The Trans-Pacific Partnership (TPP) has concluded 20 rounds of official negotiations and become a hot topic of integration in Vietnam. In a bid to provide information on TPP Agreement and its negotiation process, and Vietnam's participation for the business community to prepare for further integration, the Ho Chi Minh City Branch of the Vietnam Chamber of Commerce and Industry (VCCI - HCM) in collaboration with the Ministry of Industry and Trade organised the conference "TPP Agreement and Vietnam’s participation process.”
In his opening remarks, VCCI Vice President Hoang Van Dung said TPP is ambitious to become a new-generation, high-standard free trade agreement (FTA) negotiation with a wide range of effect, featuring a deeper degree of liberalisation than WTO and previous FTAs. Therefore, for the Vietnamese economy as well as businesses, TPP Agreement is expected to have a huge impact, both direct and indirect, on production and business outlooks in different ways.
The matter for Vietnam, like other countries participating in TPP, is how to make detailed commitments bring the most realistic benefits on conditions best suited to the capacity of enterprises. He cited examples related to the elimination of tariffs in TPP-joining countries. If eligibility is high-level “rules of origin”, export-driven economies will enjoy real benefits, but this is not the case for countries relying on materials from non-TPP countries like Vietnam. Or if TPP’s requirements for drastic changes in competition laws and transparency of public procurement are the best therapy for Vietnam in the time of completing market economy, high standards of some TPP contents may, to a certain extent, potentially exceed the endurance abilities of businesses and people.
Mr Tran Quoc Khanh, Deputy Minister of Industry and Trade and Chief Negotiator on economic and international trade, said joining TPP will bring great opportunities for Vietnam, particularly the improvement of import and export market structure, open up more markets for Vietnamese merchandise, and open access to production chains in the region and the world. The agreement will also create favourable conditions for restructuring the economy, changing the growth model, completing the institutional environment, increasing investment capital and enhancing production capacity. However, the agreement also engenders hugely competitive pressures on the market, which requires Vietnam to make an effort to overcome this challenge while refining its legal system, management thinking and management capacity.
Remarking on challenges of joining TPP, Lawyer Pham Manh Dung, a representative from LCT Lawyers Company, said Vietnam will face competition in the domestic market from "giants" from TPP countries. Tax cuts will lead to an increase in the flow of imports of competitive prices from TPP countries. Subsequently, enterprises, especially small and medium ones, will face stiff competition, resulting in a potential shrinkage of merchandise market shares and investments. Another potential difficulty that Vietnam may encounter during the time of negotiations is many that foreign companies will aggressively pour capital into areas where Vietnam has competitive advantages to catch opportunities. In the meantime, most Vietnamese enterprises are still unclear about TPP. This causes domestic companies to miss good opportunities when Vietnam enters into TPP.
Deputy Minister Tran Quoc Khanh emphasised that all countries joining TPP hope that this will be a new model of economic cooperation in the region that helps handle emerging issues in the 21st century. This agreement will try to create the most favourable conditions for the flow of trade and investment and hopefully form a nucleus for future expansion into the core of greater free trade area, not only including 12 current member countries but all 21 APEC economies.
Dr, Lawyer Nguyen Dang Liem, Rector of Gia Dinh Information Technology University
By joining TPP, the primary export goal of Vietnam will be certainly achieved: Expanding exports into TPP countries, particularly textiles and garments, footwear and wooden furniture, which will easily penetrate major TPP-member markets. The Asia - Pacific region accounts for 70 percent of Vietnam’s total exports and 80 percent of its imports. After entering TPP, export and import turnover will rapidly accelerate.
Besides, products other than leather footwear, garments, textiles, seafood, woodworks and rice will also have their advantages secured because three current competitors, namely Thailand, India (rice), China (consumer goods, light industrial products) have not taken part in TPP.
Lawyer Pham Manh Dung from LCT Law Firm
According to domestic and foreign experts, Vietnam is expected to increase export opportunities by approaching TPP-member markets with over 700 million people, which contribute about 40 percent of global GDP and a third of global trade. Tariffs will be almost eliminated.
With TPP, taxes on Vietnam’s key exports such as garments, textiles, footwear and seafood will be removed, while foreign investment into the country will be increased as access to TPP countries is expanded. In addition, with the rules of origin, Vietnam is allowed to access technology, equipment and machinery in developed countries. This is an opportunity to create a technological revolution, create competition and increase productivity for enterprises.
Lawyer Vo Thi Nhu Ngoc, Director of Vo Thi Nhu Ngoc Law Firm
Needless to say, TPP is a fierce and unequal playground. When Vietnamese enterprises are not competitive enough, they will inevitably face the risk of being ruled out. Thus, there is a need for strategies to enhance the competitive capacity of Vietnamese enterprises. When a majority of Vietnamese enterprises are small and medium-sized, the massive rush of foreign companies into the domestic market requires them to change business thinking and enhance the leading role of professional associations in general and VCCI in particular to withstand fierce competition on the market.
Besides, Vietnamese enterprises need to be informed about business law. Playing on the world market requires Vietnamese enterprises to understand the rules of play, otherwise they will be forced to retreat on the home playing field when the TPP Agreement just takes effect.
Mr Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM)
TPP Agreement, with free investment principle, helps draw investment for supporting and manufacturing industries, high value-added industries and high-tech industries. Especially with the broader market access principle, TPP provides opportunities for increased investment in telecommunications, banking and finance, transportation and other industries, especially drawing investment capital from reinvestment and production expansion projects.
However, apart from opportunities, the opening of an ambitious free trade agreement like TPP also poses considerable challenge. Weaknesses in infrastructure and policies (laws, executive management, administrative reform, etc.) are also barriers and challenges to Vietnam’s effort to draw foreign investment.
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