Promoting Exports, Integrating Deeper into ASEAN Economic Community

The Vietnam Trade Promotion Agency (Vietrade), Ministry of Industry and Trade, recently organised the Vietnam Export Promotion Forum 2014 in Hanoi. The forum focuses on Vietnam promoting exports and integration into the ASEAN Economic Community (AEC).

Mass opportunities, no less challenges

Speaking at the forum, Mr Do Thang Hai, Deputy Minister of Industry and Trade, stated that the 2014-2015 was an important period for the Association of Southeast Asian Nations (ASEAN) to complete the goal of building AEC by 2015. ASEAN is facing the prospect of further strengthening its position, becoming a competitive region in the international arena. This is also a good opportunity for Vietnamese enterprises to boost exports and integrate further into AEC.
According to Vietnam Customs’ statistics, in 2013, ASEAN was the third largest export market of Vietnam, behind only the U.S. and EU, with exports reaching US$18.47 billion. In the first quarter of 2014, ASEAN continues to maintain that position. In terms of investment, in 2013, the total newly and additional registered capital of ASEAN into Vietnam was US$5.05 billion, accounting for 23.3 percent of total newly and additional registered capital in the country. Among investors, Singapore provided one of the largest capital investments (second largest in 2012 and 2013, third in 2011).
However, according to Mr Do Thang Hai, the growth of Vietnam's exports to ASEAN recently showed signs of slowing down. One of the reasons was because export advantages with traditional markets in close geographic location, such as the preferences under the ASEAN Trade in Goods Agreement (ATIGA), had not been fully exploited.
Mr Tran Thanh Hai of the Department of Import and Export, Ministry of Industry and Trade, said that participation in AEC, Vietnamese enterprises were presented with massive opportunities but also huge challenges. ASEAN had been successful in attracting investment and participating in free trade agreements with major trading partners, integrating deeper and further into the global economy. In addition, free trade agreements of ASEAN with several regional partners had produced effects, helping exploit the enormous potential for cooperation and growth, creating a favourable environment for trade and investment between ASEAN and partners. By the end of 2013, ASEAN had completed 72.2 percent of AEC measures for the 2008-2013 period.
Also according to Mr Tran Thanh Hai, opportunities for Vietnamese businesses could be named, including: sales to ASEAN countries would be very similar with domestic sales; reduced import and export time and transparent procedures; and advantages in preferences through reform of origin procedure, moving toward allowing self-certification of origin.
In addition, Vietnamese businesses also had the opportunity to attract FDI from ASEAN countries and ASEAN partners; To join the division of labour, production cooperation with enterprises in ASEAN members.
However, participating in AEC, Vietnamese enterprises also had to face many difficulties and challenges such as competition for goods and services, competition in attracting investment, high requirements for quality of commodities and business methods. There were also trade defence measures. To get a firm standing in that market, Vietnamese goods must compete fiercely with other countries’ in the region and around the world, especially Thailand and Chinese goods, which often had the advantages in terms of price, quality and long-time domination in the market.
Making good use of tariff preferences
As stated by Mr Tran Thanh Hai, four basic characteristics of AEC were: single market, common manufacturing space; Economic region of strong competitiveness; Economic region of balanced development and comprehensive integration into the global economy. Vietnamese businesses needed to fully utilize those advantages to promote export, expand investment cooperation with partners in the region. And if successfully making good use of tariff preferences in trade with AEC countries, Vietnam would have great opportunities to export staples such as textiles, rice, seafood, and electronic components.
According to Ms Pham Thi Hong Thanh, Deputy Director of Department of Asia-Pacific market, the Ministry of Industry and Trade, Vietnamese enterprises should continue to promote export to ASEAN goods of large export proportion such as mobile phones and components; computers, electronic products and components; Motor vehicles and parts; Machinery, equipment, tools and spare parts, iron and steel, and rice.
In addition to those prioritised groups mentioned above (mainly FDI businesses), Ms Thanh also noted that in the short term, Vietnamese enterprises should pay attention to the export opportunities as following: Taking advantage of the preferential import tax rates Memorandum with Laos, Agreement to promote bilateral trade with Cambodia; Vietnam's advantages in those two markets to boost export to Myanmar. Besides, the FTA between ASEAN and China; Australia - New Zealand; and Japan, were also important factors that businesses should take into account when setting business and production strategies.
In the long term, businesses should strengthen market surveillance activities: self-establishing teams to conduct market surveys or participating in group survey organised by management agencies of state, provinces, trade promotion organisations and institutions; Participating in trade fairs and exhibitions abroad: to promote and advertise goods as well as seeking contracts and market information.
However, according to Dr Nguyen Duc Thanh of Vietnam Centre for Economic and Policy Research (VEPR), there remained the question: Which model should Vietnam adopt to conform the rules of the AEC and the global economy? Where is Vietnam’s position in the economic division and the regional production network?; Which economic measures and reforms should be used to gain advantage in the AEC in 2015?.
Representatives of Vietrade said that in 2014 it planned to promote numerous fairs and exhibitions such as: the Vietnam - Laos Trade Fair in July, Vietnam Goods Fair in Myanmar in November, and the 11th CAEXPO Fair in September, to boost exports and deepen integration into AEC.

Source: VCCI