VietNamNet Bridge – Minister of Industry and Trade Vu Huy Hoang said domestic enterprises now hold 97% local retail and wholesale market share though Vietnam opened its doors to goods imports from the Association of Southeast Asian Nations (ASEAN) decades ago.

A customer inspects a Vietnamese product at a supermarket in HCMC. Minister of Industry and Trade Vu Huy Hoang believes domestic enterprises will be able to compete with counterparts from other ASEAN countries after Vietnam joins AEC

Hoang said he believes domestic firms will be able to compete with counterparts from other ASEAN countries after Vietnam joins the ASEAN Economic Community (AEC) late this year, Vietnam News Agency reports.

Hoang raised the point after some recent surveys showed a lot of local enterprises are not well prepared for or aware of AEC establishment and some experts even warned that local businesses may lose market share at home when imports from ASEAN surge on tariff reductions and exemptions.

For example, a recent survey conducted by the University of Economics and Business with nearly 700 small- and medium-sized enterprises (SMEs) in Vietnam’s major cities found that the majority of them do not know the AEC scheme and the challenges they will face. Many respondents said they will not adjust their business plans in the face of AEC.

The trade minister stressed Vietnam considers wholesale and retail as sensitive areas when the country negotiates with partners for bilateral and multilateral free trade agreements. Therefore, he noted, Vietnam will open these markets to foreign investors based on prudent road maps and adopt appropriate policies for different goods imports, especially farm produce and fuels.

He gave an example that Vietnam now imposes import quotas on salt, sugar, eggs and tobacco materials as committed to the World Trade Organization and that high import tariff rates will be imposed on the volumes exceeding the quotas.

Quotas are among the measures Vietnam applies to protect local enterprises and encourage domestic companies to invest and maintain a firm foothold in wholesale and retail sectors.

Hoang said that not many foreign wholesale and retail firms licensed in Vietnam have been licensed to operate in Vietnam, and their goods for sale are monitored by competent agencies.

The expansion plans of foreign wholesale and retail companies are carefully considered based on a master zoning plan for these sectors and their possible impacts on the wholesale and retail networks of Vietnamese enterprises.

Foreign wholesale and retail companies should have plans to boost consumption of Vietnamese goods at their stores as well as local production. This is one of the conditions for them to meet if they want their expansion plans approved.

“As such, Vietnam’s wholesale and retail markets are still dominated by domestic firms and a mere 3% share is in the hand of foreign companies,” Hoang said.

Foreign wholesale and retail companies are requested to give priority to domestic enterprises if they want to transfer part or all of their investments and only sell their investments to foreign partners in case they cannot find local firms.

Hoang noted that Vietnam will have to gradually reduce import tariffs for many more products to 0% and relax requirements for foreign goods imports after AEC comes into existence. But he said domestic enterprises will be able to compete not only on the home market but also in other ASEAN markets.

Hoang said key Vietnamese products like apparel, footwear, farm produce and seafood could make their way to more ASEAN markets.

Hoang called for domestic enterprises to map out strategies to make the most of the AEC establishment and cope with new challenges.    

SGT