Coming into the Trans-Pacific Partnership (TPP) agreement, when opportunities and challenges are facing Vietnam's exports, which sectors should Vietnamese enterprises pay attention to? To provide answers to the questions, Vietnam Business Forum, the weekly magazine of the Vietnam Chamber of Commerce and Industry, has an interview with Nguyen Thai Duong, Deputy Director of the General Department of Vietnam Customs.
Q: Can you tell us about the customs-related content which Vietnamese businesses should pay attention to when joining the TTP?
A: Customs authorities of the TPP members always try their best to perform regulations in line with each other and in accordance with standards from the World Customs Organization. Business should take note of some information:
- Express Shipment: One of the priorities written in Customs Chapter is procedures for express shipments, which call for quick clearance time, specific procedures to create favourable conditions for this type of shipment because of its characteristic requiring to go through quickly.
- Pre-specify policy: The TPP appreciates the pre-specify rules, considering it one of the useful tools to facilitate trade by reducing clearance time and preventing trouble during customs procedures, such as problems relating to determining the dutiable value, number and origin of the shipment. Under this policy, if businesses make request beforehand, customs authorities shall grant pre-specify documents on HS codes, goods value origin prior to shipments’ arrival.
- Mechanism of origin certification: The TPP uses self-certification mechanism in the procedure of inspection and certification shipments’ origin, which allows enterprises to declare the origin of their own shipments. This mechanism is completely different to current customs management, which requires businesses to submit to the customs authorities a C/O certificate of origin issued by the appropriate authority of the exporting country in order to enjoy preferential tariffs. Therefore, businesses must adhere to the TPP regulations on origin and submitting documents to avoid possible problems while working under the agreement.
- For textile and apparel: As listed as sensitive items, monitoring mechanism for this kind of shipment is quite strict. Customs authorities of the TPP countries build and maintain domestic monitoring programmes to oversee the whole process of import, production, export and transit (including transmission) garments. They also maintain a programme to ensure that governmental agencies can check on textiles shipments at any time, whether it is already imported, awaiting export or in transit through a member country, to make sure that goods were properly labelled and documents accurate.
Q: One of the problems when Vietnam comes into the “playground” of the TPP is the reduction or total elimination of tariff barriers. How will this affect the customs revenues, especially in this difficult time?
A: Participating in the TPP, Vietnam has the opportunity to promote institutional reform, improving business environment, enhancing competitiveness, further involving in global value chains, facilitating socio-economic development.
The reduction of tariff barriers will create favourable conditions for exports of Vietnam as a member of TPP and also for goods from the TPP members to “land” in Vietnam with preferential tax rates.
As for budget revenues from commodity exports, in recent years, this revenue has accounted for 7-10 percent of total customs revenues. So joining the TPP poses great challenges for Vietnam, especially in the context of current difficult in making revenue.
Export goods of high revenues are mineral oil, coal, and ore of many types. For the immediate future, maintaining tax rates in export is one effective measure to control the export of discouraged items: natural resources and raw materials; to encourage deep processing, to protect domestic production and increase revenues for the state budget. Besides, it’s necessary to have alternative taxes, to restrict the export of discouraged goods, to raise import taxes on some key imported commodities of Vietnam.
For revenue from imported goods, reducing tax revenue from imports after joining the TPP is unavoidable. The tariff reduction can increase the flow of imports into Vietnam, with more competitive prices. Budget revenues then will shift to domestic taxes. In addition, post-clearance inspection and anti-smuggling investigations need to be strengthened to prevent revenue loss to the state budget.
Q: How do Vietnamese enterprises, especially exporters, need to prepare to seize the opportunities created by the TPP?
A: V ietnam has export advantages in textiles and garments, footwear and agricultural products. However to enjoy the preferential tax, exporters need to pay attention to the rigorous standards of origin.
One of the basic principles in order to enjoy preferential tariffs when exporting textiles to the TPP countries is raw materials used for the products must be manufactured in a TPP country. The strict origin inspection therefore is inevitable because it is closely related to tax preferences. In addition, with the mechanism of self-certification of origin, businesses should also be prepared.
Q: In your opinion, for the time ahead, what should the customs service do to promote administrative reform to get ready for this new playground?
A: Administrative reform is the top target of Vietnam customs authorities in order to accelerate the modernisation of customs service, get Vietnam’s economy ready for the new playground, of which one of the most significant is the amending of Customs Act 2005.
Amendment for Customs Law was submitted to the National Assembly during the sixth session (October and November 2013) under Governmental Document 342/TTr-CP dated September 12, 2013. The proposed amendments aim to create favourable conditions for businesses to save time and money by simplifying customs clearance procedures, for example adding the rule of fully applying risk management principles in customs regulations, amending customs agent procedures to support agents’ development, smoothing customs procedures for businesses; adjusting regulations on customs locations to facilitate the document process in the model of centralised process at the department and general department level; and amending and supplementing regulations on customs procedures towards shorter clearance time.-VNA
Q: Can you tell us about the customs-related content which Vietnamese businesses should pay attention to when joining the TTP?
A: Customs authorities of the TPP members always try their best to perform regulations in line with each other and in accordance with standards from the World Customs Organization. Business should take note of some information:
- Express Shipment: One of the priorities written in Customs Chapter is procedures for express shipments, which call for quick clearance time, specific procedures to create favourable conditions for this type of shipment because of its characteristic requiring to go through quickly.
- Pre-specify policy: The TPP appreciates the pre-specify rules, considering it one of the useful tools to facilitate trade by reducing clearance time and preventing trouble during customs procedures, such as problems relating to determining the dutiable value, number and origin of the shipment. Under this policy, if businesses make request beforehand, customs authorities shall grant pre-specify documents on HS codes, goods value origin prior to shipments’ arrival.
- Mechanism of origin certification: The TPP uses self-certification mechanism in the procedure of inspection and certification shipments’ origin, which allows enterprises to declare the origin of their own shipments. This mechanism is completely different to current customs management, which requires businesses to submit to the customs authorities a C/O certificate of origin issued by the appropriate authority of the exporting country in order to enjoy preferential tariffs. Therefore, businesses must adhere to the TPP regulations on origin and submitting documents to avoid possible problems while working under the agreement.
- For textile and apparel: As listed as sensitive items, monitoring mechanism for this kind of shipment is quite strict. Customs authorities of the TPP countries build and maintain domestic monitoring programmes to oversee the whole process of import, production, export and transit (including transmission) garments. They also maintain a programme to ensure that governmental agencies can check on textiles shipments at any time, whether it is already imported, awaiting export or in transit through a member country, to make sure that goods were properly labelled and documents accurate.
Q: One of the problems when Vietnam comes into the “playground” of the TPP is the reduction or total elimination of tariff barriers. How will this affect the customs revenues, especially in this difficult time?
A: Participating in the TPP, Vietnam has the opportunity to promote institutional reform, improving business environment, enhancing competitiveness, further involving in global value chains, facilitating socio-economic development.
The reduction of tariff barriers will create favourable conditions for exports of Vietnam as a member of TPP and also for goods from the TPP members to “land” in Vietnam with preferential tax rates.
As for budget revenues from commodity exports, in recent years, this revenue has accounted for 7-10 percent of total customs revenues. So joining the TPP poses great challenges for Vietnam, especially in the context of current difficult in making revenue.
Export goods of high revenues are mineral oil, coal, and ore of many types. For the immediate future, maintaining tax rates in export is one effective measure to control the export of discouraged items: natural resources and raw materials; to encourage deep processing, to protect domestic production and increase revenues for the state budget. Besides, it’s necessary to have alternative taxes, to restrict the export of discouraged goods, to raise import taxes on some key imported commodities of Vietnam.
For revenue from imported goods, reducing tax revenue from imports after joining the TPP is unavoidable. The tariff reduction can increase the flow of imports into Vietnam, with more competitive prices. Budget revenues then will shift to domestic taxes. In addition, post-clearance inspection and anti-smuggling investigations need to be strengthened to prevent revenue loss to the state budget.
Q: How do Vietnamese enterprises, especially exporters, need to prepare to seize the opportunities created by the TPP?
A: V ietnam has export advantages in textiles and garments, footwear and agricultural products. However to enjoy the preferential tax, exporters need to pay attention to the rigorous standards of origin.
One of the basic principles in order to enjoy preferential tariffs when exporting textiles to the TPP countries is raw materials used for the products must be manufactured in a TPP country. The strict origin inspection therefore is inevitable because it is closely related to tax preferences. In addition, with the mechanism of self-certification of origin, businesses should also be prepared.
Q: In your opinion, for the time ahead, what should the customs service do to promote administrative reform to get ready for this new playground?
A: Administrative reform is the top target of Vietnam customs authorities in order to accelerate the modernisation of customs service, get Vietnam’s economy ready for the new playground, of which one of the most significant is the amending of Customs Act 2005.
Amendment for Customs Law was submitted to the National Assembly during the sixth session (October and November 2013) under Governmental Document 342/TTr-CP dated September 12, 2013. The proposed amendments aim to create favourable conditions for businesses to save time and money by simplifying customs clearance procedures, for example adding the rule of fully applying risk management principles in customs regulations, amending customs agent procedures to support agents’ development, smoothing customs procedures for businesses; adjusting regulations on customs locations to facilitate the document process in the model of centralised process at the department and general department level; and amending and supplementing regulations on customs procedures towards shorter clearance time.-VNA
