Opportunities from FTA and TPP

Source: Pano feed


In 2015, Vietnam will complete procedures for concluding the Free Trade Agreement (FTA) with the European Union (EU) and the Trans-Pacific Partnership (TPP) Agreement. By signing these documents, Vietnam will enjoy preferential tariffs for its exports to signing countries. According to experts, this is both a challenge and an opportunity for Vietnam exports.Opportunity to raise export value

When FTA and TPP are signed, many of Vietnam’s exports to such markets as the EU, the US and Japan will be subjected to much lower tariffs. Particularly, agricultural, forest, seafood and fashion items will enjoy much greater preferences.

Dr Nguyen Trong Thua, Director of Agro-Forestry Processing and Salt Industry Department under the Ministry of Agriculture and Rural Development, said that Vietnam’s agricultural, forest and aquatic products have been exported to more than 160 countries and territories in the world. When FTAs are signed, those products, including input coffee, input tea, cocoa powder, starch, vegetable, fruit and seafood, will be exported tax free to Russia, Belarus, Kazakhstan and EU nations. This will be a great opportunity for more products of Vietnam to penetrate these markets, thus giving a strong boost to domestic production.

The Ministry of Agriculture and Rural Development said Vietnam earned a record of over US$30.8 billion from export of agriculture-based products in 2014. Last year, ten products brought home over US$1 billion each, including coffee, rubber, cashew, woodwork, fruit-vegetable, cassava, shrimp and pangasius.

In recent years, Vietnam’s agriculture has made long strides in production thanks to the adoption of new crops with higher productivity and quality. But, at a recent conference held by the Ministry of Agriculture and Rural Development in collaboration with the Ministry of Industry and Trade, Mr Reindert Dekker, an expert from the Centre for the Promotion of Imports from Developing Countries (CBI) – the agency of the Ministry of Foreign Affairs of the Netherlands, said Vietnam’s agriculture still has a lot of weaknesses and shortcomings. The worst shortcoming is Vietnam lacks brand names and raw products still make up the vast majority of exports. This makes its export value low. For that reason, Vietnamese companies need to team up to build a strong brand name.

The Ministry of Agriculture and Rural Development said exporters are investing to build more than 6,000 modern processing facilities across the country, including more than 2,000 processors of agricultural products, nearly 570 processors of seafood products and 3,000 processors of timber. Existing facilities also meet quality requirements from demanding markets like the US, Japan and the EU.

Garment – textile magnetises investment capital

Garment-textile and fashion industries will enjoy the most benefits when Vietnam signs TPP and FTAs. Thus, many domestic and companies have poured investment capital into these fields. According to the Vietnam Textile and Apparel Association (Vitas), the current average import tariff of 17.5 percent on garments and textiles will be slashed to zero.

Mr Tran Cong Khanh, Director of Administrative Office of the Ho Chi Minh Export Processing and Industrial Zones Authority (Hepza), said, investors are increasing their investment capital into industrial zones and export processing zones to catch the opportunities of TPP and FTA. The city government has also directed Hepza to focus priority support for garment-textile and fashion projects.

The Ho Chi Minh City People’s Committee has granted investment certificates for two garment and textile projects since early 2015. The first one is the fashion design and apparel production facility invested by Worldon Vietnam Co., Ltd of the United Kingdom-based Gain Lucky Corporation. The project, located in Dong Nam Industrial Park, Cu Chi district, has its capital increased from US$140 million to US$300 million. The other is the US$61-million apparel production facility invested by Nobland Vietnam Co., Ltd of South Korea-based Nobland International Inc. in Tan Thoi Hiep District Industrial Park, District 12.

Vietnam National Textile and Garment Group (Vinatex) is building and expanding 51 fashion projects, including 14 yarn production projects, 15 dyeing projects and 15 sewing projects. The total investment for yarn production and dyeing is more than VND2,940 billion and more than VND2,520 billion, respectively. The group’s fabric output is expected to rise 40 percent in 2016 to 100 million square metres from the current level and knitwear cloth output will be also doubled to 40,000 tonnes a year. When its investment projects go into operation, Vinatex will meet 50 percent of its fabric demand, equivalent to 300 million square metres.

Dinh Thanh

Đăng ký: VietNam News