10:45 | 04/06/2015 Trade
Opportunities and challenges arising from free trade agreements (FTAs) between Vietnam and partner countries will present themselves equally, an official remarked a press conference in Hanoi on June 3.
A backpack producing factory (Photo: VNA)
The signing of FTAs affords opportunities to exporters, importers and consumers as Vietnam expands its export markets, said Deputy Head of the Finance Ministry’s International Cooperation Department Ha Duy Tung.
The country has reached 10 bilateral and multilateral FTAs, including the recently-signed Vietnam–Republic of Korea (RoK) and Vietnam–Eurasia Economic Union deals.
In his view, lowered import duties on raw materials will stimulate production and churn out products at competitive prices, offering customers more choices of imported and home-grown items.
Vietnam is currently running a trade surplus with Japan , Australia and New Zealand with no plans for further import tariff cuts.
However, Tung also admitted considerable troubles faced by home companies with weak competitiveness, as the private sector is mostly working on a small scale with limited access to funding and technology.
The support industry is still underperforming, and key export products still rely on imported raw materials, such as electronics, garments, leather, footwear and automobile assembling.
He stated that Vietnam is rechecking a set of technical barriers to protect domestic firms alongside a series of business incentives to be proposed by the Finance Ministry along the process of tariff cuts.
Concerns over decreased revenue to the State budget following the import tariff decline could be offset by corporate income taxes resulting from augmented manufacturing and trading activities, said Tung.
As part of Vietnam’s commitments under its FTAs, around 5-7 tariff lines will remain unchanged, which are tobacco, alcoholic drinks and beer, petroleum, automobiles and some spare parts, certain iron and steel products, sugar, eggs and tobacco leaves, and defence goods such as weapons and explosives.
In addition, the deadline for Vietnam to complete tariff cuts differs from agreement to agreement, with the earliest date set in the ASEAN Trade in Goods Agreement (ATIGA) in 2018, followed by the ASEAN–China FTA by 2020 and the ASEAN–RoK FTA by 2021.
According to Tung, the finance ministry has adjusted several taxation policies, including lowering corporate income tax to 22 percent from 25 percent under the corporate income tax law and abolishing the cap on advertisement spending in line with National Assembly-approved revisions to the Law on Taxation, making it easier for firms to adapt to global integration.
Administrative procedures, especially in tax and customs, will continue to be streamlined, he said./.