Quality products key to accessing CPTPP markets

As many as 269 certificates of origin (CO) under the CPTPP format have been granted to local enterprises since the deal came into effect in Vietnam.

Delegates made the suggestion during a conference highlighting the opportunities and pitfalls facing local firms from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The event was held as part of the Vietnam Private Sector Economic Forum 2019 in Hanoi on May 2.

Ngo Chung Khanh, deputy director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, said several local enterprises have been proactive in taking advantage of opportunities arising from the CPTPP right after the trade pact came into force in Vietnam in mid-January.

Statistics from the General Department of Vietnam Customs show that exports to CPTPP member countries soared during the first two months of 2019. Vietnamese shipments to Japan were estimated at US$2.9 billion in value, US$300 million higher than the figure seen in the corresponding period last year.

Exports to Canada saw a 1.3-fold surge to reach US$506.8 million in the two-month period, while the value of Vietnamese goods sent to Mexico aggregated to US$321 million, an annual rise of US$32 million.

Most notably, up to 269 certificates of origin (CO) under the CPTPP format have been granted to local enterprises since the deal came into effect in Vietnam. It means that local businesses have paid more attention to utilizing the CPTPP to boost their exports.

CPTPP member countries make up roughly 13 per cent of the global GDP and 14.4 per cent of the world trade turnover.

With such a large share of the global GDP, the trade pact is hoped to open up opportunities for local firms to increase their export turnover. However, it runs parallel to considerable challenges for Vietnamese firms when attempting to penetrate demanding CPTPP markets, Khanh said.

CPTPP members’ annual imports are worth a total of US$ 2.445 trillion, while Vietnam’s exports to these markets have just reached a combined US$34 billion, representing a very modest 1.4 per cent of the total figure.

In order to enjoy tax incentives set by the trading block, local firms must build up solid competitiveness on the basis of efficient production and a stellar quality product, along with meeting CO requirements.

Nguyen Anh Duong, head of the Macroeconomics Department under the Central Institute for Economic Management (CIEM), assumes that Vietnamese firms should prioritize preparing sufficient resources to grasp the opportunities emerging from the CPTPP and other free trade agreements.

 Additionally, companies were proposed to pay much more attention to satisfying the requirements of offshore markets and improving overall product quality in conformity with customer needs.

 Prior to taking effect in Vietnam, the CPTPP had come into force in six countries as of December 30 2018, namely Mexico, Japan, Singapore, New Zealand, Canada, and Australia.

 According to the Ministry of Planning and Investment, the CPTPP is predicted to help Vietnam’s GDP value and exports increase by US$1.7 billion and more than 4 billion by 2035, respectively.