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Enterprises still in dark over AEC

Released at: 10:29, 26/01/2015

Enterprises still in dark over AEC

Forum on AEC hears that Vietnamese enterprises are still largely unprepared for upcoming integration.

by Lam Anh

Local authorities, economic experts, and representatives from the business community said that 60 to 80 per cent of Vietnamese enterprises understood nothing or cared too little about the ASEAN Economic Community (AEC), at the forum “Solving the Challenges of the AEC” held by chinhphu.vn on January 22.

According to Associate Professor Nguyen Hong Son, Head of the Economics University at the Hanoi National University, who has conducted much research on the AEC, said it is expected to be established late this year and a series of policies will be implemented. His research has shown that Vietnamese enterprises are only interested in one of the four key matters: the formation of an ASEAN common market and production area. The three remaining matters - a competitive economic area, economic support, and international economic integration - have been largely ignored. He said that, out of 10, the preparation by Vietnamese enterprises lies somewhere under 5.

Mr. Le Vinh Son, Chairman of the Hanoi Young Entrepreneurs Association, spoke of the results of a survey conducted by the Association. When asked about integration, about 80 per cent of enterprises said they were “indifferent to or don’t care about integration”, while only 20 per cent, mostly large-sized enterprises, cared about integration. “We recognized that Vietnamese enterprises lack knowledge about integration,” he said. “Most are inactive and have no idea about what awaits them as integration approaches. I am concerned that when the AEC commitments are implemented, enterprises in ASEAN and ASEAN+, which are more dynamic and competitive, will hurt Vietnamese enterprises, especially small and medium-sized enterprises.”

Deputy Minister of Industry and Trade Nguyen Cam Tu said that it is very difficult for Vietnamese enterprises to compete fairly with foreign counterparts because they are starting from a low base. They need support, including quick improvements in policies and support in integration. He emphasized that ASEAN enterprises, including those from Thailand, Singapore, Malaysia, Indonesia, the Philippines and Brunei, have worked within a market economy for many years, whereas Vietnamese enterprises only have experienced a few years in a real market economy. “Therefore, perhaps only the large enterprises are strong enough to be competitive,” he said.

According to Associate Professor Son, Vietnam is one of four countries receiving preferences in the roadmap for cutting taxes and opening up markets. Thailand, Malaysia and Indonesia have cut taxes on many goods and opened up their markets since 2010. Vietnam has cut taxes on some goods items in the last several years but a number of sensitive goods are still protected. Vietnam is now obliged to fully integrate from the end of this year to 2018. He also said that the production of consumer goods and the retail sector will suffer the most when the AEC is established because they tend to come first in market penetration by overseas players. Mr. Son from the Hanoi Young Entrepreneurs Association added that Vietnamese retailers are experiencing major pressure from consumer goods from Thailand, Indonesia and Malaysia. In his view, retailers from Thailand and Indonesia have substantial retail channels and consumer goods producers and are well placed to penetrate into Vietnam.

However, Deputy Minister Tu said that Vietnam is not overly pessimistic about the country’s consumer goods production industry. He said that Chinese plastic consumer goods sold in large numbers in Vietnam ten years ago but local companies then began to compete in both price and quality. “Regarding competitive capacity, many Vietnamese consumer products, including dairy products from Vinamilk, not only control the local market but are competitive beyond Southeast Asia,” he said. “Therefore, despite the difficulties, challenges and pessimistic outlook, there are many positives and opportunities lying ahead after the economy is opened up.”

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