Rice bags are loaded for export shipments at a port in Ho Chi Minh City.

Europe and Asia need a free trade agreement to boost economic ties, helping businesses explore potential development opportunities from each bloc, the ASEM Business Forum in Ho Chi Minh City heard Wednesday.

ASEM members should develop this dialogue into a legal agreement among them, An said at the forum held to prepare for the ASEM Foreign Ministers Meeting scheduled for May 25-26 in Hanoi.

ASEM, initiated by Singapore and France in 1996, has gathered 45 members including 16 from Asia.

Shin Nam Shik, chief representative of the South Korea Trade-Investment Promotion Agency in HCMC, said Asian state members should promote negotiations on a free trade agreement with Europe.

Shik said Europe was a source of investment capital, technology and a market for exports from Asia.

Asian member nations should also think of open markets to attract European investors and distributors who would greatly contribute to boosting trade ties between the two blocs, he added.

Asian economies should improve their infrastructure and labor standards in order to attract European investment, Shik said.

The European Commission is currently negotiating with the 10 ASEAN members a free trade pact after the Southeast Asian grouping reached similar agreements with China, Republic of Korea and Japan. ASEAN is also negotiating free trade pacts with India, Australia and New Zealand.

Vo Tri Thanh, director of Vietnam’s Central Institute for Economic Management, said European and Asian economies were dependent on each other.

He said only 32 percent of exports from Asia were to Asian markets with Europe and other markets accounting for the remaining 68 percent.

Asia needs not only to enhance economic ties but also learn from the experiences of EU members about working together as a union, Thanh said.

Opportunities for Vietnam

Alain Cany, chairman of the European Chamber of Commerce in Vietnam, said Vietnam’s textile and garment, footwear and seacooking industries would benefit if the two blocs enhanced economic ties.

Cany said European investors saw Vietnam as a potential area for investment after the country joined the World Trade Organization in late 2006.

The recession has tightened European capital inflow to Vietnam, “but I hope the flow would be smooth next year,” he said.

Nguyen Thi Bich Van, deputy general director of the General Department of Foreign Investment, said European nations were the second largest investors in Vietnam as 60 percent of their committed capital of US$11.8 billion had been disbursed as of 2008.

Trade between Vietnam and Europe in the last nine years reached $76 billion, according to the Ministry of Industry and Trade.

An of the textile association said Vietnam should start preparing for the post-crisis era right now. Businesses should restructure their operations to improve their competitiveness, he said.

As a result of the global crisis, many Vietnamese expatriates from Europe and the US have returned to Vietnam and this human resource should be tapped for the restructuring process, he added.

Tran Dinh Thien of the National Economic Institute said that in the short term, Vietnam’s economy can recover easily, but in the longer term, it should focus on administrative reforms and restructuring the public sector, especially large state-owned corporations.

Reported by Minh Quang-Tran Tam