Many local firms unaware of AEC

Many local firms unaware of AEC

Tu Hoang

Shoppers buy garments at a stall in An Dong market in HCMC’s District 5. A lot of domestic companies remain unaware of the ASEAN Economic Community - PHOTO: UYEN VIEN

The fact is proven by a recent survey conducted by the University of Economics and Business under the Vietnam National University in Hanoi with nearly 700 small- and medium-sized enterprises (SMEs) in Hanoi, Haiphong, HCMC, Danang and Can Tho cities taking part.

The majority of respondents do not know when AEC comes into existence and its key pillars, as well as the AEC scorecard, which is a monitoring mechanism for the integration process of each member of the bloc.

The survey also found that companies in industrial, construction, trade and services sectors have better knowledge of AEC than those in the agricultural sector. In general, large enterprises know AEC better than SMEs do.

Nguyen Hong Son, head of the University of Economics and Business, said most of the respondents recognized the opportunities of the single market of the 10 ASEAN nations but they also worry about fiercer competition triggered by goods producers and services providers from other countries of the bloc.

Enterprises are not fully aware of opportunities and challenges from the AEC establishment as they do not pay much attention to this. Only 40% of respondents said they will not adjust their business plans ahead of Vietnam’s further integration into the region.

The survey found local businesses attend more to the World Trade Organization, the Trans-Pacific Partnership (TPP) and the Vietnam-European Union free trade agreement (FTA) than the forthcoming birth of AEC.

According to the Ministry of Finance, with the establishment of AEC later this year, Vietnam will integrate further into the region this year than before and exempt tariffs on more groups of items imported from ASEAN and other markets as committed to FTAs.

The ministry said 72% of the groups of items imported from ASEAN were entitled to tariff exemptions last year and the percentage rises to around 90% in 2015. This year, Vietnam has committed to exempt 37% of the groups of commodities from import tariffs under seven FTAs the country has signed.

However, many domestic enterprises do not know about the commitments, according to Nguyen Thi Thu Trang, director of the WTO Center under the Vietnam Chamber of Commerce and Industry (VCCI).

The center wrote to the Ministry of Industry and Trade asking for the disclosure of Vietnam’s commitments to FTAs but the ministry said it would need more time to adjust tax codes.

Vo Tri Thanh, vice president of the Central Institute for Economic Management (CIEM), said disseminating information about Vietnam’s commitments to FTAs is slow. He added that not only businesses but also Government officials know little about AEC.

When AEC is in place, Vietnam will open its doors to investors as widely as other ASEAN countries but will exclude labor and service markets.

Thanh highly appreciates the Vietnam-EU FTA and TPP, both under negotiations. TPP requires 90% of the tariff lines to drop to 0% immediately after it takes effect while it will take seven years to bring 90% of tariff lines to zero in the FTA with the EU.

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