Economic Sector

Last updated: Wednesday, May 15, 2019


CPTPP: Opportunities and Challenges to Vietnamese Businesses

Posted: Wednesday, December 05, 2018

Top economists discussed some basic commitments in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the strategic significance of CPTPP to Vietnam and the business community at the Workshop on CPTPP - Opportunities and Challenges to Vietnamese Businesses, held in Hanoi on November 28, 2018.

With a population of 500 million and a gross domestic product (GDP) of over US$10 trillion, the CPTPP covers about 13.5 per cent of global GDP and 14 per cent of world trade (compared to TPP with a population of 800 million, 40 per cent of global GDP and over 30 per cent of world trade).

Vietnam’s entry to the CPTPP continues to motivate its market opening, investment development, and free trade expansion with more countries in the region and in the world.

In addition, the CPTPP helps strengthen Vietnam's image in the eyes of the international business and investment community, confirm the message of a country that is determined to maintain an open market economy which is attractive to investors. And significantly, taking part in the CPTPP continues to create the driving force for substantive, comprehensive and effective government reform to match with international rules.

Mr Le Xuan Sang, Deputy Director of the Vietnam Institute of Economics, said that Vietnam will benefit from 80 per cent of opportunities from the CPTPP, especially in big markets.

Mr Ngo Chung Khanh, Deputy Director of Multilateral Trade Policy Department under the Ministry of Industry and Trade, said that the CPTPP will come into force on January 14, 2019. Vietnamese businesses should take advantage of CPTPP-generated opportunities in tax incentives and institutional reforms to expand the market.

“More importantly, businesses need to dig the “gold mine” in the country: A potential market of more than 90 million people that many foreign businesses are interested in, he stressed.

He cited that some agricultural products, including Japanese mangoes and Taiwanese dragon fruits, are very expensive but still sold out in Vietnam, showing Vietnamese consumers have a rising demand for high-quality commodities. which are still high in price but are still "burning" in Vietnam. There is demand for high quality goods.

Taking advantage of free trade agreements (FTAs) in agriculture is becoming increasingly prominent in the world. Companies from Japan and South Korea have come to Vietnam to invest in agriculture and export agricultural products to their home countries.

Many Vietnamese exports are well received by the world market while the nation is importing commodities that are available and used for export in Vietnam. This paradox places pressure on enterprises that need to return to the home market to gain the share from foreign competitors, Mr Khanh analysed.

Dr Nguyen Van Nam, Council Chairman of the Institute for Brand and Competitiveness Strategy, said, as for FTAs Vietnam signed, Vietnamese companies are able to leapfrog but vulnerable because of lack knowledge.
Dr Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, advised them to grasp regulations that relate to their business and seek to meet those regulatory requirements. Provisions on commodity export are increasingly strict, e.g. traceability in addition to quality standards.

Taking the example of the European Union’s “yellow card” on Vietnamese seafood, he noted that the fishery sector should not only ensure organic products but it must also have clear and transparent fishing practices, the legality of fishing grounds and meet environmental standards.

Dr Nguyen Minh Phong pointed out that the CPTPP adds pressures on intra-regional origin and intellectual property protection; pressures on tax reduction and tax erosion; technical barriers to trade (TBT) and sanitary and phytosanitary (SPS).

The CPTPP has considerable impacts on Vietnam’s export performance and economic growth. Economic experts proposed that accelerating domestic economic restructuring and changing growth model will help Vietnam rein in challenges to achieve higher growth. Businesses need to be proactive and flexible to take advantage of opportunities generated by the CPTPP.

Huong Ly

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