Once formed in 2015, the ASEAN Economic Community (AEC) will bring both opportunities and challenges to Vietnamese exporters, according to experts.
The Association of Southeast Asian Nations (ASEAN) consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The AEC marks the commitment of the ASEAN leaders to building and promoting a single market and production base, a highly competitive economic region tempered with equitable development, and a region fully integrated into the global economy.
The AEC would create greater opportunities for Vietnam to export goods and services to the ASEAN market, though local enterprises have faced many difficulties in production and business, said Vietnam's Deputy Minister of Industry and Trade Do Thang Hai.
According to data from the ministry, trade between Vietnam and other ASEAN member countries has quadrupled over the past decade, climbing to nearly 40 billion U.S. dollars in 2013 from 9 billion U.S. dollars in 2003.
In 2013, Vietnam took in 18.47 billion U.S. dollars from its exports to the bloc, the country's third largest importer only after the United States and the EU, which represented a rise of 4. 4 percent from the previous year. In the first quarter of this year, the figure was estimated at 4.7 billion U.S. dollars, a year- on-year increase of 6.4 percent.
However, the growth tended to remain steady, or even slowed on occasion, as Vietnamese enterprises have not yet taken full advantage of the close geographical distance and incentives offered by the ASEAN Trade in Goods Agreement (ATIGA).
ASEAN member states are among Vietnam's leading trade partners, accounting for 15 percent of the country's total trade. The regional grouping made up 22.4 percent of total foreign direct investment in 2013 with Singapore, Malaysia and Thailand being key investors. The AEC and free trade agreements are expected to further promote Vietnam's exports to other ASEAN markets.
The Vietnamese Ministry of Industry and Trade forecast that exports to these markets would continue to grow steadily as more than 99 percent of tax rates of six ASEAN countries, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, will be slashed to zero in 2015 under the ATIGA signed in Thailand in 2009.
Vietnam would have a significant opportunity for major export products, such as textiles, garments, rice, seafood and electronic components.
When the AEC is formed, Vietnam could sell goods to the other ASEAN markets in ways that are similar to selling in home markets, because of simplified trade procedures and new procedures for certifying the origins of products.
However, Tran Thanh Hai, deputy head of the ministry's import- export department, expressed great concern of the fact that 80 percent of local enterprises that were surveyed about the AEC have little information about interests and challenges available for them in the ASEAN market.
He said the lack of knowledge would be a big challenge for local enterprises when the AEC is formed in 2015.
Moreover, Vietnam would compete with other countries in the ASEAN market in exporting raw products because it mainly sells raw products and components, including farming, seafood and mineral products, as well as electric and electronic components, said Pham Thi Hong Thanh, deputy head of the ministry's Asia-Pacific department.
She suggested domestic businesses should accelerate exports of key products to ASEAN in the short term, such as mobile phone handsets and components, computers, electronics and components, means of transport, tools, machinery, equipment, and steel and rice. They should also devise long-term business strategies to take full advantage of incentives post-2015.
Local firms are advised to boost competitiveness of their export products through quality improvement, especially by following regulations related to originating certification of products, if they want to fully utilize the opportunities the AEC will provide.
Besides, they should set up their development strategies to enlarge the production scale to meet bigger orders in the near future. The government would re-adjust policies to meet the needs for integration into the AEC.