The free trade agreements Vietnam has signed or completed negotiations on this year have a wider coverage not only in goods, services, and intellectual property, but also in state-owned enterprises, public procurement, customs, sustainable development, and non-commercial issues.
The biggest opportunity offered by FTAs is to expand markets thanks to tax reductions and removal of trade barriers to deal with the current limited purchasing power and Vietnamese enterprises’ competitiveness shortage. The TPP deal will help Vietnam restructure its export market and reduce its reliance on markets in East Asia, China, and ASEAN which account for up to 60% of Vietnam’s export revenue and 75% of its imports. The EU-Vietnam free trade agreement, which takes effect in 2018, will remove more than 99% of tariff lines; Vietnam’s GDP will likely gain an additional 0.5%; and exports will increase up to 6% each year. The free trade agreements to which Vietnam has been and will be a signatory require a comprehensive reform, specifically market-oriented economic reforms, one of Vietnam’s strategic breakthrough.
In addition to new FTAs, as a member of APEC, Vietnam is contributing to bolstering cooperation between and among APEC economies, and regional economic integration. Vietnam will host of the APEC 2017.
The country is also preparing for the integration in the coming time, with remarkable efforts in accelerating economic integration to obtain economic growth; and continuously and drastically conducting reforms, especially on economic institutions, and the development of human resources and infrastructure to achieve inclusive and sustainable growth. Recognizing its low starting point with downgraded infrastructure, in recent years, Vietnam has invested more on infrastructure for economic integration. In 2015, the completion of a number of major transport projects, including National Road 1’s upgraded section from Thanh Hoa province to Can Tho city, the Ho Chi Minh City-Long Thanh - Dau Giay Highway, Ho Chi Minh Road’s section through the Central Highlands, and the Hanoi - Hai Phong and Noi Bai - Lao Cai Highways, created breakthroughs in the country’s infrastructure development. Those facilities have helped improve transport capacity, boost trade activities, facilitate economic development in different regions, and help the country’s infrastructure keep up with the integration progress.
However, Vietnam competent agencies and companies need more effort to gain from economic integration trends in 2016, because in the context of global market turbulence, the world economy still faces major risks with unpredictable elements. The economic outlook is vulnerable. The weak global trade has aggregate demand decline. The world economy, which witnessed a slow recovery in 2015, needs more positive factors to regain momentum and. Crude oil price continues to sharply fall, resulting in decline of commodities, will affect exporters including Vietnam. The instability of the global financial market with the fluctuations of Renminbi and US dollar and the unpredictable future of the Chinese economy will have strong impact on the world economy. In Vietnam, prices fluctuations on the world market, especially oil prices negatively have affected the state budget. Vietnamese exporters have also to deal with higher competition in the global market. In the domestic market, the further openness of “sensitive” sector will lead to the penetration of stronger foreign competitors and import may increase strongly from 2016 if the domestic production would not be improved.
