Unlocking Opportunities: How Free Trade Agreements with Vietnam Benefit Foreign Investors

Why Free Trade Agreements Matter More Than Ever

As global trade shifts under the weight of geopolitical tensions and rising production costs in traditional hubs, investors are searching for more stable and strategic alternatives. Vietnam has emerged as a standout not just as a low-cost destination but as a nation deeply embedded in one of the most expansive networks of Free Trade Agreements (FTAs) in Asia.

With 15 FTAs currently in force and two more under negotiation, Vietnam’s web of trade pacts connects foreign investors to markets representing over 60% of global GDP. These agreements are more than diplomatic checkboxes they are real tools that unlock market access, reduce tariff burdens and create long-term growth momentum.

For investors seeking to hedge risks and build sustainable operations in Asia, Vietnam’s FTA advantage is not optional. It’s essential.

Vietnam’s Expanding FTA Network: A Quick Snapshot

FTA Type	Key Agreements	Scope & Reach
Bilateral	EVFTA (EU), VKFTA (Korea), UKVFTA (UK), AJCEP	Direct trade corridors with strategic markets
Multilateral	CPTPP, RCEP, ASEAN+6, ACFTA	Access to Asia-Pacific and global economies
Under Negotiation	Vietnam - EFTA, Vietnam - Israel	Expansion into niche, high-tech markets

Vietnam is the only ASEAN country party to both CPTPP and RCEP, positioning it uniquely at the heart of two of the most transformative trade deals of the decade.

What’s In It for Foreign Investors?

1. Preferential Tariff Access = Stronger Margins

Across key industries from manufacturing to agri-food and electronics - FTAs significantly lower or eliminate tariffs:

• EVFTA: Over 70% of EU tariffs eliminated on day one. The rest phased out over 7 years.

• CPTPP: 99% of tariffs removed among members including major economies like Japan, Canada, and Australia.

• RCEP: Streamlined rules of origin, enabling regional supply chain flexibility.

What this means: Companies sourcing in Vietnam can export with competitive advantage into high-value markets without facing the same duty barriers as competitors elsewhere.

2. Investment Protections = Lower Long-Term Risk

Many of Vietnam’s FTAs include provisions for investor-state dispute settlement (ISDS) and legal guarantees on profit repatriation, IP protection and non-discriminatory treatment.

This legal transparency and predictability reduce the risk profile of long-term investments, especially for companies in capital-intensive industries like energy, manufacturing, or infrastructure.

Example: Under the CPTPP, investors are guaranteed the right to freely transfer capital and profits out of Vietnam in convertible currency a key differentiator compared to other frontier markets.

3. Faster, Simpler Supply Chains = Competitive Speed

FTA frameworks streamline customs procedures and reduce non-tariff barriers. For example:

• Digitalized rules of origin (ROO) speed up clearance.

• Mutual recognition of standards reduces technical delays.

• Cumulative origin rules (esp. under RCEP & CPTPP) mean inputs from member countries count toward FTA eligibility — allowing for more agile sourcing strategies.

For manufacturers: This translates into faster turnaround, fewer delays, and more predictable delivery cycles critical in today’s just-in-time environments.

EVFTA Signing Ceremony. Photo source: Nhandan Online

4. Strategic Sector Incentives = Sector-Specific Wins

Vietnam actively aligns FTA commitments with industrial policy priorities, especially in:

• High-tech manufacturing: Electronics, semiconductors, automotive

• Green sectors: Renewable energy, sustainable packaging, smart agriculture

• Digital economy: Data localization eased via digital trade chapters

Case in point: Samsung leverages both ASEAN-Korea and CPTPP access to centralize its global smartphone production in Vietnam serving over 120 countries with reduced trade friction.

Challenges Exist - But Always Can Be Navigated

While Vietnam’s FTA ecosystem is powerful, unlocking its full value requires deep expertise:

• Compliance is complex: Navigating origin rules and sector-specific chapters demands precision.

• Non-tariff barriers persist: Despite progress, some industries still face hidden friction such as testing standards or quotas.

• Local supply chain gaps: Some sectors face localization challenges, limiting immediate FTA benefits.

Smart investors don’t avoid complexity they manage it. The right local insight partner can turn these obstacles into opportunities.

Inside a shoes production factory. Photo source: Dautu Online

From Potential to Performance: What Should Investors Do Now?

1. Audit Your FTA Exposure

• Which agreements cover your sector?

• Are you using the right rules of origin to qualify for tariff reductions?

• What regulatory risks could undercut your supply chain or repatriation plan?

2. Design Your Market Entry or Expansion With FTA Strategy in Mind

• Consider joint ventures or sourcing partners in CPTPP countries.

• Build a tax and legal structure aligned with FTA protections.

• Time your capital deployment to take advantage of phased-in incentives.

  
  

Contact us to explore how Vietnam’s trade deals can directly power your next investment move.