Vietnam looks ahead to EVFTA bidding changes

“To prepare for the European Union-Vietnam Free Trade Agreement (EVFTA), the Ministry of Justice is already working on a draft programme of comprehensive legal checks, which include certain related regulations and documents to be revised,” Nguyen Thi Thuy Hang, deputy director of the Ministry of Planning and Investment’s Department of Public Procurement, told VIR at last week’s workshop to present Circular No.04/2017/TT-BKHDT governing e-bidding.

“When the EVFTA is signed, the National Assembly will consider and approve the programme. Ministries are then assigned by the government to carry it out,” Hang said.

Under the draft programme, the Law on Public Procurement is not subject to an amendment. However, there may be specific regulations for bidding packages that are subject to adjustments under the EVFTA.

Vietnam has so far built a number of regulations to help Vietnamese contractors increase their capacities. An example is the bidding for engineering packages worth VND5 billion (US$227,270), aiming to help small businesses improve their capacity. In addition, the requirement that foreign bidders have to partner with Vietnamese firms will also help them gain international experience.

“E-bidding is also a step for local contractors to gradually adapt to a new situation, while increasing competitiveness, transparency, professionalism, and efficiency in local biddings ahead of the EVFTA, which may take effect in two to three years,” Hang said.

Vietnam has committed to opening the market for foreign businesses in terms of international bidding in two FTAs, namely the EVFTA and the Trans-Pacific Partnership (TPP)-which is now once again in talks as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

According to the commitments in the EVFTA, Vietnam must treat EU firms the same as domestic ones. This means that EU firms would be allowed to join not only large bidding packages, but also smaller ones. EU firms also would not need to partner with Vietnamese contractors as they are currently required to.

Under current Vietnamese rules, foreign businesses are only able to take part in large bidding packages which Vietnamese firms are incapable of fulfilling, or those that cannot find contractors. International contractors are also required to partner with Vietnamese firms when they join bidding packages.

The EVFTA is considered one of the most comprehensive and ambitious trade and investment agreements that the EU has ever concluded with a developing country. It is the EU’s second agreement in the ASEAN region after Singapore and will intensify bilateral relations between Vietnam and the EU.

Vietnam will have access to a market of 500 million people and a total GDP of US$15 trillion, accounting for 22% of global GDP. In return for this, exporters and investors from the EU will have further opportunities to access one of the fastest-growing countries in the region.

Investors are waiting for more favourable conditions-in terms of the services market, investment protection, and other concerns-which may be brought about by the partnership as early as next year. Vietnam is on the radar of EU investors, including those already in the country, which are open to expanding their operations given the right steps and measures.