Firms to face fierce competition after joining ASEAN Community

Consumers could benefit, as in theory they should have more choices in choosing products at more reasonable prices. However, this will also pose challenges for Vietnamese businesses as they will have to compete with other businesses among ASEAN members.

It’s easy to buy Thai products in Vietnam. Consumers seem keen on Thai’s products as they have catchy design, good quality and are competitively priced compared to other imported products from ASEAN.

Realising the potential of Thailand's products in Vietnam market, many companies have actively looked for new products and distribution channels with Thailand partners.  These businesses previously only met once every 2 to 3 months, now the Thai partner comes to Vietnam every month to introduce new products.

"Vietnam has a large population. The Philippines and Indonesia’s populations are located across thousands of islands so it’s hard to reach consumers there", Songkiat Wattanavijitkul, Director of Good One Intertrade Company, said.

According to the General Department of Customs, trade turnover between Vietnam and ASEAN has grown rapidly over the past 10 years. Before 2010, Vietnam mainly exported rice and crude oil to ASEAN. However, after 2012, Vietnam’s export products have become diverse and include electronic components, equipment and machinery, and mobile phones. This shows that Vietnam has gradually become more involved in the regional supply chain.

"The tariff reduction schedule in ASEAN will have a tremendous impact on supply chains, and should create more favourable conditions for investors in the region to link together to form distribution networks, and to create products which are made in ASEAN", Nguyen Anh Tai, Deputy Director of International Co-operation Department, General Department of Customs, said.

According to the General Department of Customs, most of the tariff lines in ASEAN have been eliminated in 2015, only 7% of tariff lines will remain in effect until 2018. It’s clear that consumers should benefit from the tax reductions. For Vietnamese enterprises, this will also be an opportunity to access quality input resources and a market of over 600 million people.