CPTPP takes effects in Vietnam: opportunities and challenges

18-01-2019

After the withdrawal of the U.S. from former original TPP, the CPTPP was agreed and signed by 11 members countries (namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) in March 2018. The agreement is expected to boost the economic growth and living condition; reduce the poverty; create more jobs among members countries. Besides, the CPTPP will cut down 98 percent of current trade tariffs between member countries; especially for agricultural and industrial products, enhance investment regulations and intellectual property protection.

Once the trade agreement is officially forced, it can create a mass free trade area whose market population is 500 million people and accounts for 13.5 percent of global GDP at around $10 trillion. Besides, the trade pact will increase Vietnam’s GDP and exports by 1.32 percent and 4.04 percent respectively by 2035, while creating jobs for 20,000-26,000 people.

As expected, Vietnam can benefit from trading; especially in exports and the elimination of textiles and footwear tariffs from major CPTPP members. Under CPTPP, Vietnam can have opportunities to develop in many fields including food and beverage, tobacco, textiles, chemicals, plastics, leather, transport equipment and services. Additionally, the reforms will help Vietnam enhance the global economic integration into global production chains; access to new export markets, technology and investment opportunities. As a result, poverty, unemployment and standard of living will be improved on a sustainable progress.

Beside of direct benefits from the reforms, the CPTPP will create a fair & competitive trading playground for partners; which ensure transparency, anti-corruption measures and less dependent on access to bureaucratic decision-makers. This transformation reduces the costs and risks of doing business in Vietnam; and provides opportunities for domestic companies to reach new markets and expand their business. Smaller firms can be more active in the play field because of the regional trade is more accessible.

In addition to the current advantages including sustainable economic growth, stable political institutions, low labour cost,; investors continually have a glance on Vietnam after the CPTPP. The trade pact stimulates the trend of shifting manufacturing to Vietnam especially after the China – U.S. trade war. Three businesses will be strongly benefited include industrial properties and ready built factories; warehousing and e-commerce.

The withdrawal of the U.S. has lightly affected to the potential economic opportunities of Vietnam simply because the U.S. is the largest economy in the former TPP and one of Vietnam’s key trading partners. With the presence of the U.S., Vietnam can easily access to one of the global largest markets with different industries including garment, footwear, furniture and agricultural products. However, the CPTPP will still help Vietnam access to various number of potential markets.

Besides, it could be barriers for businesses to approach information and preferential access provisions of the trade pact because of lack of clarity in requirements, high cost of learning, and adapting to new procedure.

One of key challenges that Vietnam must face with is building the national institutional capacity needed to ensure seamlessly implementation of the deal. Recently, the Competition Laws has been reviewed and discussed to ensure that it is consistent with CPTPP commitments. However, the important point is how Vietnam can build the capacity of the Competition Authority to effectively implement the laws. It is necessary to identify what groups are negatively impacted by the trade pact and find out suitable options to amend the effects.

 

BW Industrial Development JSC

The leading for-rent industrial real estate platform in Vietnam.

With a professional and passionate management team, BW Industrial Development JSC is well positioned as a fully integrated platform to capture the robust demand for modern logistics properties. With an existing development of 200 ha across Vietnam, BWID is currently providing multiple services including:  Ready Built Factory For Rent, Logistics Warehouse For Rent & Built-to-suit Project in 08 Industrial Parks in which four locations in the North (in Hai Phong, Hai Duong & Bac Ninh) and other four locations in the South (in Binh Duong & Dong Nai).

When leasing BW Industrial’s ready built factories, BW Industrial provides transparency and supports investors to ensure cost and time efficiency for tenants. We support to facilitate speedy setup of manufacturing operations and government license applications in Vietnam. Hence, all of BW Industrial’s existing tenants always satisfy the quality of the ready built factories and value-added services that BW Industrial is providing

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