Hanoi (VNS/VNA) - The opening of the domestic market as committed in the EU –Vietnam Free Trade Agreement (EVFTA) will lead to the strong penetration offoreign businesses to expand their retail chains in the country.

This poses great challenges, requiring state management agencies to makeappropriate and timely decisions to support retail businesses in the newcontext.

Dinh Thi My Loan, vice president and general secretary of the Association of Vietnam Retailers (AVR), said that this was an opportunity to increase thecirculation of domestic goods through expanding the business size and networkof foreign retailers.

The size of the domestic market had plenty of room for growth, which was aspace for Vietnamese retail businesses to expand their market share, she said.

The opening of the market would give Vietnamese retailers opportunities toaccess large investment capital, as well as advanced management technology intrade activities from EU countries.

Commercial infrastructure would be modernised, helping domestic businesses andconsumers access the supply of high-quality products and services, said Loan.

However, the EVFTA also has negative effects, creating great challenges fordomestic distribution businesses, especially small and medium-sized enterprises.

The Ha Noi Moi (New Hanoi)newspaper quoted Nguyen Thi Kim Dung, director of Co.opmart Ha Dongsupermarket, as saying that many businesses with small capital and lowmanagement qualifications would face difficulties.

In addition, businesses in the retail sector were also challenged to adapt tothe rapid development of information technology and the digital economy, saidDung.

The transformation and digitalisation of information systems related tobusiness and customer management were important issues, but they were still ahuge obstacle for domestic retailers.

Tran Duy Dong, director of the Ministry of Industry and Trade's Domestic MarketDepartment, emphasised that in order to make full use of the EVFTA, statemanagement agencies needed to implement a number of solutions.

In particular, it was necessary to focus on studying the EVFTA's commitments toimplement them effectively, and strengthen policies to support small and mediumenterprises, said the director.

Besides, it was necessary to remove difficulties in logistics to support tradedevelopment, promote reforms and simplify administrative procedures, and createlinkages between ministries and sectors to improve the competitiveness of thebusiness environment, he added.

On the other hand, he also said it was necessary to complete policies toattract foreign investment, develop measures to protect domestic enterprises bysetting up technical barriers and strictly controlling the activities offoreign enterprises.

In addition to the above solutions, to minimise the negative impacts, small andmedium-sized enterprises in the country need to strengthen links and cooperationwith domestic and foreign partners to take advantage of technology, managementand markets to participate in the value chain, cooperate with manufacturers andparticipate in domestic, regional and global production networks and supplychains./.