Vietnam is also currently negotiating five other trade agreements, including the Trans-Pacific Partnership. What do small and medium enterprises need to do, and what support do they need in this context of increasing competition?
Increased integration means more opportunities as well as competitive challenges for Vietnamese businesses. However, according to a recent survey carried out by the University of Economics and Business under the National University, about 60% of small & medium enterprises questioned remain unaware of even the basics of Vietnam’s upcoming commitments to the ASEAN Economic Community which comes into effect on the final day of the year.
Pham Van Hai, Managing Director, Hanvico said: “To be honest, I’ve only heard about AEC and TPP economic integration through the TV and other media. But I don’t really know far along Vietnam is with this process, or how my business can take advantage of further integration.”
Phung Thi Lan Huong, Head, FTA Division, WTO Centre, Vietnam Chamber of Commerce and Industry said: “In our previous FTAs, only around 30 percent of exports actually utilised the preferential tariffs offered. The role of the Vietnam Chamber of Commerce as well as business associations is very important in providing businesses with information and consultancy. Businesses really need information, but not just general information, or just the FTA document. They wouldn’t understand just that. We need to explain the FTA terms in simpler language, so businesses can easily understand and see how the FTA can directly impact their business operation or export products.”
As a supporting agency, the WTO Centre plans to publish guidebooks providing businesses with highlights of the recent free trade agreements that Vietnam has signed to in order to increase their awareness of how businesses can utilise the advantages the FTAs present.
In addition, businesses themselves will need to strive for greater efficiency and improved competitiveness.
Nguyen Quang Vinh, Director, Vietnam Business Council for Sustainable Development said: “Small & medium enterprises are often weak when it comes to market research. I think for them to improve competitiveness, they need to improve their strategic business planning, governance, the adoption of newer technology to improve efficiency, and sustainable development strategies.”
Vietnam currently has 500,000 SMEs, accounting for a gigantic 97.5% of the total number of operating businesses. As the backbone of the economy, reform efforts by these businesses, along with assistance from government policies and support from business associations, will mean firms can strive to increase competitiveness and develop sustainably as Vietnam integrates further into the global economy.
