The Hanoitimes - Vietnam’s participation in the CPTPP would help the country perfect legal frameworks and improve the business environment towards greater transparency, smoothness and fairness.
With the Comprehensive and Progressive Trans – Pacific Partnership (CPTPP) coming into play, the most challenging issue for local enterprises would be a change in mindset and considering competition part of the market economy, according to Tran Quoc Khanh, vice minister of Industry and Trade.
Khanh made the comment at the Vietnam Private Economic Forum 2019 held on May 2, discussing the prospect of CPTPP as a breakthrough for Vietnam’s economic development.
Overview of the panel on CPTPP.
According to the vice minister, who has participated in many FTA negotiation, from the competition pressure, enterprises must change their stance from passive defense to be active players in the market.
The government would support enterprises but their proactive behavior would be a decisive factor determining the success under the CPTPP, Khanh stated.
Currently, Vietnam is the seventh member country to have official ratifed the deal following Mexico, Japan, Singapore, New Zealand, Canada and Australia, after the US withdrew in January 2017.
Tran Quoc Khanh, vice minister of Industry and Trade.
The CPTPP-11 economies make up around 13% of global economic output and are home to 500 million people.
The National Center for Socio-Economic Information and Forecast (NCIF) under Vietnam's Ministry of Planning and Investment expected the CPTPP would boost Vietnam’s GDP by US$1.7 billion and over US$4 billion in exports, equivalent to additional growth of 1.32 and 4.04 percentage points till 2035, respectively.
Khanh expected Vietnam’s participation in the CPTPP would help the country perfect legal frameworks and improve the business environment towards greater transparency, smoothness and fairness.
Discussing the CPTPP’s impacts, Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (VITAS), considered CPTPP a backbone of Vietnam’s textile industry, however, the deal would be insufficient for further development without a solid foundation.
Giang said the government must set up a development strategy and a long-term vision for the textile industry, including infrastructure and human resources.
Chairman of the Vietnam Cotton & Spinning Association (VCOSA) Nguyen Van Tuan said another challenge to Vietnam’s textile industry is the fierce competition from foreign companies which currently dominate 70% of the domestic market.
Over the past 18 years, the textile industry has sustained an average growth rate of 15% per year but still depends on raw imports, while for the enterprises, the key issue would be value addition instead of purely relying on low-valued work.
Vice Minister Khanh expected the next big market for Vietnam’s textile industry would be the EU, especially with the upcoming Vietnam – EU Free Trade Agreement (EVFTA).
According to HSBC’s latest report, Vietnam’s textiles and footwear sectors are expected to benefit most from the EVFTA. Vietnam’s exports of textiles and footwear to the EU totaled nearly US$9 billion in 2018. Meanwhile, EU levied average tariffs on these products currently as high as 9%.
These tariffs would be removed in three years or directly upon entry into force of the EVFTA for less sensitive products. Meanwhile, EU tariffs on more sensitive textile and footwear products would be removed after five to seven years.