The establishment of the ASEAN Economic Community in late 2015 will create a larger market for Vietnamese businesses to take advantage of, as well as presenting a range of other opportunities and challenges, a Ministry of Industry and Trade official said.

The AEC will create a single market, allowing enterprises to benefit from free trade agreements (FTAs) and the abolition of taxes,
Tran Thanh Hai, deputy head of the ministry’s Import-Export department, said.

Vietnamese firms will be able to sell their products in other ASEAN countries almost as easily as in the domestic market, he said, adding that less cumbersome procedures for import-export and certification of origin (C/O) will facilitate the flow of Vietnamese goods into the AEC market.

However, Hai noted that local businesses will face fiercer competition from goods, services and investments from other AEC member countries.

Higher standards for exports will pose a big challenge for Vietnamese enterprises, particularly in the context of an increase in trade protection measures, he added.

To take full advantage of the FTAs, businesses should understand and use risk prevention tools, such as term-based and derivative markets and insurance policies; guarantee technical standards, particularly for developed markets; expand export markets; and join production networks and chains, Deputy Director of the Central Institute for Economic Research and Management Vo Chi Thanh said.

Businesses should shift from price-based competition to competition based on commodity standards and patterns, he said, adding that the Government should take measures to help businesses improve their competitiveness.

Hai agreed with Thanh and recommended that Vietnamese companies continuously strive to improve the quality and competitiveness of their export goods, especially with regard to C/O regulations, if they want to effectively benefit from the AEC.

Businesses should keep up-to-date with the information and commitments published by the AEC and the Regional Comprehensive Economic Partnership (RCEP) Agreement to develop reasonable business strategies and set enterprises on the right path for the future.

Once the AEC is formed, the removal of tariffs will act as an immediate stimulus for export, investment and economic growth in the member countries, Deputy Minister of Industry and Trade Nguyen Cam Tu said.

However, C/O regulations can act as an obstacle for businesses since they must prove the origin of their products to benefit from preferences, he said, noting that this will force enterprises to make suitable changes and adapt to roadmaps accordingly.

Tu also said the AEC should continue its consolidation beyond 2015 to become the centre of production networks and supply chains throughout the region and the world to further boost ASEAN’s economic growth and integration.

Once the AEC is operational, Vietnam needs to undertake maximum efforts to improve its position, with top priority given to infrastructure development and communications, which are considered key factors for sustainable development, he said.

In recent years, ASEAN has always been one of the leading export markets for Vietnam . The country’s trade with the association saw a drastic change to exports and imports in 2013, totalling 18.4 billion USD and 21.3 billion USD, respectively, in comparison with 13.5 billion USD and 20.9 billion USD, respectively, in 2011.

In the first six months of 2014, two-way trade between Vietnam and ASEAN exceeded 20 billion USD, up 3.6 percent year-on-year.

It is forecast that Vietnam’s exports to ASEAN countries will continue to grow thanks to a zero tax rate imposed on 99 percent of tax line under the ASEAN Trade in Goods Agreement (ATIGA).-VNA