Vietnam becomes a 'lowland' for Southeast Asian goods consumption

Thailand becoming the champion in exporting cars to Vietnam, even though import tax will not be reduced to 0% until 2018, is just one of many examples showing the risk that Vietnamese goods may lose at home when joining the ASEAN Economic Community.

The above risk was emphasized by Deputy Prime Minister Vuong Dinh Hue when working with the Inter-sectoral Steering Committee for International Economic Integration this weekend. Specifically in the automobile sector, the tax has not been reduced to 0% according to the commitment to join the ASEAN Economic Community (AEC), but Thailand has become the largest exporter to Vietnam.

Previously, data updated to July 2016 from the General Statistics Office showed that the total import-export turnover between Vietnam and ASEAN countries was 22.8 billion USD, down 8.3% compared to the same period last year.Exports to other countries reached nearly 9.6 billion USD, down 12.3%, while imports from ASEAN to Vietnam were more than 13.2 billion USD, down 5.1%.

Deputy Prime Minister Vuong Dinh Hue is worried about the weakness of Vietnamese businesses and goods in the AEC.

“AEC is an agreement on a unified market, but after only 7 months of joining, Vietnam is becoming a low-end consumer area in the region. Thailand has already overtaken China, and South Korea is the largest automobile exporter to Vietnam. India is a potential competitor,” said Deputy Prime Minister Vuong Dinh Hue.

Data from the management agency shows that among Vietnam's 3.6 billion USD intra-ASEAN trade deficit, the largest trade deficit is fromMalaysia, Singapore and Thailand. Vietnam only has a surplus of a few tens of millions of USD with Laos, Cambodia and Myanmar.

The Deputy Prime Minister asked a member of the Steering Committee for International Economic Integration: “Will this risk continue? What should Vietnam do to cope with this situation so as not to become a low-lying area for goods from ASEAN countries?” He alsoRequire Steering Committee members to focus on research, risk analysis and response plans to avoid prolonged risks.

Thai goods are flooding the Vietnamese market.

Previously, assessing the impact of free trade agreements (FTAs), Deputy Minister of Industry and Trade - Tran Quoc Khanh said that ASEAN or ASEAN+ markets do not bring clear benefits to Vietnam because most partners have overlapping economic structures and compete with Vietnam.

Meanwhile, although many trade agreements have been signed, the ability of domestic enterprises to seize opportunities is unclear. For a long time, enterprises have been accustomed to the business practice of "sitting at home waiting for partners to come and buy goods", not paying attention to tax cuts and incentives in foreign markets because they leave it to traders to act as intermediaries. On the contrary, while domestic enterprises are still "blind" to the opportunities opened up by FTAs, FDI enterprises have taken full advantage of them.

“Domestic businesses are still used to relying on “relationships to get contracts” so they rarely go to foreign markets to find partners. Therefore, the ability to grasp and take advantage of opportunities brought by trade agreements is not clear,” the head of the Government’s negotiation delegation on international trade frankly said.

The Deputy Minister of Industry and Trade also said that the Government needs to encourage and create conditions for strong, well-organized enterprises to invest abroad, such as Vinamilk, TH True Milk, Minh Phu, Vinh Hoan, etc.

Adding his opinion, Mr. Nguyen The Phuong - Deputy Minister of Planning and Investment said that we must focus on the competitiveness of each product and each industry so that Vietnam can be able to participate in the integration game. "If we do not improve the competitiveness of our products, we will lose right in the ASEAN playground, not to mention when the Trans-Pacific Partnership Agreement - TPP comes into effect," Deputy Minister Phuong expressed.

In addition, according to Mr. Tran Quoc Khanh, in the future, if there are negotiations for more free trade agreements, national and ethnic interests must be the highest goal for negotiations, and the principle is that Vietnam needs to be "treated" specially in implementing the agreement because it is an underdeveloped country; choosing markets with economic structures that complement ours.

In fact, some signed markets such as Japan and South Korea have economic structures that complement Vietnam's, contributing to rebalancing or narrowing the trade balance with these countries.

According to VNE