Vietnamese goods still ignore the ASEAN market

VCN- This is the assessment of experts at the seminar on “ASEAN Market: What is the path for Vietnamese goods”, held by the Saigon Economic Times in Ho Chi Minh City on October 10.
vietnamese goods still ignore the asean market
Thanh Long of Vietnam (dragon fruit) has strong consumption in Thailand market. Photo: Nguyen Hien.

Imports - exports into the ASEAN are too small

According to experts at the workshop, with a market of 660 million people, the 2016 GDP reached $US 2.551 billion and is expected to become the world's fourth largest economy by 2030, the ASEAN Economic Community (the AEC) promises to open new opportunities for Vietnamese enterprises. However, after nearly three years of AEC establishment, while quite large quantities of goods from the regional countries flooded into Vietnam, especially Thai goods, Vietnamese enterprises seem to be too thoughtless, even ignore these markets.

In order to prove that, Ms. Nguyen Thi Tue Anh, deputy director of the Central Institute for Economic Research, said that according to the statistics, both Vietnam’s imports and exports with ASEAN are at the bottom of the list compared to other free trade agreements. Only 9.8% of Vietnam's goods are exported to the ASEAN, the remaining 90% is exported to the world market outside the ASEAN, while the intra-regional average is 24%. Similarly, the imports from ASEAN were only 14% of total imports, while the regional average was 22%. This shows that after 3 years of AEC establishment, Vietnam's participation in this community is very modest.

“According to a survey conducted by the Vietnam Chamber of Commerce and Industry in 2018, the ability to take advantage of the ASEAN market in 2016-2017 is 30% lower than some other free trade agreements. According to the survey results, although the percentage of enterprises learning about the AEC is quite high (50%), the percentage of enterprises which know about AEC is only over 16%. This shows that the attention of businesses to the ASEAN market is not much,” Ms. Tue Anh said.

With information on import-export activities into the ASEAN market in recent years, Mr. Pham Thanh Kien, Director of Department of Industry and Trade of Ho Chi Minh City, said that from 2015 to 2017, each year, the volume of goods exported from the ASEAN increased. Specifically, in 2016, the import turnover reached $US 3.31 billion, increasing by 13% compared to 2015, the export turnover in 2017 reached $US 3.47 billion, increasing by 4% compared to 2016. However, these figures do not increase dramatically after the AEC was established. Meanwhile, the import is still very large. The import turnover from the ASEAN to Vietnam reached $US 7.2 billion in 2016 and increased to $US 8.15 billion in 2017, an increase of 13% compared to the same period. At present, the import from the ASEAN is 2.6 times higher than the export. This shows that trade deficit from the ASEAN is a big issue.

The enterprises’ ability is limited

Commenting on the advantages of ASEAN market for Vietnamese enterprises, Ms. Nguyen Thi Tue Anh said that, commitments on tariff reduction in the AEC is the fastest and highest compared with other free trade agreements. So far, Vietnam has completed its tariff reduction schedule in the AEC. Therefore, Vietnamese enterprises have the opportunity to export their products to the market. At the same time, enterprises also have preferential tariffs when importing, because of lower tariffs and higher quality inputs/outputs.

The opportunity is great, but the challenge is not small. The structure of goods is quite similar in the ASEAN, leading to fierce competition, especially protected sectors. Besides, the quality and level of human resources in Vietnam is low compared to other countries in the region. In 2017, it only reached 3.39/10 points while Malaysia reached 5.59, Thailand was 4.94...

In addition, the ability of enterprises is still limited for taking advantage. “If there is a lack of institutional capacity and ability of enterprises to take advantage of the opportunities from international economic integration in general and AEC in particular... all just stops at ‘opportunities’, ‘potential’ and ‘able’,” Ms. Tue Anh insisted.

According to Mr. Pham Thiet Hoa, director of the Investment and Trade Promotion Center of HCM City (the ITPC), Vietnamese enterprises have not yet fully exploited the potential of the ASEAN market due to their undiversified products, uncompetitive prices. Besides, the distribution system is still poor. Enterprises are not connected closely with the authorities responsible for promotion and diplomacy. Many enterprises have not been qualified to export to Islamic countries, do not know the technical and legal barriers of the countries in the region... Therefore, enterprises must overcome the above restrictions to dominate the ASEAN market.

Sharing experiences of entering the ASEAN market, Mr. Le Duc Nghia, General Director of An Cuong Wood Company said that in order to export goods to the ASEAN market, enterprises must determine 2 problems: who are customers and how to sell. In addition, the enterprises should follow the agent channels to minimize costs. In particular, they should participate in fairs and exhibitions to capture the tastes of consumers.

In the same view, Nguyen Thi Tue Anh also said that the determination of the target market is very important. In addition, enterprises have to find out the ability of the product to meet the market demand, ensure product quality criteria, and can also establish agency channels for joint ventures, links in various forms to penetrate the market…

In the same view, Ms. Nguyen Thi Tue Anh also said that the determination of the target market is very important. In addition, enterprises have to find out the ability of the product to meet the market demand, ensure product quality standard, along with channel agents, they can choose joint-ventures, mergers in various forms to penetrate the market...

By Nguyen Hue/ Kieu Oanh

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