Economic Sector

Last updated: Monday, April 22, 2019


CPTPP Pact Builds up Reform Pressures

Posted: Monday, June 18, 2018

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was signed in March and is expected to take effect in early 2019. While providing obvious opportunities for various industries, the CPTPP also poses challenges when it goes into practice.

According to a Japanese study, for the case of Vietnam, the CPTPP tariff benefits only help Vietnam's GDP increase by 1.1 per cent, less than a sixth of benefits expected from the TPP. Meanwhile, benefits from institutional reform, only taking into account non-tariff barriers that CPTPP brings to Vietnam's gross domestic product (GDP), are almost the same as the TPP, helping GDP increase by about 10 per cent. CPTPP is a very real opportunity, but also will apply pressure and a new standard for Vietnam to conduct reforms for its own interests and needs.

What the business community is concerned about is how the CPTPP will create momentum for domestic reform, especially business environment reform and administrative procedure reform. Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said that the challenge in implementing the CPTPP is much greater than previous FTAs in Vietnam. Currently, the Government has been carrying out many specific programmes on administrative reform and environmental improvement. In order to make the best use of opportunities offered by the CPTPP, it is important that all state agencies and enterprises take part in a substantial, comprehensive and effective system reform, he insisted.

From the perspective of industries, Mr Nguyen Ton Quyen, Chairman of the Vietnam Timber and Forest Products Association, said that wood processing enterprises have taken action to catch opportunities from the CPTPP. However, low command of foreign language skills is also a barrier for enterprises in global integration. Therefore, the Government should soon have official translations of documents related to the CPTPP, the AFTA and other deals, preferably in forms easy to understand for enterprises, such as question and answer, to better support them.

Mr Nguyen Hoai Nam, Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that what makes enterprises most hesitant are that Vietnam’s preparations and reforms are not timely enough for businesses to take advantage of FTAs and the CPTPP compared with foreign countries, specifically direct competitors. Based on our experience in executing AFTAs, Vietnam has four direct shrimp competitors in the world, he said. They all have specific strategies and conduct thorough studies on Vietnam to work out competitive measures, including studies on FTAs and the CPTPP. They have clear analyses of markets with which Vietnam has signed FTAs, to know their specific disadvantages against Vietnam and Vietnam's competitive strengths against them. The business community hopes that the country's preparations and reforms will go faster. If we cannot change and reform right in the text, we will focus on reforming personnel for higher quality and performance, he emphasised.

To have good preparation and make most advantage of opportunities from the CPTPP, reform efforts need to come from both sides, the government and the business community, experts recommended. The government should develop a well-prepared action plan based on the tariff reduction roadmap which includes an itinerary for improving issues on a sector-by-sector basis. From that general plan, enterprises have to work out plans for themselves and need to raise awareness of making long-term investment and gradually improving competitiveness.

Nguyen Thanh

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