Vietnam with a total investment capital of 5.08 billion USD, accounting for about 30.4% of total investment capital in Vietnam.

This agreement is expected to promote easier access to trade flows between Hong Kong and ASEAN. Enhanced trade and investment flows will  help Vietnam further improve its production capacity, thereby maximizing opportunities from shifting trade flows.

VnEconomy/ BACH HUE