Forum hears of issues for local enterprises in benefiting from greater access to US under TPP.
The US market has a range of opportunities but whether Vietnamese enterprises are capable of grasping them is a pressing problem, according to experts at the Export Forum 2015, with the theme “Solutions for Penetrating the United States and Latin American Markets”, held by the Center for the Promotion of Trade and Investment of Ho Chi Minh City (ITPC) on November 17.
Opportunities are sure to be presented to Vietnamese enterprises when the TPP comes into effect and the country is already one of the top export destinations for Vietnam. According to reviews from the American Marketing Association (AMA), two-way trade between the United States and Vietnam is in great shape 20 years after relations were normalized.
Mr. Nguyen Duy Khien, Director General of the America Market Department under the Ministry of Industry and Trade, said the TPP gives Vietnamese goods a great many competitive advantages as consumer preferences in the market are diverse in terms of quality and price.
After the bilateral trade agreement was signed, tax rates imposed on Vietnamese goods exported to the US market were reduced, making them more competitive, especially garments, footwear, timber, and seafood. In some goods Vietnam now ranks among importers, such as textiles, where it was just behind China in 2014.
According to figures from Vietnam Customs, exports to the US stood at $27.6 billion in the first ten months of this year and in 2014 reached nearly $30.6 billion, up 24 per cent against 2013. When the TPP comes into being tax rates on all Vietnamese exports will be removed, which is a golden opportunity for local enterprises.
Despite this, according to Deputy Minister of Ministry of Industry and Trade Tuan Anh, downsides still exist, as domestic companies have failed to recognize the potential on offer.
Vietnam recorded a trade surplus with the US in 2014, but its total exports represented just 1.3 per cent of all imports to the US, indicating that Vietnamese goods are still to truly make a mark in the country. There are concerns, therefore, about the ability to boost Vietnam’s exports to the US market when the TPP officially comes to effect.
Mr. Herb Cochran, Executive Director of the American Chamber of Commerce (AmCham) in Ho Chi Minh City, is concerned about the tangible benefits for Vietnamese enterprises. Foreign-invested enterprises account for 70 per cent of Vietnam’s exports to the US, his research shows, and 90 per cent of exported goods used raw materials imported from other countries.
According to Mr. Tuan Anh, there is no doubt that Vietnam needs revolutionary innovation in its business community. Manufacturing enterprises in particular need to specialize and food hygiene standards must be raised to take advantage of the opportunities.
Mr. Khien said that enterprises need to work to surmount the difficulties they face in accessing the US market. Such difficulties include the degree of competition, the complexity of rules, and technical barriers to trade. Value added also needs to be increased.
The TPP will create opportunities but also pose challenges as there are certain requirements regarding intellectual property protection, which has been a long-standing issue for most Vietnamese enterprises.