Business must take a proactive approach
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will come into force on January 14, 2019 and the imported commodities of Vietnam along with those of six other member nations will enjoy a substantial tariff reduction under the commitments outlined by the CPTPP agreement.
The effects of Free Trade Agreements (FTAs) are projected to have a major impact on the Vietnamese economy and the activities of businesses.
Ngo Chung Khanh, deputy head of the Ministry of Industry and Trade's multilateral trade policy department, said when CPTPP takes effect, Vietnam’s exports to other member nations will enjoy a preferential tariff under the specific roadmap planned for Vietnam.
According to calculations, average tariffs will be reduced by over 60% during the first stage and will be slashed further to 80% over the course of the next three years.
Mr Khanh said Vietnamese businesses should take note of market demands, the rules regarding the origins of products and regulations of the markets of CPTPP member nations.
Such measures can be taken to identify concrete commodities for export and improve efficiency by noting codes and comparing the rules of origin for export commodities.
According to statistics released by the Ministry of Industry and Trade, Vietnamese businesses have taken only 30% of opportunities that have arisen from FTAs.
Mr Khanh attributed the situation to the fact that businesses have taken their eye off the ball regarding FTAs, leading to businesses to not enjoy the full advantage that FTAs bring.
He said businesses have not been proactive enough in learning about opportunities, tax rates and preferential tariffs when exporting their products to foreign markets.
Not many businesses have made contact with negotiating delegates regarding market information and incentives for their export products.
The deputy head emphasized that there are ample opportunities and challenges presented by CPTPP and businesses should be fully aware of them in order to seize them.
Businesses urged to obey international regulations
Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, said most Vietnamese businesses have not adhere to rules of origin, noting that they must grasp the information on these regulations in order to reduce costs and avoid penalties when trying to crack foreign markets.
Dr Thanh noted that businesses must comply with international law and not make rash decisions, which could cause harm to both themselves and the wider Vietnamese business community when exporting their products to foreign markets.
Regarding the challenges of implementing the CPTPP, economist Nguyen Minh Phong stressed that Vietnamese businesses will face a number of complicated trade issues in the context of Vietnam’s deeper integration into the global economy.
He noted that the impact the CPTPP agreement could have on the national economy will depend on businesses, and their preparations and capabilities to seize opportunities and deal with challenges in carrying out the agreement.