How will TPP affect the exporting industry and the economy of Vietnam?

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The purpose of TPP is not only to lower taxes of trading goods but also to improve services, investments, copyrights, and labor rights. For Vietnam, how will TPP affect the exporting industry and the economy? Here are somepredictions from the author about the advantages and disadvantages of TPP in the exporting industry and the economy of Vietnam after the Agreement is in place.

After TPP is in place forVietnam, Vietnamese exporting companies will have manybenefits increasingrevenues and competing against exporting businesses from non-TPP countries. Because exporting goods from Vietnam and exporting goods from other TPP countries support and implement others, lowering taxes on trading supplies will give Vietnamese exporting businesses great chances to save money onsupplies, sell supplies with better prices, and to make more profit. Furthermore, Vietnamese exporting companies also have better chances to compete with low prices against exporting companies from non-TPP countries like China, Thailand, and other countries when these businesses export the same goods as Vietnamese businesses, such as leather materials, farming supplies, and other similar goods. Besides low exporting taxes, cheap rents and cheap utilities also help Vietnamese companies to save money producing goods to compete against businesses from non-TPP countries. For example, the average cost of utilities for a house with anarea of 85m2 is $US 54 per month in Vietnam, but the average cost of utilities for a house with the same area in Thailand is $US 62 per month. With rent prices, the rent for an area of 85m2is around $US 622 per month in Vietnam, but, in China, the rent for the same area costs $US 1870 per month. Moreover, cheap rents and cheap utilities are also the advantages of Vietnam compared to other TPP countries. When comparing rent prices between Vietnam and a Southeast Asian country in TPP like Malaysia, the rent of an 85m2 area in Malaysia costs $US 288 per month more than the rent of the same area in Vietnam ($US 850 per month in Malaysia vs. $US 622 per month in Vietnam). With utilities prices, the average cost for an 85m2 house in Japan is $US 185 per month, but, in Vietnam, the utilities cost for the same house is only $US 54 per month.

TPP also changes the direction of Vietnamese businesseswhich produce and sell goods in the country to export goods to other TPP countries. Before TPP applies, numerous companies cannot export supplies to TPP countries because export taxes and transporting fees will too high. These businesses predict that their exporting goods will not attract customers due to the high prices of goods that include export taxes and transport fees. After TPP applies, these businesses will have better chances improving revenues by exporting supplies rather than selling supplies in Vietnam when the exporting taxes are much lower or even zero. Additionally, the average transportation fee per good will become cheaper when exporting more goods. Because citizens from TPP countries have higher income than Vietnamese people do, exporting businesses will have better chances selling more good withappropriateprices with low or zero exporting taxes to make more profit. The average annual income per capita inthe U.S. is $US 53,657 (2014), but the average annual incomeper capita inVietnam is only $US 1,800 USD (2015). When comparing purchasing power, most TPP countries have a higher spending rate,from 1.8 to 2.5 times, than Vietnam. Although selling more supplies and making higher profits also depend on many other factors like advertising, marketing, aftersales services, and others, TPP will give Vietnamese local businesses many advantages when switching to exporting businesses.

Apart fromadvantages from TPP, there are also many challenges that Vietnamese exporting companies will have to face. Exporting businesses will have to pay higher wages, to pay work insurance, and have health and safety provisions in place for their workers. All of these expenses will add more coat toproduction. A reasonable wage is required to pay workers for them to have decent standards of living. Furthermore, other payments such as work insurance and health and safety provisions are necessary for businesses to improve employees working conditionsin thelong run.

For workers inexporting businesses, they will have great chances to improve their incomes and to earn more workers rights when TPP is in place in Vietnam. Because Vietnam is in a “Golden Working Population Era”, which the population of the working age is growing incredibly, more people ofworking age can have jobs due to the growth in numbers of exporting companies from TPP.

Higher workers incomes will allow consumption of higher quality goods and services. This is incentive for many industries to grow, different businesses to increaserevenues, more people to get jobs, government to increase the budget, and the economy to grow.

TheVietnamese government will have great opportunity toincrease the budget significantly due to more taxes received when exporting businesses receive higher profits and employees have higher incomes. The government can use money from the budget to improve infrastructure, heath care, education, and many other important sources increasingliving standards. The bigger the budget the better chances the government has to help people, especially thepoor.

To fully use all the benefits from TPP, Vietnamese exporting businesses need to take advantages of thehuge labor population in the “Golden Working Population Era” and improve technologies. By maximizing the use of labor, businesses can produce maximum amounts of products. Furthermore, technologies are important weapons that help companies to manufacture more goods, to advertise their products, and to connect with importing businesses from other TPP countries. Because of that, Vietnamese exporting companies need to make plans to buysuitable and useful technologies.

TPP can increase more investments directly or indirectly in the Vietnam economy because of all the advantages of exporting goods from TPP. Investments from other countriesnot only help improve manufacturing industries and create jobs but also bring challenges to Vietnamese businesses, because many businesses hasve difficultiesborrowing money. The interest rate for investments in normal or long term in Vietnam on average is 1,5 to 2 times higher than the rate in other TPP countries and nearby countries. To solve this problem, the government needs to find a solution which encourages businesses and especially small and mediumsize companies to get loans with cheaper interest rates.

TPP does not only give Vietnamese exporting businesses advantages to increaserevenues and to compete against exporting companies from other non-TPP countries, but also brings many challenges to Vietnamese exporting businesses. Furthermore, TPP also helps workers to improve their incomes and to have better working conditions. The more profits from businesses and the higher incomes from workers play a big role growing the economy and increasing the budget of the government.