New Pacific Rim trade pact holds great promise for Vietnam

08:34 | 25/03/2018 Cooperation

(VEN) - The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) being finalized by its 11 member countries was signed in Chile on March 8. The agreement will open up great opportunities for Vietnam to cooperate with the world’s leading economies.

new pacific rim trade pact holds great promise for vietnam

Opportunities

The CPTPP, which replaced the Trans-Pacific Partnership (TPP) which was scrapped after the US pulled out last year, is designed to benefit all member countries. For Vietnam, it will mean development opportunities in many fields, such as diplomacy, economic growth and foreign direct investment (FDI).

According to the Ministry of Industry and Trade, the CPTPP is capable of bringing about practical benefits and advantages, thereby fostering cooperation in the region.

The CPTPP will contribute to boosting exports to major markets such as Japan, Australia, Canada and Mexico. It is an open-ended agreement, so future membership expansion will significantly increase the economic benefits to members. As one of the countries participating in the agreement from the beginning, Vietnam will have more advantages in protecting its interests. In addition to economic growth, the CPTPP will provide opportunities for Vietnam to strengthen FDI attraction in fields that the country is in need of development.

According to the Ministry of Planning and Investment, Vietnam is focusing on attracting environmentally friendly projects with modern technology and a strong effect on domestic growth. The CPTPP, with the participation of many large countries, will be an opportunity for Vietnam to achieve its objective of selecting high-quality FDI projects in the future.

Vo Tri Thanh, former director of the Central Institute for Economic Management under the Ministry of Planning and Investment, said the CPTPP is a highly standardized deal in terms of institutions, state management quality, and legal framework. It requires high quality of production and reform of institutions and policies, which are the most important factors in boosting growth quality and promoting inclusive growth. Vietnam’s participation in the CPTPP will force the country to make greater efforts in institutional reforms in order to create more transparent business and investment environment.

Challenges

From an economic perspective, Vietnam stands to gain the most from the Pacific Rim deal. However, in practice, the situation will depend on how it makes most of advantages and copes with obstacles inherent in this pact. Only with appropriate efforts will the country be able to realize its potential and deal with challenges. Vo Tri Thanh said that in comparison with other CPTPP economies, the Vietnamese economy is of smaller scale and at a lower development level. While providing an opportunity for Vietnam to learn from the developed economies, it also confronts the country with the challenge of making the most of export opportunities. In this regard, Vietnam’s institutions have many problems, while the Vietnamese business community remains weak.

In addition to efforts in institutional reform, the government and other ministries, departments and localities need to continue to improve the business and investment environment, increase business competitiveness, promote application of scientific and technological advances in production, and create favorable conditions for businesses to expand by providing necessary information on global integration and adopting support policies. Businesses and associations should be more active in understanding business opportunities, and strengthening investment in machinery and equipment to produce high-quality products able to compete in foreign markets.

Vietnamese businesses need to train human resources and increase skill training, particularly in information technology, to take advantage of the new agreement.

The CPTPP is a new free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Once the CPTPP enters into force, it will be one of the largest free trade agreements in the world.

Nguyen Hoa