Pacific Rim trade deal boosts Vietnam's economy

Pacific Rim trade deal boosts Vietnam's economy

Since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) went into effect in Vietnam in early 2019, Vietnam has become a member of one of the world’s largest trading blocs. Its 10 Asia-Pacific partners include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, and Singapore. The agreement has had positive impacts on Vietnam’s foreign trade.

Optimistic exports

In 2021, despite COVID-19, Vietnam's goods exports to CPTPP markets recorded encouraging achievements.

Japan became the largest CPTPP importer of Vietnamese goods, accounting for more than 52 percent of Vietnam’s export value to the bloc. Meanwhile, exports to Chile and Peru increased 85 and 128 percent over the previous year.

According to the Ministry of Industry and Trade, the CPTPP bloc has contributed 15 percent to the global gross domestic product (GDP) and trade. The zeroing of import duties by large markets, such as Japan and Canada, will help Vietnam increase its export value.

Vietnam’s major exports, including farm produce and seafood, electricity and electronics, became tax-freed ones as soon as the CPTPP came into effect. The Ministry of Planning and Investment has predicted Vietnam's exports would likely increase 4.04 percent by 2035. Having FTA relations with CPTPP countries will offer Vietnam opportunities to restructure its import and export markets in a more balanced direction. According to a World Bank study published in March 2018, Vietnam's exports to CPTPP countries will increase from US$54 billion to US$80 billion by 2030, accounting for 25 percent of the country’s total export value.

Potential industries

Economists say the CPTPP will mainly benefit food, beverage, tobacco, textile, chemical, plastics, leather product, transport equipment, other machinery and equipment, and some manufacturing and service sub-sectors. According to a study by the Ministry of Planning and Investment, the CPTPP will likely help light industry and labor-intensive industries grow 4-5 percent and increase exports by 8.7-9.6 percent.

Since Vietnam became a signatory to the CPTPP, the Kite Joint Stock Company, a coffee exporter to Japan, has found and received more partners and orders. The company’s CEO Vo Thi Thuy Hang said that although it is still facing many difficulties due to the pandemic, the CPTPP is having a very positive impact on the company’s exports to Japan. Hang said her company is investing in production and product quality improvement to take advantage of CPTPP opportunities and meet requirements of the market and partners.

Do Thi Thuy Huong, Member of the Vietnam Electronic Industries Association’s (VEIA) Executive Committee, said FTAs ​​such as the CPTPP are expected to help the electronics industry attract capital and technology in order to strengthen production, find more quality partners and make export breakthroughs.

According to Ngo Chung Khanh, Deputy Director of the Ministry of Industry and Trade’s Multilateral Trade Policy Department, the ministry will promote FTAs’ commitments and preferences, closely eye enterprises and connect resources for efficient CPTPP exploitation. Businesses and industries need to take the initiative in learning about the agreement if they are to take advantage of CPTPP opportunities, build appropriate production and trading development strategies, and find more global market exploitation opportunities, Khanh said.

VietNam Economic News