Vietnam to get great chance to boost exports and join global supply chain

At a workshop held in Ho Chi Minh City last week. Dr Nguyen Tien Dung, principal of the Law-Economics University, during his speech said that Vietnam has the lowest level of development in the 12 Trans Pacific Partnership (TPP) nations but Vietnam is seen as the country that will benefit the most to get the biggest benefits from the TPP, compared with other participating nations, and this will be a great chance for the country to boost its exports and join the global supply chain.

TTP will help Vietnam complete its market-orientation targets, improve its business environment and competitive ability.

Ngo Chung Khanh, deputy head of the Ministry of Industry and Trade’s Multilateral Trade Policy Department, said that TPP is the new model of regional economic cooperation with the aim of solving problems emerging in the 21st century like labour, state-owned enterprises and environmental protection, he said.

TPP is expected to create favourable conditions for promoting trade and investment by cutting nearly 100 per cent of tax. The TPP’s benefits would be even greater than Vietnam’s membership in the World Trade Organisation (WTO).

Vietnam should be focused on garments and textiles, and on labour and intellectual-property protection.

Need to focus on garments and textiles as they are the core benefit for Vietnam. At present with a tax level of 17-25 percent, Vietnamese textiles and garments will strengthen their foothold in the US market with 20-percent market share and ranking second.

If taxes were zero, the turnover and volume of the Vietnamese textile and garment industry would rocket. But to take full advantage of the TPP, Vietnam must improve the situation where US$15 billion of the total of $19 billion in export revenue has to be spent on imported materials, he said.

As for the labour field, the TPP will apply economic sanctions if Vietnam violates the International Labour Organisation’s regulations. These have already been applied in the country under the WTO, but only for reference.

Within the TPP, labourers will have the right to set up their own organisations that protect their rights, and the organisations would not be able to join the Vietnam Labour Federation, he said.

TPP will bring great opportunities for Vietnam’s economy by promoting trade between Vietnam and the EU, [and with] the US and other TPP member nations; diversifying export markets; improving the investment environment and attracting high-quality investment; and opportunities to join the global supply chain, he said.

Khanh also warned that TPP will increase the speed of economic growth, create more jobs, improve incomes and eradicate hunger but increase competitiveness. It could cause local enterprises to collapse and go bankrupt. He also pointed out that the state budget would be affected but not as much as feared, as the portion of the budget from import taxes has been falling year on year.

The TPP will promote the market economy but high standards in administrative management will create challenges for state management. A series of laws will be released to implement TPP commitments.