Exports are the main driver of Vietnam’s high growth rate according to the World Bank. Taking advantage of FTAs is one way to promote trade. However, a survey by Vietnam Chamber of Commerce and Industry shows that Vietnamese enterprises aren’t ready due to several barriers.
Rules of origin are one factor in tariff reductions and they help create more added-value. Therefore, firms can escape from the low added-value trap and climb the global value chain.
However, representatives of textile and garment companies have said that increasing added-value to take advantage of the FTAs isn’t going to be possible for every business. The important thing is to improve competitiveness through increased production capacity.
"If firms buy expensive and low-quality input materials with longer delivery time even from the domestic market, general competitiveness will be reduced. Therefore, what matters is how much they can dominate and compete in the market." - Le Tien Truong, Vietnam National Textile & Garment Group
According to Vietnam Chamber of Commerce and Industry, 88% of enterprises plan to improve their production capacity in the next 3 years. This would contribute to reaching the target of adding more than 8% to Vietnam’s total GDP thanks to TPP and 4% from EVFTA by 2035.
