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VN prepares for flood of imports

Update: February, 07/2015 - 09:56

Increased competitiveness is key for the Vietnamese economy, former director of the Department Strategy Institute, Luu Bich Ho, told Hai quan (Customs) newspaper.

Viet Nam has signed and will sign several Free Trade Agreements in 2015. But many Vietnamese economic experts are worried that our preparations for their implementation could have been better. What's your position?

Integration will help open a much bigger market for Viet Nam. At the same time, it will also enable us to attract more capital resources and advanced technology. Tough competition, both inside and outside Viet Nam, lies ahead. Tax tariffs of many commodities will be slashed, even to zero per cent as required by some agreements. So if Vietnamese enterprises don't prepare well, I'm afraid we'll fail to utilise the advantages offered.

Regarding legal institutions and policies, we have satisfied market requirements, yet we do not know if our products or commodities will be able to compete in these markets. In the present context, our economy has not yet fully recovered and many enterprises are still facing many difficulties. So when the Trans Pacific Partnership Agreement is struck, at the beginning, there is no doubt we will face many more difficulties than those at present.

Do you mean our enterprises will face more difficulties in competing against imported foreign products that are given preferential tariffs?

The Vietnamese market will be flooded with foreign goods due to low or zero tariffs. As a result, they will directly compete with products made in Viet Nam, particularly our export goods. In addition, Vietnamese enterprises may not be able to utilise advantages offered by the FTAs in potential markets.

Will you please tell us some of the key lessons Viet Nam has learned since joining the World Trade Organisation?

Many of our enterprises have not properly prepared for what they should do when Viet Nam joined the WTO seven years ago. In addition, following the event, our economy entered a period of high inflation and sluggish economy as the world economy entered a crisis. As a result, our benefits from exports are not as high as what they have been expecting.

Our export achievements so far mainly come from Foreign Direct Investment enterprises. Vietnamese enterprises faced many difficulties entering the new markets - and there was fierce competition in gaining footholds with other competitors. For example, we have already got some traditional markets for agricultural products, but we still face many difficulties as client demands are becoming tougher and tougher. Viet Nam has been a WTO member for seven years, yet it has not been able to utilise membership's benefits to the fullest.

As from 2015, Viet Nam's commitment to cut down tariffs comes into effect. What will the picture be if the competition of our economy and enterprises is not improved?

Our competitive capacity is pivotal for the national economy. Of course, the capacity here is reflected, first of all, in domestic institutions. So it is important to conduct an institutional reform to make it suitable to tendency and requirements of integration. That reform must be manifested through high quality goods with low production cost and easy market access so that the prices will be cheaper.

At present, the world's oil price has plunged, but prices for our commodities using petrol and diesel inputs remains high. This is an indication that the ongoing institutional reform has not much improved. In a nutshell, high quality products and commodities as well as services are important, not only high macro targets.

I agree that issues relating to policies, mechanisms, market, institution and others should be covered by institutional reform. Yet, at the end of the day, the market must reflect the strong competitiveness of our goods and the effectiveness of our investment policy.

What are the challenges Viet Nam will face in comprehensive international integration?

Comprehensive international integration covers various domains, including co-operation in the fields of economy, culture, science, technology, environmental protection, politics, national security and defence. During the international integration, all nations depend on each other while their co-operation keeps being consolidated despite fierce competition against each other.

In addition, there is the division, confrontation and struggle among super powers or between and within members of major economic bloc. That's not all, border conflicts or sovereign disputes between nations have also affected their economic relations.

In such a context, it is imperative for Viet Nam to adopt a good strategy and institutions in the course of international integration so that we can utilise advantages and overcome difficulties and challenges for national economic development.

Last but not least, the mainstay for an effective international integration is based on our integrated strength, independence and autonomy. — VNS

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