12:38 | 25/08/2015 Cooperation
(VEN) - Vietnam’s membership of the Association of South East Asian Nations (ASEAN) over the last two decades has provided major benefits to the Vietnamese economy. Vietnamese goods are present in all markets in the region, and Vietnam has received tens of billions of US dollars of investment from other ASEAN member countries.
First step towards integration
Vietnam became an official member of ASEAN on July 28, 1995. This was a strategic step, which has had a positive effect on the country in a variety of aspects, especially economics.
Looking back over the last two decades, Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh said that ASEAN was the first arena for Vietnam to test its international integration capability, creating positive changes in drafting and improving domestic policies, laws and procedures to make them suitable with international standards. “The ASEAN Free Trade Agreement (AFTA) and FTAs between ASEAN and its partners have made Vietnam confident when joining larger arenas as the potential Trans-Pacific Partnership (TPP), Regional Comprehensive Economic Partnership (RCEP), and a number of FTAs with the EU, the Republic of Korea, and the Eurasian Economic Union (EEU).
International integration has helped Vietnam expand its market, attract more investment, and access modern technologies and management experiences to develop the country.
According to Deputy Prime Minister Pham Binh Minh, although Vietnam joined ASEAN later and its development level was lower compared with some other ASEAN members, Vietnam is one of the leading members in terms of implementing measures to build the ASEAN Economic Community (AEC), having achieved 93.5 percent of the tasks required for the AEC compared to the average 90.5 percent of other member states. “Vietnam has participated in creating a post-2015 AEC Vision that is aimed at deepening and broadening regional links to build a law-based and people-centered ASEAN,” he said.
Trade and investment growth
Over the last two decades, trade and investment relations between Vietnam and other ASEAN members have expanded.
In terms of investment, according to the Foreign Investment Agency under the Ministry of Planning and Investment, as of June 20, 2015, ASEAN countries had 2,632 investment projects ongoing in Vietnam with total registered capital of US$54.6 billion. Singapore took the lead with 1,428 projects totally capitalized at US$32.2 billion, followed by Malaysia, and Thailand.
ASEAN’s foreign investment (FDI) in Vietnam has been concentrated on processing and manufacturing industries (US$22.2 billion), real estate (US$16.6 billion), and construction (US$3.24 billion).
In terms of trade, by the end of 2014, ASEAN became the second largest supplier of goods for Vietnam, just behind China, and the third largest export market for Vietnam, behind the US and the EU. In the first half of this year, according to the Ministry of Industry and Trade, Vietnam’s imports from ASEAN, including East Timor, reached an estimated US$11.98 billion, while Vietnamese exports to ASEAN reached an estimated over US$9.35 billion.
ASEAN with more than 600 million people is a large consumer of Vietnamese products such as crude oil, iron and steel, machinery, instruments and spare parts, rice, textiles and garments, and seafood.
New expectations from AEC
ASEAN is moving nearer to the formation of the ASEAN Community, with the AEC to be established on December 31, 2015. According to Minister of Industry and Trade Vu Huy Hoang, AEC will turn ASEAN into a united market and production base, an economic region of high competitiveness, and a region of balanced economic growth that is fully integrated into the global economy.
As a united market and production base, ASEAN will allow the free circulation of goods, services, investment, capital, and skilled workers among member countries.
AEC will not only create an open market of goods and services but also tighten and harmonize the links between producers, and minimize barriers to major production input factors in order to ensure high production efficiency, reduce production costs and enhance the competitiveness of products manufactured in ASEAN,” Minister Vu Huy Hoang said.
When AEC is established, there will be big opportunities for Vietnamese goods to penetrate regional markets as well as for Vietnamese businesses to increase their participation in global production and value chains in order to benefit more from intra-regional trade and investment.
However, Deputy Prime Minister Pham Binh Minh said in order to make the most of benefits from AEC, it is necessary to improve awareness about the ASEAN Community and the strategic importance of Vietnam’s participation in ASEAN cooperation. “Seventy percent of Vietnamese businesses participating in a survey proved to know very little about AEC. Therefore, state authorities are responsible for improving awareness about the opportunities and challenges posed by the ASEAN Community, and it is the obligation of each business and even each member of the public to learn this knowledge,” he said.