The Vietnam Chamber of Commerce and Industry- Can Tho Branch (VCCI Can Tho) recently sponsored a business conference entitled “2015 economy: Orientation and Solution for Mekong Delta businesses to upgrade competitiveness in economic integration.” The topic is most important and necessary for businesses, with information showing opportunities and challenges under the impact of trade agreements so that businesses can have appropriate strategic orientation and increase competitiveness when Vietnam integrates fully into the global economy.
Speaking at the seminar, Mr Vo Hung Dung, VCCI Can Tho Director reaffirmed that 2015 will be marked by rapid globalisation and regional linkage, with the establishment of FTAs between Vietnam and other countries and territories. In addition to the formal establishment of ASEAN Economic Community (AEC), Vietnam will conclude 6 FTAs including TPP, ASEAN Regional Comprehensive Economic Partnership (RCEP)+6, EU, South Korea, Russia-Belarus-Kazakhstan and EFTA (4 Central-Northern European countries). The new development brings both opportunities and challenges to Vietnamese businesses and economic sectors, in particular the Mekong Delta region. Without the correct strategy, Vietnamese businesses may be defeated on their “home field”.
Concerning the Mekong Delta, Mr Vo Hung Dung said that it is an important economic region making up 19.5 percent of Vietnam’s population. It is also a dynamic region with important exporters of rice, aqua-products, fruits and vegetables. The region has 51,000 businesses with annual export value of some US$11.5 billion and good business environment: PCI upgraded together with active VCCI Business Associations, Vietnam Tra fish Association, while provincial business associations supporting the development of SMEs.
According to Ms Nguyen Thi Phuong Linh, Secretary General of Mekong Delta Business Association, the constraints of Mekong Delta businesses are: capital, market (counterfeit or poor quality products), materials, policy, legal documents and administrative formalities. Referring to aqua-production, she said that Government Decision 36 is not realistic; the application would be difficult for businesses. The short supply of materials will increase production cost and competition will decrease prices. In addition, difficult and slow access to credit, post-harvest assistance and preferential treatment, together with higher input cost and lower sale price, unstable market and complicated administrative formalities, make it agricultural production more difficult.
For his part, Mr Vo Tri Thanh, Deputy Director of Central Institute of Economic Management, believed that there are new opportunities and great potentials for the Mekong Delta with the implementation of free trade agreements such as TPP, Vietnam-EU, Vietnam-Russia-Belarus-Kazakhstan, especially for agricultural and aqua production. Those agreements will cut tax rates to 0 percent, reducing production cost and increasing competitiveness. However, Mr Thanh warned that in the new context, Vietnamese agriculture must change production methods, restructure to large-scale and chain production, green growth and safe food, and promote brands and markets.
Sharing the same views, economic expert Dr Le Dang Doanh reaffirmed that businesses themselves must realize and grasp opportunities, expanding export markets with low tax rates and increasing favourable imports. They must develop regional and business linkages, as well as the role of associations to increase combined strength.
Regarding opportunities and challenges for Vietnamese exporters by the end of 2015 when ASEAN Economic Community comes into force, Mr Doanh believed that such sectors as garment, footwear, bags, electronics, wood-based products, etc. based on low cost production and skill, can expand exports to EU and TPP, but with competition among AEC members. Furthermore, with similar economic structure, Vietnamese comparative advantages and export to other AEC members are minimal. He advised Vietnamese businesses to develop cooperation, linkages and value chains to meet standards and demands of specific markets (Japan, South Korea, USA, Europe), to upgrade key human resources and invest in e-commerce.
Ms Nguyen Thi Phuong Linh also called on businesses in the region to update policy and trade agreements that Vietnam already signed or will sign. Meanwhile, they must increase added value of their products, linkages with others, develop new products and markets, and diversify brands and packages.
For local authorities, they should continue to improve business environment and facilitate business activities, update information on macro policy and trade agreements, especially transparency in providing information so businesses can make the best use of business opportunities.
Ha Vu
Strengthening Businesses in Mekong Delta Region Related image(s)
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