08:38 | 09/08/2017 Vietnam - Asean
(VEN) - The Association of South East Asian Nations (ASEAN) has undergone 50 years of development and reaped considerable economic and social successes. Today, ASEAN is one of the world’s most successful multilateral organizations, with Vietnam playing an important role in boosting its development.
Growing middle class
In the half century since its founding, ASEAN has faced challenges stemming from the global and regional transformation, and its achievements have made it stronger. Economic growth has contributed greatly to increasing revenues and prosperity for member states.
During the past three decades, ASEAN member economies have expanded in large part due to exports, resulting in major demographic changes, especially in a growing regional middle class.
Addressing a recent conference themed “ASEAN at 50: ASEAN Economic Community and the opportunities for Vietnamese businesses” in Hanoi, ASEAN Secretary General Le Luong Minh said member states had become attractive to foreign investors. In early 2016, ASEAN became the world’s seventh largest economy. Just one year later, in early 2017, the bloc moved up one place to the sixth position, and is forecast to become the world’s fifth largest economy by 2020.
The establishment of the ASEAN Economic Community (AEC) marked a new step forward in regional integration, aiming to build a connective, competitive, dynamic and creative ASEAN economic space. According to Vu Quang Minh, assistant to the Vietnamese minister of foreign affairs, since its establishment more than a year ago, AEC has brought into play its role in creating a good business environment and opportunities for businesses to participate more deeply in the ASEAN market.
Vietnam’s role in ASEAN
Vu Quang Minh said Vietnam joined ASEAN’s economic integration process at a very early stage of the Free Trade Area (AFTA). In the 22 years that have ensued, the Vietnamese economy has gradually tightened its linkage with the ASEAN economy. Vietnam has boosted trade with other member economies and become more deeply involved in global value chains thanks to its participation in the Trans-Pacific Partnership (TPP) agreement and negotiations on the Regional Comprehensive Economic Partnership (RCEP), and the signing of FTAs with the EU and the Eurasian Economic Union. ASEAN has become Vietnam’s second largest trading partner. Vietnam’s trade with ASEAN has grown an average 14.5 percent annually over the past decade, from about US$19 billion in 2006 to US$41.36 billion in 2016. ASEAN is the third largest export market and also the third largest supplier of goods for Vietnamese businesses.
ASEAN is also an important source of foreign direct investment (FDI) in Vietnam, with total registered capital of about US$64 billion. It offers a gateway through which multinational corporations headquartered in ASEAN states can invest in Vietnam. ASEAN’s investment projects in Vietnam are mostly concentrated in manufacturing and processing industries. ASEAN has thus been an important driving force of Vietnam’s steady economic growth in recent times.
Nonetheless, Secretary General Le Luong Minh said ASEAN has to overcome numerous difficulties, such as the development gap between member states and differences in terms of law and institution, as well as in the awareness of businesses and people. Many problems have also arisen in the regional integration process, such as differences in development goals, population ageing, middle-income trap, inequality, and nontraditional threats.
According to Deputy Minister of Foreign Affairs Nguyen Quoc Dung, a major task of the governments and business communities of ASEAN member countries is to materialize the AEC at a new level of its development. In addition, the governments need to narrow the development gap among member states and between ASEAN and the rest of the world, boost economic integration to enhance the bloc’s competitiveness, and increase infrastructure and people-to-people connectivity. Deputy Minister Dung emphasized that to take advantage of the AEC, businesses need to enter and maintain their firm position in the ASEAN market. The business community needs to participate in the setting of rules and play a greater role in ASEAN and AEC for its own benefit.
Many Vietnamese companies lag behind those in advanced ASEAN member countries in terms of capability, experience, and especially foreign language skills. This creates major hindrances to Vietnam’s participation in the AEC. However, great efforts to improve their capabilities and competitiveness will enable domestic businesses to turn challenges into opportunities in the AEC playing field.
“The Vietnamese government is committed to further boosting economic reforms. The spirit of innovation is reflected in its efforts to build an honest, constructive and responsive government. The government pledged to create a favorable environment for domestic businesses to grow and integrate into the world. The government is willing to accompany businesses to help them overcome difficulties. However, only businesses which are aware of and capable of taking advantage of opportunities will achieve success,” Deputy Dung said.