Nghe An Enterprises Participating in CPTPP: Opportunities and Challenges

1:50:52 PM | 27/3/2019

"The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) generates opportunities to increase profits for businesses, create more jobs, boost economic growth and improve people's lives, multilateralize international economic relations, help Vietnam’s economy escape from dependence on some markets, and ensure proactive and sustainable development, " said Dr. Vu Tien Loc, President of Vietnam Chamber of Commerce and Industry (VCCI).

VCCI President Vu Tien Loc added that the CPTPP Agreement would allow Vietnam's economy to integrate more deeply into the world trading system, create an opportunity to expand trade and investment with three potential markets in America, and upgrade and deepen relationships with the remaining seven markets, many of which are our important strategic partners.

However, the fierce competition from foreign investors has taken place in the domestic market, while the ability of Vietnamese enterprises to adapt to the market economy is not really good. We will have to accept the presence of goods and services of partner countries, which means that domestic goods and businesses must compete fiercely at home. The risk of failure will be clear if businesses do not innovate and adapt themselves to the new environment.

What do Nghe An businesses need to do?

The great benefits, positive impacts and risks of CPTPP for Vietnam’s economy are clear, but what do Vietnamese businesses in general and Nghe An enterprises in particular need to do to benefit from an agreement with the great scale and influence of the CPTPP? Nghe An is a large province with more than three million people and 19,000 enterprises. The number of small and medium enterprises, even super small ones, accounts for 97%, with many of them struggling for survival. Hence, to take the opportunity of CPTPP will require tremendous effort.

The Nghe An business community should actively explore and understand information about the CPTPP in order to firmly grasp Vietnam's commitments and the markets in partners’ interest, focusing on preferential tariff under this agreement for the strong, competitive and potential products in the locality such as: Textile, mineral processing, roofing, cement, fruit and seafood processing, starch cassava, rice, peanut, coffee, orange, passion fruit, pineapple. Specifically, seafood products will enjoy tax free export to Canada and Japan. Rice also enjoys tax free export to, and has strong potential to access and grow in the Canadian market. With a new market like Mexico, rice exports of about 70,000 tons/year will enjoy 0% tax in the 11th year since the agreement has come into effect. Besides, commodities such as coffee, tea, pepper will also enjoy the tax rate of 0%. In addition, textile, rubber, chemicals and pharmaceuticals will also receive benefits; enterprises need to quickly change the way of doing business towards professionalism and with a clearer strategy. In addition, issues such as anti-corruption and transparency in competition as well as conditions for sustainable development of enterprises in environmental protection need to be a focus; other mandatory provisions include improving the working conditions of workers and unions as well as fully implementing the International Labor Organization (ILO) Convention in which Vietnam has participated. These are also weaknesses of Vietnamese enterprises in general and Nghe An ones in particular.

Government needs to work together with business

One of the key tasks in the Draft Plan for implementing CPTPP agreement of People's Committee of Nghe An province, assigned to the Department of Industry and Trade, is: in coordination with other departments, industries and local authorities to improve competitiveness for commodities, businesses, especially medium, small and super small businesses; at the same time, providing information, preparing solutions to respond and support for commodity sectors and commodities that are highly and directly impacted from fluctuations in the international market”. Besides, the Draft also focuses on many other tasks such as: propaganda and dissemination of information on CPTPP and markets of participating countries, the establishment of legal documents, improvement of competitiveness and human resource development, guidelines and policies for trade unions and workers' organizations at business facilities. In particular, specific social security policies, environmental protection and sustainable development have also been put into the Draft by the People's Committee of Nghe An province. From that, we can clearly see the special interest of the local government for a very important agreement to ensure that CPTPP can quickly come to life, bringing practical benefits for businesses and citizens.

However, the implementation work requires close coordination between various authority levels and sectors; fierce and synchronous engagement; the monitoring and urging of the Provincial People's Committee with the support of VCCI and business representative organizations in the province. At the same time, the State should continue to improve the institutions of economic law and the business environment in a clear, transparent manner, adhering closely to international standards, thereby promoting both domestic and foreign investment. In addition, Nghe An should continue to promote administrative reform in the direction of streamlining and efficiency; downsizing personnel, improving professional qualifications and skills for public employees having foreign language skills and professional ethics. Above all, businesses need to be sensitive, creative and proactive in seizing opportunities from the CPTPP Agreement to prepare a new competition in the region and internationally, taking potential risks and challenges, as this may be a good opportunity for businesses to develop more sustainably.

Phan Duy Hung, VCCI Nghe An