New ASEAN community offers export opportunities

The ASEAN Economic Community (AEC) would bring challenges, as well as improved export opportunities for Viet Nam when the AEC is formed in 2015, according to experts.

The AEC marks the commitment of ASEAN leaders to building and promoting a single market and production base, a highly competitive economic region tempered with equitable development, and a region fully integrated into the global economy.

Power transmission cables produced by Thinh Phat Company are exported to many ASEAN countries. The ASEAN Economic Community (AEC), expected to form in 2015, is expected to improve export opportunities for Viet Nam

ASEAN includes the Association of South East Asian Nations consisting of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam.

Experts said the AEC would also create greater opportunities for exporting goods and services to the ASEAN market, though local enterprises have faced many difficulties in production and business.

Deputy Minister of Industry and Trade (MIT) Do Thang Hai said the trade turnover between Viet Nam and ASEAN has quadrupled over the past decade, climbing to nearly US$40 billion in 2013 from $9 billion in 2003. Last year, Viet Nam took in $18.47 billion from its exports to the bloc, the country's third largest importer only after the US and the EU, which was an increase of 4.4 per cent from the previous year, added Hai.

Meanwhile, export turnover was estimated at $4.7 billion in the first quarter of this year, a year-on-year increase of 6.4 per cent. However, the figure has tended to remain steady, and even slowed on occasion, as domestic enterprises have not yet taken full advantage of the close geographical distance and incentives offered by the ASEAN Trade in Goods Agreement (ATIGA).

Hai said ASEAN is one of Viet Nam's leading trade partners, accounting for 15 per cent of the country's total trade. The regional grouping made up 22.4 per cent of total foreign direct investment (FDI) capital in 2013 with Singapore, Malaysia and Thailand being key investors.

AEC and free trade agreements (FTAs) have helped promote Viet Nam's exports to ASEAN, Hai stressed.

Thanh also forecast that exports to these markets wouldcontinue to grow steadily as more than 99 per cent of tax rates of six ASEAN countries – Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – will be slashed to zero in 2015 under the ATIGA signed in Thailand in 2009.

This would provide plenty of opportunity for Viet Nam to balance its trade, Thanh added.

Hai said Viet Nam would have a significant opportunity for major export products, such as textile, garments, rice, seafood and electronic components.

When the AEC is formed, Viet Nam could sell goods to ASEAN market in ways that are similar to selling in home markets, because of simplified trade procedures and new procedures for certifying the origins of products.

However, Chu Duc Khai, general secretary of the Viet Nam Steel Association, said most local steel enterprises have had a lack of information about conducting business in the ASEAN market, the AEC and the benefits, as well as challenges, of doing business in the regional market.

They have not had the chance to study the ASEAN market, and steel companies have only exported small amounts to ASEAN countries, including the Philippines, Cambodia and Indonesia, with a total volume of 1.7 million tonnes and a value of $1.4 billion, Khai said.

Meanwhile, Tran Thanh Hai, Deputy head of the Import-Export Department under the Ministry of Industry and Trade (MoIT), was concerned because 80 per cent of local enterprises that were surveyed about the AEC have little information about interests and challenges available for them in the ASEAN market, reported Thoi bao Kinh doanh newspaper.

This lack of knowledge would also be a great challenge for local production and business enterprises when the AEC is formed in 2015, Hai said.

Additionally, local products would face competition with products made in other ASEAN countries and China.

Moreover, Vietnamese export products would compete with other countries in the ASEAN market to export raw products, because the country had mainly exported raw products and components, including farming, seafood and mineral products, as well as electric and electronic components, said Pham Thi Hong Thanh, deputy head of Asia Pacific Department under the MoIT.

Thanh pointed out challenges for Vietnamese products in the context of fierce competition, especially when barriers to protect domestic products no longer exist.

She suggested domestic businesses should accelerate exports of key products to ASEAN in the short term, such as mobile phone handsets and components, computers, electronics and components, the means of transport, tools, machinery, equipment, and steel and rice. They should also devise long-term business strategies to take full advantage of incentives post-2015.

Tran Thanh Hai, Deputy Director of the MoIT Import-Export Department, said local firms needed to raise the competitiveness of their exports through quality improvement, especially by following regulations related to originating certification (OC) of products, if they want to fully utilise the opportunities the AEC will provide. He also proposed that domestic businesses should set up their development strategies to enlarge the production scale to meet larger orders in the near future. Meanwhile, the Government had corrected policies to become more suitable with the process of integrating into the AEC.

Bui Huy Son, head of the Trade Promotion Agency, said to support local enterprises in entering further into the ASEAN market, the agency had conducted market studies and compiled market information, as well as sponsored seminars and training courses to improve exports and the competitive abilities of businesses, and organised exhibitions and trade fairs to create business bridges for local firms with ASEAN partners.

So far this year, the agency had submitted to the MoIT to receive approval for 183 projects under the national trade promotion programme, including projects on supporting local firms in trade promotion activities in ASEAN countries, Son said.They also needed to specify the contents of their strategies and measures to further boost exports to the ASEAN market, participants suggested.