09:04 | 15/08/2019 Cooperation
(VEN) - The ASEAN-Hong Kong (China) Free Trade Agreement (AHKFTA) came into effect on June 11 for Singapore, Thailand, Vietnam, Laos, and Myanmar, creating a driving force for trade and investment between ASEAN nations and Hong Kong (China). The remaining ASEAN member states will complete the ratification process later this year.
According to a Hong Kong and Shanghai Banking Corporation Limited (HSBC) report, the trade pact signed by Hong Kong (China) and the 10 ASEAN member countries will prompt reduction of tariffs and facilitate the free flow of services and investments within and across the corridor.
To implement tariff reduction commitments, the Ministry of Finance has submitted to the government a draft decree on preferential export tariffs and special preferential import tariffs under the AHKFTA for the 2019-2022 period. Accordingly, Vietnam will eliminate customs duties for 75 percent of designated products within 10 years, and reduce another 10 percent of tariff lines within 14 years. Under the trade deal, the average tax rate will be reduced from 6.97 percent to 4.98 percent.
According to the Ministry of Planning and Investment’s Foreign Investment Agency, Hong Kong (China) took the lead among the countries and territories investing in Vietnam in the first seven months of the year, with US$5.44 billion, outstripping investment from all the other major investors. The Republic of Korea ranked second with US$3.13 billion, followed by China with US$2.45 billion, Singapore with US$2.29 billion and Japan with US$2.25 billion.
Among the major Hong Kong (China) investments in the first seven months of 2019 were a US$3.85 billion BeerCo Limited acquisition of a stake in the Vietnam Beverage Co., Ltd. In addition, Goertek received an investment certificate for a US$260 million project to develop a factory manufacturing electronics, network equipment and multimedia sound systems in the northern province of Bac Ninh; and Meiko Electronics Vietnam registered to increase investment capital by US$200 million for designing, assembling and manufacturing electronic components in Hanoi.
Hong Kong (China)’s importance as a transition point for trade between mainland China and Vietnam will continue to grow at a much faster pace with the trade pact coming into force.
The AHKFTA and the ASEAN-Hong Kong, China Investment Agreement (AHKIA) were signed by ASEAN Economic
Ministers and the Secretary for Commerce and Economic Development of Hong Kong, China on November 12, 2017
in Pasay City in the Philippines. The AHKFTA is ASEAN’s sixth free trade agreement with external partners, after
China, the Republic of Korea, Japan, India, and Australia-New Zealand.