VIFTA – Opportunity for Vietnamese goods to penetrate Israeli market

The two countries started negotiations for the agreement seven years ago, with 12 negotiation sessions, and completed negotiation in April 2023.

Israel is the first country in West Asia that Vietnam has signed a free trade agreement with, and Vietnam is also the first country in Southeast Asia that Israel has signed an FTA with.

Israel has established itself as one of the most technologically advanced countries in the world, including industrial manufacturing and processing technology, new technology, artificial intelligence (AI), and agricultural production technology, among others. Besides, it has great demands for raw materials for the food industry.

The accord will create favourable conditions for Vietnam to export its key products to Israel while helping enterprises to have an opportunity to access to Israel’s advanced technology, contributing to cutting production, business costs while improving competitiveness of Vietnamese goods.

Vietnam and Israel have complementary economies, therefore the deal is a strategic step for the two countries to promote bilateral trade and tighten economic relations.

Despite a modest population, demand for importing consumer goods in Israel is big with about 25 billion USD a year. This shows great potential for the two countries, as many products at high demand in Israel are Vietnam’s strengths, such as textiles, leather footwear and seafood. Meanwhile, Israel’s strength in high technology provides Vietnam with an avenue to improve its domestic production capacity.

Currently, two-way trade between the two countries is only about two billion USD and Vietnam carries a trade deficit. Therefore, the agreement is an opportunity to increase trade turnover and balance the trade between the two sides.

Israel and Vietnam have been trade partners since 1994, since then the trade relationship between them has developed. Import-export turnover was under two billion USD in 2020, but it increased to 2.3 billion USD in 2021 and 2.6 billion USD in 2022.

Vietnam has around 70 items that it can export to Israel, such as leather and footwear, seafood, fruits…

According to Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), VIFTA is an opportunity for the fishery sector to expand its export market in the context that the industry is facing a tough period.

The Israeli market does not have a high proportion in Vietnam’s aquatic product export structure, but this is a very high potential market because Israel has large demand and high payment ability.

Israel ranks 22nd among over 100 seafood export markets of Vietnam, buying products such as shrimp, frozen squid, canned tuna, and pangasius.

In 2022, Israel ranked fourth among Vietnam’s 10 largest tuna import markets, after the US, Canada and Japan, with export turnover reaching 36.63 million USD, the eighth in terms of squid and octopus, with 23.22 million USD, and 20th in frozen shrimp, with 21 million USD.

Meanwhile, Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, said that with the freshly signed agreement, Israel will soon enter the top 10 markets for Vietnamese fruit and vegetable exports.

Although Israel is very strong in agricultural production, there are ample opportunities for exporting Vietnam’s tropical fresh fruits and vegetables such as dragon fruit, longan, lychee, and mango to the West Asian country.

Minister of Industry and Trade Nguyen Hong Dien said he hopes Israeli businesses will continue to research and soon have new investment projects in Vietnam. He commits to creating all favourable conditions according to legal regulations to help Israeli businesses invest, produce and do business in Vietnam.

Nir Barkat, Minister of Economy and Industry of Israel, said that the Israeli Government also has introduced mechanisms and policies to encourage businesses to develop and expand investment and cooperation in foreign markets. With the signing of the VIFTA, Israel is opening more doors for Vietnamese goods to directly enter its domestic consumer market. Therefore, this is a good time for both sides to promote trade and investment, forming a trading ecosystem in the business communities of the two countries.

The minister also hoped Vietnam and Israel will soon open direct flights from Ho Chi Minh City to Israel in order to facilitate more effective cooperative activities.

Tran Quoc Manh, Chairman of the Board of Directors of Saigon Production and Trade Development Joint Stock Company said that VIFTA will open more opportunities for wood businesses to access the Israeli market. 

Meanwhile, Nguyen Van Khanh, Vice Chairman of the Ho Chi Minh City Leather and Footwear Association, commented that having a new market like Israel will lend a hand for the Vietnamese leather and footwear industry to open more doors to expand exports. Even though Israel is not a really big market, creating a breakthrough for the industry, it will be important in the long run.

In addition, Israel is a partner with great competitiveness and good conditions, so Vietnamese businesses with insufficient capacity will have difficulty in accessing the market. In particular, when exporting goods to Israel, businesses must pay attention to improving quality, especially food hygiene and safety.

Experts have also warned that Israel is a promising market but it also has high standards for products, therefore Vietnamese businesses need to have a thorough understanding of Israel’s regulations in order to be successful in this market./.

Source:Vietnamplus