Strengthening AEC links for economic growth

AEC will be a home of more than 600 million people for total gross domestic product (GDP) of nearly US$3 trillion a year. Thanks to the establishment of AEC, goods, services, capital flows, technologies and skilled labors will enjoy free circulation in ASEAN without any barrier or discrimination among members.

Total ASEAN trade has increased from US$1.6 trillion to US$2.6 trillion, while investments have increased from US$80 billion to US$122 billion. Total GDP of the 10 ASEAN countries currently stands at US$2.6 trillion, an increase of 80 percent compared to the same period seven years ago. The ASEAN economy ranks seventh worldwide and is expected to rank fourth by 2050. In addition, the rate of poor people in ASEAN has reduced by four times, while the number of middle-class people has recorded a six-fold increase.

ASEAN ranks third after the US and the EU among Vietnam’s top export markets. Vietnamese exports increased from US$2.6 billion in 2000 to US$10.4 billion in 2010 and US$19.12 billion.

Total trade turnover between Vietnam and ASEAN over the first nine months of the year reached US$31.3 billion. Vietnamese businesses exported goods and services to ASEAN for US$13.7 billion, accounting for 11.4 percent of the country’s total export turnover. Meanwhile, import turnover from ASEAN stood at nearly US$17.6 billion, accounting for 14.1 percent of the country’s total import turnover.

In addition to traditional goods such as rice, coffee, rubber and crude oil, Vietnam has focused on exporting consumer and industrial goods such as computer components, garments and textiles and processing agricultural products with high value.

Vietnam has become an attractive destination for ASEAN investors. By the end of 2014, Singapore, Malaysia and Thailand were included among the 10 ASEAN partners having the largest foreign direct investment (FDI) capital in Vietnam.

According to the Ministry of Planning and Investment’s Foreign Investment Agency, ASEAN had 2,632 valid FDI projects in Vietnam with total registered capital of US$54.6 billion by the end of June 2015. Each project valued at US$20.7 million, higher than an average of US$13.9 million a project.

Singapore led ASEAN countries investing in Vietnam with 1,428 projects for total capital of US$32.2 billion, followed by Malaysia and Thailand with 499 projects for US$12.06 billion and 392 projects for US$6.8 billion, respectively.

Vietnam has also become an important destination for foreign investors who are willing to promote production and consumption in ASEAN.

Deputy Minister of Industry and Trade Nguyen Cam Tu said that after the establishment of AEC, there will be no tariff barriers, contributing to promoting exports, attracting more investment and enhancing economic growth of all member countries. However, rules of origin are seen as a new barrier against businesses as they must verify the origin of goods following the rate specified in each item. Vietnamese businesses must adopt new development strategies in order to adapt to its new barrier.

According to economists, the establishment of AEC would not create huge pressure for Vietnamese businesses as AEC is an inheritance of ASEAN Free Trade Area mechanisms.

Thu Hang