Vietnam Has Reaped Massive Profits from UK Cooperation; Is Indonesia Feeling Left Behind?
The UK-Vietnam Free Trade Agreement (UKVFTA) demonstrates that comprehensive trade agreements can deliver significant economic benefits within a relatively short period. Indonesia could potentially emulate Vietnam’s success by adopting similar measures.
Vietnam and Singapore are the two ASEAN nations that have already signed free trade agreements with the United Kingdom. The UK-Vietnam FTA was signed on 29 December 2020 and came into effect on 1 January 2021. This agreement provides a competitive edge for Vietnamese goods compared to other regional exporters such as Malaysia, Thailand, and Indonesia, which rely on similar export products.
After four years of implementation, the UKVFTA has proven to have a tangible impact. According to data from the General Department of Vietnam Customs, trade between Vietnam and the UK reached over US$9.38 billion in 2025, a 41% increase compared to 2019 (US$6.61 billion) before the agreement was signed. The Ministry of Industry and Trade (MoIT) noted that Vietnam’s trade growth with the UK in 2024 surpassed the average growth rates with the EU (16.8%), Europe as a whole (17.2%), and the global market (15.4%).
In 2025, Vietnamese exports to the UK reached US$8.39 billion, an increase of 11.8%. Several commodities recorded significant increases in export value, including toys, sporting goods, and components (up 60.5%); coffee (up 55.3%); cashews (up 42.5%); vegetables and fruits (up 50.7%); and pepper (up 61.5%). Meanwhile, Vietnamese imports from the UK reached US$991.36 million in 2025, up 12% from 2024, with pharmaceuticals and plastics being the primary imports.
Currently, the UK is Vietnam’s third-largest trading partner in Europe, while Vietnam serves as the UK’s primary partner in Southeast Asia. From the UK’s perspective, the deal opens new doors into ASEAN, and vice versa. Notably, the surge in imports from Vietnam has outpaced the growth of UK exports to Vietnam. According to the UK Department for Business and Trade, UK imports from Vietnam jumped by 65%, while exports rose by 40%. Key UK exports to Vietnam include mechanical power plants (intermediate goods) at 26.0%, followed by pharmaceuticals, pulp, paper, and plastics.
On the investment front, there has been a surge in British capital in Vietnam. Total direct investment from UK investors in Vietnam rose to £1.327 billion in 2023 from £936 million in 2020. The UKVFTA has rapidly increased trade volumes through various incentives, with the UK reducing tariffs more quickly, bringing many products to 0% immediately. The agreement secured the elimination of 65% of all tariffs since the EU-Vietnam FTA (EVFTA) took effect, a figure expected to rise to 99% following a 6–9 year phase-out schedule.
The agreement provides specific terms for UK exporters to Vietnam, with 48.5% of tariff lines eliminated as of 2021, 91.8% by 2027, and 98.3% by 2031. For imports from Vietnam to the UK, 85.6% of tariff lines were eliminated in 2021, rising to 99.2% by 2027.
The UKVFTA provides substantial benefits to key commodities in both nations. For Vietnam, the textile and garment sector is a major winner, as tariff reductions make Vietnamese apparel more competitive in the UK. Footwear also stands to benefit significantly. Seafood products such as shrimp, pangasius, and tuna are also poised for growth, alongside high-demand items like coffee, cashews, and spices. From the UK side, alcoholic beverages benefit from the removal of previously high tariffs, alongside the pharmaceutical sector and industrial machinery, which supports Vietnam’s accelerating industrialisation. Overall, the UKVFTA demonstrates that free trade agreements are not merely about importing and exporting goods, but about unlocking opportunities for high-value-added industries in both nations.