The launch of the ASEAN Economic Community (AEC) in four months will be a critical moment for Vietnam as trade in East Asia is the key to the nation’s future— driving the growth needed to lift it to sustained prosperity.
But it’s more than just the 10 member states of ASEAN that Vietnam needs to be competitive with in order to benefit from free trade and integration in East Asia, speakers at a recent conference in Hanoi emphasized.
China, Japan and the Republic of Korea (RoK) cannot be left out of the equation, so it’s really the alliance – ASEAN+3 – that should be the focus of the business community, but right now most seem disinterested.
Director Nguyen Thu Trang of the World Trade Organization (WTO) Centre said most business men and women in Vietnam are by and large not aware of the looming common market.
“They’ve failed to take advantage of even the existing benefits that ASEAN offers,” Trang said.
The same is true for other free trade agreements that the nation has entered into as surveys show that overall 67% of respondents said they have never benefited from lower tariffs from any free trade agreement.
On the omnipresent rules of country of origin labelling required by ASEAN and the modalities for complying with them – most businesses are utterly inadequately prepared, Trang stressed.
Over the past few years, trade between Vietnam and other ASEAN+3 nations should have increased as businesses formed alliances with their counterparts in other member nations in preparation for the AEC, said Dr Nguyen Anh Thu of the Vietnam National University.
In turn that would have placed them in good stead to compete in other global markets such as the US and the EU, Thu stressed. But in reality the country’s trade with ASEAN+3 nations has actually fallen over the past few years.
In addition, businesses have not sufficiently focused on increasing the capacity of their staff with continued education and training that would position them to move up the supply chain value ladder.
Most Vietnamese businesses have been content with taking low level assembly line or other labour intensive work trying to capitalize on the nation’s lower salaries, wages and natural resources, Thu underscored.
This type of work is on the lower rung of the supply chain ladder and businesses need to adequately plan and prepare to climb up that ladder by using superior knowledge and innovation in manufacturing.
To corroborate his comments that the two major problems that Vietnam currently faces are the lack of adequately trained workers and low labour productivity Thu, cited the nation’s low 2014 competitive capacity ranking of 99 out of 144 countries.
“The stark reality is that Vietnamese businesses thus far have done little to make arrangements with their counterparts in ASEAN+3 to solidify the trade bloc and bring about a more competitive region.
VOV
