Though much still needs to be done for the 10 member-states to achieve a – true single market – Vietnamese private companies are already taking advantage of the lucrative trade and investment openings the AEC offers.
The ultimate goal is for the AEC free trade region to have a free flow of goods and services, skilled labour as well as investment, said Deputy Director Vo Tri Thanh of the Central Institute for Economic Management (CIEM).
Mr Thanh said domestic sector companies engaged in the manufacturing and processing of food products, services, and retail are among those likely to benefit most significantly from the economically integrated region’s formation.
“The opportunities are in the manufacturing sector, particularly for food products, as well as services and retailing,” he said. “It really depends on the market businesses want to tap.”
ASEAN hub
But what is more critical for domestic companies at this juncture, according to Deputy Director Thanh, is for the sector to take advantage of reduced import duties and other preferences the AEC presents. For example, he said the European Union Generalized Scheme of Preferences (EU GSP+) allows zero-duty entry for imports from AEC members to the 28-member EU bloc of locally made products across some 6,200 product lines. This quite literally means Vietnamese exporters can already ship many products to the EU import duty free.
Further, if a Vietnam domestic business exports product to another AEC member country that is going to be processed and the finished product then imported into the EU— that product will also in many instances qualify for duty free import into the EU.
Some of Vietnam’s most important domestic exports to the EU include processed fruit and foodstuffs; clothing; footwear; fish and textiles, said Mr Thanh, many of which today qualify for duty free import into the EU.
EU - Vietnam FTA
On February 1, 2016, the European Commission published the text of the recently concluded Free Trade Agreement (FTA) between the EU and Vietnam.
The greater part (99%) of goods covered under the FTA will benefit from a full reduction in customs duties. It is expected that the EU – Vietnam FTA will enter into force by the end of 2017/early 2018. As it now stands, until the FTA enters into force, imports from Vietnam will continue to benefit from preferential status under the EU GSP+ until then, said Deputy Director Thanh.
“We need to position Vietnam as a manufacturing hub,” said Mr Thanh. And we need to use the country’s inclusion in the EU GSP+ scheme as a way to attract foreign manufacturers here—not only from ASEAN companies, but from other nations around the globe, as well, he said.
Economic prospects for Vietnam are indeed rosy. The question now is whether the local domestic sector will be able to take full advantage of these rare opportunities that are opening up in the AEC region.
