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Vietnam’s businesses still not tapping AEC market

Vietnam is a member of the ASEAN Economic Community (AEC), which was established three years ago. However, its businesses are not exploiting the 600 million consumer market.
VietNamNet Bridge - Vietnam is a member of the ASEAN Economic Community (AEC), which was established three years ago. However, its businesses are not exploiting the 600 million consumer market.


Vietnam is a member of AEC

While Vietnamese businessmen are slow paced in approaching the vast market, other ASEAN countries have been fully exploiting the market in Vietnam. 

The products from ASEAN, especially Thailand, have been flooding Vietnam, according to Nguyen Thi Tue Anh, deputy head of the Central Institute Economic Management (CIEM).

Anh said the committed tariff cuts within AEC framework are the sharpest, while the time to implement the tariff cuts is the shortest. 

To date, Vietnam has completed the tariff cut process with tax barriers in all business fields removed.

In 2015-2017, exports from HCMC to ASEAN increased year after year with the export turnover surging from $1.1 billion in 2016 to $3.5 billion in 2017. 

This means that Vietnam has bigger opportunities to export advantageous products and expand markets, while it can import products at lower prices.

However, only few Vietnam’s enterprises have exploited the AEC market. Anh cited figures to prove that Vietnam’s exports to ASEAN countries are the lowest in the region.

Only 9.8 percent of Vietnam’s total exports went to ASEAN markets in 2016, while 90 percent went to other markets. 

Meanwhile, the average level of other ASEAN countries was 24 percent.

The imports from ASEAN to Vietnam were also the lowest, just equal to 13.7 percent compared with other markets.

In 2017, the proportion of goods exported within ASEAN countries was 11.7 percent, a slight increase compared with 2016.

The labor force, quality and capability of enterprises in Vietnam remain low. In 2017, Vietnam gained 3.39 out of 10 scores in these indicators, while Malaysia got 5.59 and Thailand 4.9.

“If Vietnam lacks institutional capability and business capacity to take full advantage of the opportunity brought by global integration, the theoretical potential will not turn into reality,” Anh said.

According to Pham Thanh Kien, director of the HCMC Industry and Trade Department, in 2015-2017, exports from HCMC to ASEAN increased year after year with the export turnover surging from $1.1 billion in 2016 to $3.5 billion in 2017. 

The export growth rates were 13 percent in 2016 compared with 2015 and 4 percent in 2017 compared with 2016. However, the figures did not increase sharply after the establishment of AEC.

Meanwhile, imports from ASEAN to Vietnam are ‘worryingly high’ as commented by analysts. 

The import turnover was $7.2 billion in 2016 and surged to $8.2 billion in 2017, up by 13 percent and 2.6 times higher than export turnover.

The director of the HCMC Investment & Trade Promotion Center, Pham Thiet Hoa, commented that Vietnam’s goods are not diverse, the prices are not competitive, and the distribution network is weak. Manufacturers do not cooperate well with diplomatic and business promotion agencies to exploit foreign markets.


AEC a catalyst for reform in Vietnam

VN firms yet to get the hang of AEC

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