The signing of free trade agreements (FTA) has helped Vietnam’s economy cushion the negative impacts of its international integration, instead of maximizing benefits, so there should not be excessive optimism, an expert said at a conference in HCMC on February 27.
Tran Toan Thang, deputy director of the Business Environment and Competitiveness Department of Central Institute for Economic Management (CIEM), said Vietnam has inked 15 FTAs so far while its neighboring countries such as Indonesia, Malaysia, Thailand, and Singapore have signed 17, 21, 21 and 32 FTAs respectively.
The free trade agreement between Vietnam and the European Union (EVFTA) may not bring as huge benefits to Vietnamese enterprises as expected.
He explained a majority of Vietnamese goods to the European market are essential consumer items. If tariffs of such products were reduced, their selling prices could be lowered but this would not have strong effects on demand.
This is a difference between essential and luxurious goods. Even if the agreement takes effect next year, Vietnam’s total shipments to the EU might not skyrocket, he reasoned.
The prerequisite for Vietnam’s products to the EU is that they must meet the market’s technical requirements.
He analyzed these enterprises are inclined to have short-term investments rather than long-term ones. Thus the improvement of competitiveness is more challenging.
Once the agreement comes into force, some sectors would suffer negative growth. This means a certain number of workers would be made redundant. However, this factor has not been taken into careful consideration by enterprises to have contingency plans in a timely manner.
-Compiled by VietnamCredit-