However, experts believe that along with the challenges, domestic enterprises still could benefit from many opportunities.
97% of total import tariff lines will be cut to 0% from 2015 to 2018 according to the ASEAN Trade in Goods Agreement. The removal of tariffs will mean direct competition in the regional market between Vietnamese and foreign products. This new deal challenges many small businesses due to their limited ability.
Vu Thi Lan Thanh, Chairwoman, Nam Thanh Textile Company said: "The implementation of the ASEAN Trade In Goods Agreement creates challenges for my company because we lack good management and modern equipment. In order to compete with foreign companies, I’ll have to import more modern machinery".
Cutting import tariffs may pose a disadvantage for domestic enterprises such as the low-price imported materials and diversification of modern equipment.
Vo Tri Thanh, Vice President of Central Institute for Economic Management said: "It wasn’t until 1989-1990 that Vietnam opened the door to the world but we managed to become second highest rice exporter in the world after just a year. That is an example of our ability and strength. If we dare to take the chance, we will be able to compete with other countries."
Since the beginning of this year, more than 1,700 tariff lines have been cut to 0%. In 2018, the remaining 669 tariff lines will be cut down which is equivalent to 7% of total tariff lines.