Last updated: Monday, April 24, 2017
RCEP Likely to Replace TPP?Posted: Monday, March 27, 2017
The Central Institute for Economic Management (CIEM) recently collaborated with the University of Tokyo to hold the Vietnam-Japan Research Forum "Strengthening Vietnam-Japan Industrial Cooperation towards Effective Implementation of the Regional Comprehensive Economic Partnership - RCEP”.
The RCEP between ASEAN and six FTA partners, including China, South Korea, Japan, India, Australia and New Zealand, began negotiations on May 9th 2013. The agreement is currently under negotiation.
Opportunity from the RCEP
According to Dr Nguyen Dinh Cung, President of the CIEM, Vietnam-Japan Industrial Cooperation Programme is one of the decisive factors that have contributed significantly to the achievements of business development in Vietnam. Currently, Vietnam is also one of the few countries to benefit greatly from investment projects with plentiful financial resources of Japan through projects in various forms; learn from the lessons of Japan in industrial development. Vietnam has many opportunities to cooperate with Japan to develop the local industry as they are both involved in bilateral and multilateral trade agreements, including the RCEP.
Dr Vo Tri Thanh, former Vice President of the CIEM said that like other FTAs and integration commitments, the RCEP will open up new promising investment opportunities for Vietnam. By then, through market opening and reducing tariff barriers, RCEP have allowed us to more easily access the investment and export markets of ASEAN and its partners (including developed and developing countries) with the diversity of demand for goods and services; open the door to import cheaper goods and import machinery and equipment with appropriate modern technology; participate in value chain and regional production networks, strengthen technical cooperation and position in dispute resolution; cut transaction costs and enjoy a friendly business environment by harmonising existing regulations and applying FTAs.
Dr Vo Tri Thanh also noted that in the future, the RCEP could be a substitute for the TPP, which is difficult to complete as originally expected by the participating countries. According to experts, the RCEP will play an increasingly important role in enhancing economic cooperation and promoting ASEAN countries, while promoting greater cooperation between the two countries Vietnam and Japan.
Particularly in cooperation with Japanese investors, Mr Thanh said that so far, Vietnam has been very successful in the field of motorbike development. But on the side of development cooperation in the automotive industry, it has not met expectations. The reason is because the procedure of Vietnam's policy is too cumbersome, not suitable for practice. Meanwhile, Japanese investors in the auto industry, have not seen the Vietnamese market as critical. Therefore, they have not really transferred the core technology and Vietnam's automobile industry just focuses on assembling.
According to Dr Nguyen Thi Tue Anh, Deputy President of the CIEM, we all know that in the future, the opportunities offered by the RCEP for Vietnam's industrial sector are huge. However, in fact, Vietnam will also encountered many barriers, from the agreement itself. That is, Vietnam must meet the rules of origin; though slightly less strict than the EU-Vietnam FTA, especially for the supporting industry in Vietnam, which is still underdeveloped, reducing the competitiveness of the goods. In addition, standards of labour, environment, technology, food hygiene and safety are also required to comply with international standards.
So, according to Dr Tue Anh, the direction of Vietnam-Japan cooperation in the development strategy of industrialisation in the future should focus on the new science such as high technology, environmentally friendly; enhancing technology transfer through linking production, forming vendor enterprises in the country; human resources training industry through on-the-spot training or bilateral cooperation.
Hiroaki Yashiro, JICA Senior Advisor, said that although there are many areas to develop such as stable economic environment, low labour cost, hard-working labour and creativity, most Vietnamese businesses can not participate in the supply chain of Japanese enterprises. To be able to join this supply chain, Vietnamese businesses need to improve productivity and get more support from Japanese companies.
Economic expert Pham Chi Lan said that the lack of initiative of Japanese enterprises in the development cooperation of the automobile industry of Vietnam is behind the failure. While the world's cars are rapidly changing the technology, many new vehicles are introduced, but Japanese investors in Vietnam are still stuck with cars of the old generation. Therefore, if the incentives continue, within 15 years or 20 years, the vehicles will be difficult to sell. Another example is two years ago, Toyota has proposed conditions of US$2 billion to stay in Vietnam. "The cost is too high while Japanese investors have not yet handed over the know-how, but simply assume the Vietnamese market is an assembling market. So when does Vietnam's auto industry take off? "said Pham Chi Lan.