TPP does not have a positive impact on all Vietnamese businesses.

Vietnamese enterprises still lack information about TPP, and need changes in management, connection... to increase competitiveness.

At the end of April 2014, the National Assembly's Economic Committee commented that in the near future, Vietnam could become a member of the Trans-Pacific Partnership (TPP). With a deep level of liberalization and the large total economic scale of the participating countries, TPP will be an opportunity for Vietnamese enterprises to expand market access and improve competitiveness. However, besides the opportunities as mentioned by the National Assembly's Economic Committee, many experts and managers have long commented and predicted the challenges for Vietnam when the TPP is signed. In particular, the first subjects that will directly participate in TPP are enterprises. And certainly TPP will not only bring rosy colors to the business activities of Vietnamese enterprises.

Textiles and garments are expected to benefit the most from the TPP, but are currently facing many challenges (Illustration photo/BaoBinhDuong)

Opportunities can sometimes become challenges…?

Dr. Nguyen Duc Kien, Deputy Chairman of the National Assembly's Economic Committee, said that Vietnam's participation in the TPP Agreement will open up a very large market for businesses to sell products with many different requirements and many market segments.

Also predicting the advantages that TPP brings, Associate Professor, Dr. Hoang Phuoc Hiep, Head of the Faculty of Economic Law, Hanoi University of Business and Technology, said: Signing and implementing TPP will help the Vietnamese economy reallocate resources in a more efficient way, thereby actively supporting the restructuring process and innovation of the growth model. The free trade relationship with major markets such as NAFTA (United States, Canada, Mexico) and Japan and the elimination of import taxes on agricultural products and some other products in TPP will be a real boost for Vietnam's exports. Some items such as textiles, footwear will have a great opportunity to expand their market share in TPP countries, other key export products such as seafood, wooden furniture, agricultural products will also benefit greatly.

However, Mr. Hiep also noted, “the overall impact of the TPP on the Vietnamese economy is positive, but that does not mean it is true for all industries and businesses operating in Vietnam.” And it is also important to note that opportunities can sometimes become challenges if there is a lack of appropriate macroeconomic policies and necessary internal reforms.

Analyzing international investment movements and the “China factor” in the process of international economic integration in recent times, Mr. Hiep pointed out: While many Vietnamese enterprises are not yet ready to receive the effects of signing and implementing the TPP Agreement, enterprises from China and some other economies have quickly made appropriate adjustments to their business strategies.

Citing Bloomberg news agency, Mr. Hiep said: Chinese enterprises have prepared quite early to welcome the effects of TPP. One of them is the Chinese textile group Texhong Textile. Texhong Textile has been very early in expanding its operations abroad, mainly in Vietnam. In 2012, the first phase of the yarn factory of Texhong Ngan Long Company under Texhong Textile Group was started in Quang Ninh with an investment capital of 300 million USD, bringing the number of factories of this Group in Vietnam to 4.

In addition, in November 2012, Sunrise Textile Co., Ltd. (Shengzhou), China, in a joint venture with Thien Nam Investment and Development Joint Stock Company, established Thien Nam Sunrise Textile Dyeing Joint Stock Company, with a total investment capital of 24 million USD, to build a factory producing woven fabrics with a capacity of 1 million meters/month and knitted fabrics with a capacity of 300 tons/month. Or recently, Crystal Group of Hong Kong said that it will invest 425 million USD in the Pacific Crystal textile project and 120 million USD in the Tinh Loi garment expansion project, using more than 70 hectares of land in Lai Vu Industrial Park, Hai Duong...

Meanwhile, on the side of Vietnamese textile and garment enterprises, Mr. Le Tien Truong, Permanent Deputy General Director of Vietnam Textile and Garment Group (Vinatex), said: One of the challenges is the very fast and strong investment trend of foreign investors with advantages in finance, technology and market that far exceed those of Vietnamese enterprises. When the content of the Agreement is gradually clarified, knowing the time frame for benefiting from the Agreement in Vietnam, foreign investors will immediately invest in Vietnam.

Lack of information about TPP, businesses cannot easily adapt...

Dr. Tran Dinh Thien, Director of the Vietnam Economic Institute, said: The limited competitiveness of Vietnamese enterprises internationally can have adverse impacts on industries and localities that have not met development needs, including in agriculture, industry and services. In particular, according to Mr. Thien, too sudden trade liberalization can also lead to bankruptcy and unemployment in enterprises with weak competitiveness.

Dr. Bui Thanh Nam (*):“Joining TPP, Vietnam faces challenges from stagnant business system. Vietnamese enterprises will find it difficult to turn opportunities into reality and face greater challenges if they continue to maintain an outdated management system. The ability of Vietnamese enterprises to adapt to the market economy is very poor, and the ability to proactively exploit opportunities is also very weak…” (*) -Faculty of International Studies, University of Social Sciences and Humanities, Hanoi).

In addition, one of the other difficulties for Vietnamese enterprises when joining TPP is non-trade issues. According to Mr. Thien, higher protection for intellectual property rights, high requirements in environmental protection, labor principles... can negatively impact trade activities if the commitment requirements are too high compared to Vietnam's ability to meet. This will cause Vietnamese enterprises to spend more money to implement or will neutralize the advantages gained from the partners' tariff reduction commitments.

In particular, according to Mr. Thien, because the media about TPP is too weak, many businesses currently do not have much information about TPP. Meanwhile, in fact, "businesses must fully grasp information about this agreement to be able to plan to change production and business activities, change technology...".

Therefore, among the many things that Vietnamese enterprises need to do to benefit, or at least avoid risks in the TPP market, Mr. Thien recommends that enterprises themselves need to make changes in business management, have broader understanding, and have wider connections to further enhance their competitiveness.

According to vov