Ensure integration as quickly as possible

(Baonghean) - Editor's note: Up to now, Vietnam has signed 10 bilateral and multilateral free trade agreements (FTAs), and is negotiating and moving towards signing 4 other important bilateral and multilateral agreements. Nghe An Newspaper reporter had an interview with Deputy Director of the Department of International Cooperation (Ministry of Finance) Ha Duy Tung about the content of these FTAs ​​and the challenges of the economic integration process for domestic enterprises.

PV:Dear comrade, the commitment to open the market is an important content in most of the FTAs ​​that Vietnam has signed with the international community. Could you please clarify the average level of liberalization in the FTAs ​​we have participated in?

Deputy Director Ha Duy Tung (right) at a press conference.

Deputy Head of Department Ha Duy Tung:In most of the FTAs ​​that we have signed, the average liberalization level is about 90% of the tax lines, except for the ASEAN Agreement (ATIGA), which is a new intra-bloc agreement with a commitment to liberalize nearly 100%. The final liberalization level in other FTAs ​​is expected to reach about 90% of the tax lines with the final tax rate of 0% at different times depending on each FTA. The FTA that completed the roadmap the earliest is ATIGA (2018), followed by ACFTA (2020) and AKFTA (2021). Accordingly, the list of goods for which we do not commit to eliminating taxes in most FTAs ​​accounts for about 5-7% of the tax lines, including: tobacco, alcohol, gasoline, automobiles, some auto components and spare parts, some iron and steel products, goods subject to tariff quotas (sugar, eggs, tobacco leaves) and national defense and security products (weapons, explosives, etc.).

To implement the commitments under the above FTAs, in the period of 2015-2018, the Ministry of Finance issued circulars implementing the roadmap for tariff reduction in the signed FTAs. We are currently negotiating the Vietnam - EU agreement, the Vietnam - 4 Nordic countries agreement (EFTA), the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP).

PV:How do you assess the opportunities and challenges when we join the international economy through FTAs?

Deputy Head of Department Ha Duy Tung:We all know that the requirements and commitments to integration are the levers for Vietnam to restructure its economy, contributing to economic growth. The reduction of import taxes on raw materials and input materials for production reduces the production costs of domestic enterprises, thereby making goods prices more competitive, promoting production for export. Enterprises can also choose imported goods of different origins, improving competitiveness. Consumers can use imported and domestic goods with better quality and affordable prices. The integration process will create great opportunities to attract foreign investment capital, shifting investment flows into Vietnam. Thereby, many enterprises have access to preferential investment capital, thereby accelerating reform, self-reorganization, proactively shifting investment, improving business skills, transferring technology to increase competitiveness, creating new business thinking and promoting economic restructuring and improving production and business efficiency.

Not only that, when integrating, policy-making will gradually be improved, gradually bringing Vietnam's policy system closer to international practices, helping the Vietnamese economy to have clear changes. Obviously, in terms of import and export turnover, even for markets that have signed FTAs ​​with Vietnam such as Japan, Australia, New Zealand, there are still many opportunities for Vietnam's exports. These are markets where Vietnam mainly has a trade surplus and has not yet reached the stage where both Vietnam and its partners have deeply cut import taxes.

In addition to the above-mentioned opportunities, the process of deep economic integration is also the cause of revealing more clearly the inherent weaknesses of our economy, most clearly shown in the decline in growth quality. Economic growth continues to be broad-based, relying mainly on increasing the amount of investment capital, exploitation and export of resources. Meanwhile, the efficiency of using resources such as capital, natural resources, land, etc. and labor productivity remains low.

For domestic enterprises, due to the low competitiveness of Vietnamese enterprises, the private sector has developed, but its scale is still small and has many limitations in terms of financial capacity and technology; not to mention the problem that domestic manufacturing industries have to face with the competitiveness of imported goods in terms of quality and price. In addition, there are other internal challenges such as the land, labor, capital, and technology markets that have not developed synchronously. Supporting industries have not developed, and imports are still heavily dependent on one or a few markets. Up to now, some of Vietnam's strong industries such as electronics, textiles, footwear, automobile and motorbike assembly in Vietnam have not had a truly developed supporting industry. Ineffective industry development planning combined with weak competitiveness has led to a weak supporting industry.

Not only is it a challenge for businesses, but even state management agencies also face obvious challenges such as the need to perfect and supplement mechanisms and policies on the development of domestic industries and livestock, while competitiveness is still weak; Propaganda and dissemination of integration are still limited, many businesses do not understand the content of the agreements, and are not well prepared for the reduction steps.

PV:Can you tell us, from the perspective of the Ministry of Finance, what are the fundamental and systematic solutions for Vietnamese enterprises and the development of the Vietnamese economy?

Deputy Head of Department Ha Duy Tung:In recent times, in order to support enterprises to participate effectively in the integration process, the Ministry of Finance has actively implemented a number of solutions proposed by the Finance sector. First of all, it is to actively organize propaganda activities to raise awareness of people and enterprises about the economic integration process of Vietnam, helping enterprises to grasp and proactively adapt, proactively change, take advantage of opportunities as well as enhance competitiveness, overcome challenges created by FTAs. Promoting the reform of administrative procedures, especially tax and customs procedures to reduce costs and facilitate enterprises has always been focused on, in parallel with the implementation of adjustments to a number of appropriate domestic tax policies to facilitate enterprises. For example, reducing the corporate income tax rate from 25% to 22%, abolishing the limit on advertising and promotion spending, applying tax exemption/incentive policies for input materials serving the production of export goods... Or tax exemption/incentive policies for imported machinery and equipment to create fixed assets for processing enterprises, export production enterprises and tax exemption and tax incentives by region, area, investment sector and other tax incentives.

In the coming time, in order for enterprises and state agencies to be proactive and active in exploiting the effectiveness of integration, enterprises need to proactively and actively seek information on integration commitments, focus on finding out what tax reduction roadmaps their business products have in order to have appropriate production and business adjustment strategies, take advantage of opportunities as well as be ready for competition. It is necessary to identify one's advantages, from which one has a solid foundation for investment and improving competitiveness.

On the part of state agencies, in addition to the task of promoting propaganda to enterprises about Vietnam's commitments as well as the commitments of partners to help enterprises take advantage of opportunities and overcome challenges, reviewing the development planning of sectors and regions in accordance with the integration process is very important. Strengthening consultation with the business community to perfect the legal framework to implement commitments in a transparent and stable manner is also very necessary to be carried out in parallel with the process of promoting administrative procedure reform, gradually perfecting the business environment to attract investment both domestically and internationally.

PV:Thank you comrade!

Red River

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