As the country with the lowest per capita GDP amongTrans Pacific Partnership Agreement (TPP) signatories, Vietnam will enjoy comparative and unique advantages such as labor-intensive manufacturing and fewer tariffs when TPP comes into effect, according to the World Bank (WB).
At
the Taking Stock report, the international lender published a special
section on the TPP Agreement, in which it argues that the TPP is
expected to generate considerable benefits for Viet Nam.
A boost for GDP growth rate
On economic impacts, the TPP could add as much as
8% to Viet Nam’s GDP, 17% of its real exports, and 12% to its capital
stock over the next 20 years.
Despite various implementation challenges, the impact of the TPP on Viet Nam is expected to be positive.
The simulations suggested that the TPP would spur
Viet Nam’s real GDP to over 8% by 2030 thanks to fewer tariffs on its
exports especially garments and textiles. So far, the U.S. still applies
17% of import tariffs.
Wider export opportunities
The TPP would pave the favorable way for Viet Nam
to penetrate and expand its export markets. As almost all tariffs and
non-tariffs on industrial and agricultural products will be
eliminated or gradually reduced, both export and import activities will
strengthen thanks to fewer trade costs.
TPP would boost trade growth towards trade liberalization.
Diversifying exports
The TPP would diversify Viet Nam’s exports towards
export-oriented manufacturing. The Southeast Asian country has
transformed export structure from reducing raw materials and raising
manufactured products.
According to the WB, the density of manufactured
products is accounting for around 58% of total export turnover, but
would rise additional 30% while other sectors like agriculture,
petroleum, mining, and services would experience slightly decreases.
In addition, the international lender projected
that the TTP would help Viet Nam deeply integrate into the global chain;
create conditions on economic restructuring; encourage investment; and
nuture a more competitive and creatitve economy.
However, the WB also forecast that in the short
term Viet Nam would not be able to optimize abundant opportunities
brought back by the TPP.
Viet Nam heavily relies on imported raw materials in garment and textile production. Around 60-90% of fibre was imported from China and Taiwan. Thus, a large proportion of Vietnamese exports will not meet TPP’s regulations on origin. The lender proposed domestic enterprises restructure; develop auxiliary industries; and control pollution by applying modern and environmentally-friendly technologies.
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