Deputy Trade Minister speaks on Viet Nam's joining AFTA
Ha Noi, Dec. 27 (VNA)-- Viet Nam will add 760 more items to the list of tariff cut to below 20 percent in 2003 in line with its commitment to the ASEAN Free Trade Area (AFTA), said Deputy Trade Minister Luong Van Tu.
The AFTA treaty signed by 10 members of the Association of Southeast Asian Nations (ASEAN) fixed the deadline in 2006 for Viet Nam to cut import tariffs on almost all products down to below 5 percent.
Tu told Viet Nam News Agency (VNA) that Viet Nam embarked on the Common Effective Preferential Tariff Programme (CEPT) in 1996 on the way towards the AFTA. This year, the country applied the tariff cut rules on 481 imports from other ASEAN members, lengthening the list to an estimated 5,500 items so far.
The Deputy Trade Minister said:
"ASEAN is Viet Nam's most important trade partner, whose trade turnover often makes up 25 percent of the country's gross foreign trade volume. In 2000, the grouping made up 18 percent of Viet Nam's export turnover and 28 percent of the country's imports. The country imports petrol from Singapore, from which it bought 1.18 billion USD worth of petrol in 2001."
The trade ties with ASEAN will not change much in the coming years, noted the official, adding "Viet Nam has three more years to protect a number of products, such as vegetable oil, confectionery, vegetables, instant coffee, brew, cement, vehicle tires, paper, and sanitary porcelain."
Asked about opportunities and challenges for Viet Nam to join the AFTA, the Deputy Trade Minister said:
"In a few years when protection is no longer allowed, products from other ASEAN countries will have many opportunities to enter into the Vietnamese market, and Viet Nam's products will enjoy similar opportunities. The question is, who will seize the opportunity the AFTA will bring in and take opportunities to contain challenges. The most major immediate opportunity for Viet Nam is the tariff cut to between zero and five percent on all products applied by the six founding members since January 1, 2003."
"This will create good opportunities for Viet Nam to increase exports to other ASEAN member countries over the next three years and export labour to newly developed countries (NIC) such as Singapore and Malaysia, which need about one and two million foreign workers annually, respectively. In addition, with its population of over 80 million, Viet Nam, widely known as the most stable and safest place in the region, has been regarded as a potential and untapped market where labour costs are very cheap. These are great advantages for the country to lure more foreign investors, especially those from ASEAN countries.
"The biggest challenge facing Viet Nam is to raise its competitive edge by promoting technological and managerial renewal as well as practising thrift, reducing production costs and increasing marketing. It is essential for producers to think of both exports and sales at home when they intend to make new products. They should consider these new products as those of ASEAN."
Regarding Viet Nam's preparations for AFTA accession, Tu said: "In face of a new competition, the Government has taken many measures, including applying export-support policies, establishing export-support funds and promoting economic restructuring, particularly expanding autonomy in business operations. As a result, Viet Nam now has 90,000 businesses in all economic sectors, compared with 6,500 enterprises in the State-owned sector in the past. Many businesses, particularly the Thanh Cong Textile Company, the Kinh Do Confectionery Company, the Trung Nguyen Coffee Company, and the Dien Quang Light Company, have actively improved their competitive edge, developed human resources, and built trademarks.
"However, some enterprises do not clearly recognise the challenges that they will face in the open market. They are waiting for the State's protection, including providing more investment, writing off debts, increasing import taxes, and giving monopoly rights in importing and supplying some commodities.
"The open market is a battle field, and there will be a natural elimination in this competivive process," the deputy minister stressed.
He asked businesses "to understand well the Government's policy on actively integrating into the international economy, considering it as an essential step and gradually getting rid off being dependent on the State".
They should carefully study what the State has committed so as to have correct assessment on opportunities and challenges they will meet in production and business operation, the official added.
