After more than a year of implementation, the Viet Nam-Israel Free Trade Agreement has played a pivotal role in boosting trade and investment, expanding opportunities to access markets in the Middle East and West Asia. However, to effectively utilize the agreement, businesses need to proactively upgrade product standards, strengthen partnerships, and translate tariff preferences into substantial growth.

Officially effective from November 17, 2024, the Viet Nam-Israel Free Trade Agreement (VIFTA) marks a significant milestone in Viet Nam's economic integration process with the West Asia-Africa region. This is the first bilateral Free Trade Agreement (FTA) Viet Nam has signed with a country in this region. According to Mr. Do Quoc Hung, Acting Director of the Department of Foreign Market Development ( Ministry of Industry and Trade ), Israel is not only a leading trading partner in West Asia but also Viet Nam's third largest export market and fifth largest trading partner in the region. VIFTA provides a solid foundation for Vietnamese businesses to penetrate deeper into a dynamic market. This is also Israel's first FTA with a Southeast Asian country.

The core value of VIFTA lies in its strong commitment to market opening. Upon entry into force, Israel eliminated tariffs on 66.3% of tariff lines and will gradually eliminate them over a period of 3, 5, 7, and 10 years for the remaining lines. Viet Nam also committed to eliminating most tariff lines according to a schedule. This gives key Vietnamese export products such as seafood, cashew nuts, textiles, coffee, and pepper a significant competitive advantage. In particular, the application of 0% tariff quotas for agricultural products such as eggs, meat, tuna, and vegetables is seen as a major opportunity for Vietnamese goods to increase their market presence. The agreement also establishes a transparent legal framework for services and investment, enabling both sides to participate deeply in each other's value chains.

Bilateral trade turnover is projected to reach approximately US$3.25 billion in 2024 and is forecast to exceed US$3.75 billion in 2025. Viet Nam's exports are estimated to grow by over 10%, reaching approximately US$850-880 million. Mr. Le Thai Hoa, Viet Nam's Trade Counselor in Israel, assessed that domestic businesses have initially effectively utilized incentives to boost exports and seek investment. To date, Israel has 45 investment projects in Viet Nam with a total capital of US$156 million, while Viet Nam has invested over US$78 million in 4 projects in Israel.

Ms. Do Thi Thuy Huong, Vice President of the Viet Nam Supporting Industries Association, affirmed that the tax reduction under VIFTA has created significant advantages for import and export. This is a golden opportunity for Vietnamese electronics businesses to access source technology and connect to supply chains in Israel – a country known as the world 's high-tech "capital". The synergy between policy and the proactive efforts of businesses is transforming VIFTA into a new impetus, supporting the modernization of domestic production through the import of advanced machinery from Israel.

Proactively gather market information.

With promising initial results, the potential for cooperation between the two countries remains enormous. Israel is currently Viet Nam's fourth largest export market and second largest import market in the Middle East. According to Ms. Nguyen Thi Lan Phuong, Deputy Head of the WTO and Trade Negotiations Department (Ministry of Industry and Trade), the VIFTA possesses many deep preferential commitments for Viet Nam's key export products. Conversely, Viet Nam's reduction of tariffs on Israeli technology products also helps businesses in both countries access the market more easily. The Ministry of Industry and Trade has proactively provided free market information and is ready to resolve technical standard issues for businesses.

Another important driving force, according to Le Thai Hoa, Viet Nam's Commercial Counselor in Israel, is the planned launch of a direct flight between Israel and Viet Nam on January 5, 2026. This route will significantly shorten trade times, reduce logistics costs, and boost trade promotion. The Israeli market prioritizes processed and fully packaged finished products, which are strengths of Vietnamese goods such as food, cashews, textiles, and household appliances.

However, experts note that leveraging VIFTA requires in-depth research into consumer culture. The Israeli market has distinct seasonality, with high demand for honey during the New Year (September), and surges in demand for furniture and tourism in April and May. Understanding these festive cycles helps businesses proactively plan their production. Ms. Do Thi Thuy Huong, Vice President of the Viet Nam Supporting Industries Association, recommends that businesses thoroughly understand rules of origin, improve quality standards, and strengthen partnerships to participate more deeply in the supply chain of supporting components.

With thorough preparation and proactive approaches, Vietnamese businesses can fully realize the opportunities offered by VIFTA. In particular, given Israel's location in the Middle East and West Asia region, connecting Asia, Africa, and Europe, VIFTA not only opens up a new market but also creates opportunities for Vietnamese goods to expand strongly into the Middle East, West Asia, and Africa – regions with great potential for Vietnamese export industries.

Source: Ha Noi News

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