Vietnamese firms yet to tap ASEAN economic potential

11:41 | 08/12/2018 Trade

(VEN) - The ASEAN Economic Community (AEC) established nearly three years ago has increased the inflow of goods from other countries in the region, especially Thailand, to Vietnam. However, Vietnamese companies have yet to tap the potential of this market.

vietnamese firms yet to tap asean economic potential
Vietnamese food products have won the trust of Thai consumers

Trade deficit grows

Pham Thanh Kien, Director of the Ho Chi Minh City Department of Industry and Trade, said the trade deficit with ASEAN is a matter of concern. Last year, Ho Chi Minh City’s imports from ASEAN member states were 2.6 times higher than its exports to this region. The import value increased from US$7.2 billion in 2016 to US$8.15 billion in 2017.

According to Nguyen Thi Tue Anh, Deputy Director of the Central Institute for Economic Management, AEC member countries are promoting the liberalization of intraregional trade by gradually eliminating tariff and non-tariff barriers. The tariff cuts to which AEC members are committed are the highest compared with other free trade agreements. This means Vietnamese exports face fierce competition with products of other ASEAN countries in terms of quality and added value, but they are at a disadvantage given the condition of their equipment and technologies.

Consumer trends

Pham Thiet Hoa, Director of the Ho Chi Minh City Trade and Investment Promotion Center, said Vietnamese companies are unable to tap the potential of the ASEAN market because their products are not diverse; their prices are not competitive and their distribution networks are inadequate. Moreover, domestic companies still lack ties with trade promotion and diplomatic agencies, as well as good knowledge of technical barriers and the laws of other countries in the region. They are also still weak in management capability.

However, some kinds of Vietnamese goods sell well in the ASEAN market. Examples include Vinamit’s semi-moist and dried fruit products that attract Thai consumers. Many foreign companies are willing to purchase Vietnamese agricultural products for distribution.

To make the most of the AEC market opportunities, domestic companies need to take the initiative in innovation, devise business strategies and strive to enhance their competitiveness. They also need to keep up with consumer trends in each ASEAN country and set up linkages with reputable local distributors.

Punthila Puripreecha, Operations Director of the MM Mega Market (Vietnam) Company Limited, said the company organized field study trips to Vietnam for Thai purchasers to see how Vietnamese products are made and how their quality is controlled. This year, the company has exported more than 100 tonnes of Vietnamese farm produce, including sweet potato, dragon fruit, dried fruit, rice paper and other products, to 700 Big C supermarkets in Thailand. By the end of 2018, Vietnam will complete the tariff reduction roadmap to which it committed under the AEC agreements.

Ngoc Thao