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Opportunities for Vietnam with RCEP in effect

Opportunities for Vietnam with RCEP in effect

Tuesday 04, 01 2022
The Regional Comprehensive Economic Partnership (RCEP), implemented from January 1, 2022, is expected to be one of the important factors in helping Vietnam recover its economy post-COVID-19, creating many opportunities for the country.

What will RCEP provide?

The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement that includes ten member countries of the Association of Southeast Asian Nations (ASEAN), namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Nam and ASEAN's five partners include China, Japan, Australia, New Zealand, and South Korea. RCEP is a region that accounts for about 26.2 trillion USD in global GDP, 30% of the world's population, and 30% of global trade.

The Regional Comprehensive Economic Partnership

The RCEP agreement automatically comes into force 60 days after the minimum number of IOR/A is reached, ratified by six ASEAN countries and at least three non-ASEAN countries. By the end of December 2, 2021, there had been 11 countries ratifying RCEP: Australia, Brunei, Cambodia, China, Japan, Laos, New Zealand, Singapore, South Korea, Thailand, and Vietnam.

RCEP will move towards eliminating at least 92% of import tariff lines between the signatory countries within 20 years. In addition, businesses may benefit from additional preferential market access for specific products.

Besides, the agreement cuts costs and time for businesses to export goods to any signatory country without having to meet the separate requirements of each country.

The agreement also reduces non-tariff barriers to trade between member states, such as customs and quarantine procedures and technical standards.

With optimized trade rules between the signatories, streamlined procedures, and wider opening up in the services - trade and investment sectors, RECP will bring specific benefits to member countries.

RCEP will help create a stable and long-term export market, contributing to promoting the implementation of Vietnam's policy of building an export-oriented manufacturing base.

RCEP

In addition, the RCEP agreement creates a legally binding framework that contributes to a fair-trade environment in the region and will be a driving force in promoting trade, contributing to post-pandemic economic growth and recovery.

Opportunities for Vietnam

RCEP coming into effect will open up opportunities for Vietnamese companies to boost export, participate in new value chains in the region, and enhance FDI attraction. With the RCEP agreement, Vietnam and other ASEAN countries stand before a chance to become an appealing foreign investment destination.

Vietnam is considered a safe and attractive investment destination. Vietnam’s chances to attract investment from RCEP member countries are huge, especially with its effort to build outstanding mechanisms and policies to catch up with the shifting investment capital.

Mr. Luong Hoang Thai, Director General of the Multilateral Trade Policy Department (Ministry of Industry and Trade), said that the impact on attracting FDI depends on the movement of each country, such as the policy of attracting international investment, as well as policies for each specific sector. That is a very important basis for investors to consider and decide where to invest.

In addition, the implementation of RCEP also creates a binding legal framework in the region on trade policy, investment, intellectual property, e-commerce, etc., creating a level playing field in the region. Thanks to the harmonization of rules of origin within the RCEP bloc, Vietnam's exports can increase the ability to meet conditions for enjoying preferential tariffs, thereby increasing exports in the region, especially in markets like Japan, Korea, Australia, New Zealand, etc.

RCEP

Aside from the advantages, RCEP can bring competitive pressures on Vietnamese goods and services, especially in the context that Vietnamese businesses are still heavily dependent on raw materials. imported from outside.

Specifically, commitments in RCEP will also reduce tariffs of many countries in the bloc on Chinese goods. Vietnamese businesses will be forced to compete domestically with a series of new, lower-priced goods from China. Some industries will be affected by this tariff reduction. In particular, the world economy as well as many countries in the region are being affected by the COVID-19 pandemic. Companies in Vietnam will have to be proactive to overcome such challenges.

 

Compiled by VietnamCredit

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