TTP deal to make Vietnam a favoured destination for export oriented investment

Trans-Pacific Partnership (TPP) trade agreement is expected to create a new foreign direct investment (FDI) trend in Vietnam which would also have a positive impact on the country’s improvement of investment climate, said Duane Morris Vietnam LLC’s general director Oliver Massmann.

He noted that determining the actual working of the new FDI trend required a detailed analysis of the content of the agreement and its implementation.

Vietnam, following the TPP provisions, must adhere strictly to principles such as transparency, predictability, the stability of the investment environment, and the strengthening of protection for intellectual property rights. This will also create an attractive environment in Vietnam, he explained.

Vietnam will also have a price-related competitive advantage due to the preferential taxation that TPP countries will grant to Vietnam, over China, India and Thailand as they are not included in the deal and which are Vietnam’s competitors in the textile industry, according to Oliver Masmann.

Meanwhile, head of the Central Institute for Economic Management (CIEM), Nguyen Dinh Cung also commented that the TPP, which would create a free trade zone that include 40% of the global economy, would impact FDI in two distinct ways.

First, the deal will include provisions that directly reduce barriers to investment by improving intellectual property protection, removing barriers to investment in services, and raising the consistency and transparency of regulatory regimes across partner countries.

Second, reducing barriers to trade will help increase FDI as trade and investment complement each other.

The signing of the TPP is expected to give many trade and investment jackpots to Vietnam. The wave of FDI coming into Vietnam has been progressively increasing in recent years and is expected to continue for years to come. Garment and textile firms are expected to greatly benefit from the TPP.

The skills of Vietnam’s workforce and Vietnam’s low cost of doing business have already attracted garment and shoe investments for years, said Sesto Vecchi, member of the AmCham Board of Governors and managing lawyers of Russin&Vecchi.

It is no surprise that just a week after the deal’s negotiations, an Indian textile and garment delegation entered Vietnam aiming to set up an Indian textile industrial park to tap into the TPP advantages for Vietnam. Other investors in the textile and shoes sectors are also preparing their entry to the Vietnamese market to cash in on the premium from the TPP.