The Indonesian Ministry of Trade has raised concerns about the negative impact of the Free Trade Agreement (FTA) between Vietnam and the European Union (EU) on the domestic pharmaceutical industry.
One of the consequences is the narrowing access for Indonesian pharmaceutical exports to Vietnam. The Vietnam-EU FTA, ratified in 2019 and effective in 2020, led the Vietnamese government to align the standards for all products entering the country with those of the European Union.
“Vietnam is one of the markets for pharmaceuticals produced in Indonesia, but in 2020, they implemented new rules. Vietnam no longer follows the Asia-Pacific standards but the European standards,” Addy Perdana Soemantry, Indonesian Trade Attaché in Hanoi, said on Wednesday, March 6, 2024.
According to Trend Economy data, the value of pharmaceutical imports from Indonesia to Vietnam witnessed an increasing trend from 2011 to 2019. In 2019, the value reached US$40.37 million.
However, the export value decreased by 4.45 percent annually in 2020 to US$38.57 million. The performance of Indonesia’s pharmaceutical exports to Vietnam further declined by 48.2 percent annually in 2021, totaling US$19.97 million.
Addy noted that the change in Vietnam’s pharmaceutical product standards to European standards has made it challenging for domestic drug manufacturers to penetrate the Vietnamese market. Nevertheless, the import of pharmaceuticals from Indonesia to Vietnam increased again in 2022, reaching US$40.9 million.
The Ministry of Foreign Affairs reported that the pharmaceutical market in Vietnam reached US$6.98 billion in 2022. The import value of pharmaceutical products in the same year reached US$3.78 billion, showing a 10.6 percent annual increase.
Based on Trend Economy data, six out of 10 countries with the largest import values in Vietnam in 2022 were from Europe:
● France: US$443 million
● Germany: US$374 million
● Belgium: US$290 million
● Italy: US$176 million
● Ireland: US$95 million
● Spain: US$94 million
The Ministry of Foreign Affairs projects that the pharmaceutical market in Vietnam will grow to US$16.1 billion by 2026. Meanwhile, healthcare expenditure in Vietnam is expected to reach US$23 billion in the same year.
