The Trans-Pacific Partnership Agreement (TPP) was signed on Oct 5th 2015 with 12 member countries (including Vietnam). The agreement will take effect in 2018. According to experts, the TPP will open opportunities for trade cooperation, goods export, enhance the supply chain value and modernize production, business activities of domestic enterprises.
Enterprises should be well prepared in all aspects to successfully join TPP. Photo: The production line of Vietnam Sansho Co. (Vietnam - Singapore Industrial Park II)
Good changes
Vietnam is one of 12 members, and has the lowest development level among the TPP members with a total GDP of $176 billion, the average income of about $1,960 in 2013. Joining TPP would open up opportunities for industrial cooperation, investment, technological innovation, and strategic alliance, thanks to profit advantages owned by some domestic industries. In Binh Duong, industries, such as wood processing, garment..., used to process, manufacture on demands; but now, many domestic enterprises have proactively innovated their technologies, designed, produced and exported with their own brand. Some typical names are Minh Duong furniture, Hiep Long, Thuan An; Binh Duong garment; Thai Binh shoes...
To catch TPP opportunities, since 2013, a new wave of investment has appeared in Vietnam, focused on areas, such as fabric manufacturing, textile accessories... to enjoy tax incentives. Particularly in Binh Duong, Far Eastern Textile Corporation has invested in factories in VISP 1 (Thuan An Town), now is expanding in Bau Bang Ip and Binh Phuoc province; Kyung Bang Group (Korea) invested in Bau Bang Ip ... This is an opportunity for the domestic textile industry as well as in the province to reorganize production, innovate technology, complete supply chain of raw materials in order to improve competitiveness and contribute to reducing trade deficits as before.
Well preparation in all aspects
Currently, despite the bilateral comprehensive cooperation relations with most economies joining the TPP, Vietnam has not been recognized as a market economy by the US and some other countries. This has concerned domestic businesses, because domestic goods could be sued for dumping, specifically, steel, wood processing industry, including many enterprises are now located in Binh Duong.
However, according to experts, as TPP membership, Vietnam may be recognized as a market economy in multilateral negotiations, which have been difficult to achieve in bilateral negotiations. Besides, the integration level of the TPP is very intensive and higher than the World Trade Organization (WTO). Meanwhile, at present, the most favored nation tariff (MFN) of Vietnam is the highest (8.4%) among 12 economies of TPP. Once the TPP takes effect, cutting this tax rate would be a big challenge to Vietnamese enterprises, which are still weak in competitiveness, management capacity and technology ownership… According to Mr. Huynh Quang Thanh, Chairman of Binh Duong Furniture Association (BIFA), most enterprises are usually afraid as newly participating in the market. But with a careful preparation, we will be more confident, because investors does not often bring their plants, staff as going overseas, but mainly recruit local people and retrain. This is an advantage to domestic enterprises.
Currently, the trend of equitization, divestment in State-owned enterprises is growing. Many enterprises have entered the market, accepted competition rules, expanded in foreign countries, like Viettel, Vinamilk ... In Binh Duong, many State-owned enterprises have enhanced efficiency after equitization, like 3-2 Investment Construction JSC, Binh Duong Import Export JSC…
Furthermore, Binh Duong has a high concentration of labor in numerous IPs, where will easily have disputes, conflicts. Therefore, ensuring social security and order, welfare is very important. According to Major General Nguyen Hong Linh, Director of Financial Security, Investment Office under Ministry of Public Security, along with advantages, difficulties and challenges posed by the TPP are vital. However, advantages still dominate. Entrepreneurs must keep striving, promote creativity, proactivity, innovation for cooperation and integration. On the side of state authorities, political social organizations should closely follow the assigned tasks, update constantly the current situation to timely propose solutions to ensure the completion of assigned tasks, contribute to the building and protecting the country.
Reported by Duy Chi – Translated by Ngoc Huynh
