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Investment spurred by TPP

Released at: 12:04, 06/10/2015 Trans-Pacific Partnership

Investment spurred by TPP

Mr. Warrick Cleine, Chairman and CEO of KPMG in Vietnam and Cambodia, believes the TPP will trigger even greater interest in Vietnam among foreign investors.

by Linh San

The conclusion of the TPP negotiations in the US this week is fantastic news for Vietnam.

While we have already seen an increase in manufacturing related FDI over the past few years, some in anticipation of this agreement, we expect to see a further surge in interest in the coming years. This will not only be from TPP participant countries, such as the US and Japan, but from any country whose manufacturers are seeking easier and more secure access to some of the world’s most exciting consumer markets.

Importantly, the TPP will also bring greater focus from Vietnam’s export partners on the defined country of origin of goods exported from Vietnam. We expect that the TPP will provide greater incentive for business investment in vertical manufacturing; that is, investment in materials and component manufacture. This will increase the amount of value added activity in Vietnam’s manufacturing sector.

The TPP agreements also require the participant countries make substantial commitments in areas such as State procurement, labor laws, intellectual property rights, and international dispute resolution. For Vietnam, this is likely to substantially influence the government’s legislative and reform agenda for several years to come. From a business perspective, the commitment that the Vietnamese Government has made in these areas provides great comfort in the direction in which Vietnam is headed.

Of course, the TPP is a multilateral agreement, which means that while markets will open to Vietnam there are corresponding commitments from the Vietnamese side. We expect to see the business sector from the various TPP countries look to Vietnam to enjoy what will be enhanced market access and investment opportunities.

Vietnam’s young and growing population provides an attractive consumer market for these multi-national companies and consumers will benefit from greater variety and dynamism from the business sector. For Vietnamese businesses, however, the need to be internationally competitive has never been greater.

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