Vietnam pins high hope on RCEP for speeding up economic recovery amid pandemic

HANOI, Dec. 30 (Xinhua) -- Vietnam is expecting the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade agreement, to create a new springboard for its economy to recover and grow quickly amid and after the COVID-19 pandemic, said local officials, experts and entrepreneurs.

According to them, the RCEP, taking effect on Jan. 1, 2022, will bring about both short- and long-term benefits, especially trade and investment-related ones, to Vietnam which is in dire need of quick economic recovery after two years of being hard hit by the global pandemic.

Specifically, they pinned high hope on an important member of the RCEP, China, that took the lead in ratifying the RCEP, showing strong determination in protecting the multilateral trading system, and accelerating regional economic connectivity, creating bigger demands for goods and services in the region as well as the world.

"The agreement will take effect in early 2022 in the context that the world in general and Vietnam in particular are facing unprecedented impacts due to the COVID-19 pandemic. Therefore, RCEP is expected to become a new impetus for the Vietnamese economy and businesses to recover and grow after the pandemic," Hoang Quang Phong, vice president of the Vietnam Chamber of Commerce and Industry (VCCI), said at an online seminar on the RCEP held in late 2021 by the VCCI in coordination with the Central Institute for Economic Management.

One of the manifestations of the new impetus is tariff preferences which will help Vietnamese enterprises export larger volumes of goods and services to more foreign markets, deeply partake in regional and global supply chains as well as value chains more easily, and lure bigger foreign investment, especially in promising sectors such as retails, entertainment, education and healthcare, he said.

The pandemic has disrupted supply chains, affecting the global economy, while the trade protectionism trend is emerging, so the RCEP implementation marks an important milestone in the process of economic integration of Vietnam and other ASEAN (the Association of Southeast Asian Nations) countries.

Nguyen Thi Thu Trang, director of the VCCI's Center for WTO and Economic Integration, explained that during the implementation of previous free trade agreements (FTAs), many Vietnamese export products used raw materials imported from countries outside the FTAs, so they did not meet the origin requirements to enjoy tariff preferences. Now, China and South Korea, the two main raw material suppliers to Vietnam, are RCEP members, so the issue of rules of origin for export goods to enjoy preferential tariffs becomes easier to be solved.

In addition to trade and investment, the RCEP will positively affect many other fields of Vietnam and other RCEP members because its implementation will create a binding legal framework, setting up a level playing field for all.

The RCEP implementation will create a binding legal framework for all 15 member on trade policy, investment, intellectual property, e-commerce and many other fields, thereby forming a level playing field in the region, Phong stated.

Luong Hoang Thai, head of the Multilateral Trade Policy Department under the Ministry of Industry and Trade echoed Phong's statement, saying that the implementation of the RCEP would create a long-term stable export market for Vietnam, while setting up a legally binding framework on trade, investment, intellectual property, e-commerce, and dispute settlement, contributing to a fair trade environment in the region.

At a workshop themed "RCEP: Opportunities and Challenges" held by the Ministry of Industry and Trade in November 2021 in Hanoi, Thai also said that amid the recent volatile world situation with supply chain disruptions, the implementation of the RCEP would create a long-term stable export market for Vietnam, while its enterprises could overcome competitive pressure.

In addition to the RCEP, Vietnam has already had other bilateral and regional FTAs with high degree of requirements, so its businesses have already been used to meeting such requirements, Thai explained. Besides, the ministry is building programs on improving competitiveness of local enterprises, and facilitating their participation in regional and global value chains involving industries and services in which Vietnam has great strength and potential, including seafood, garments, footwear and woodwork, he added.

Big FTAs like the RCEP are considered critical factors, supporting Vietnam's economic recovery in the 2021-2025 period, Tran Toan Thang at the National Center for Socio-economic Information and Forecast under the Ministry of Planning and Investment told Xinhua recently.

"When the RCEP comes into force, all goods originating from members will enjoy preferential tariffs, so trade between Vietnam and such traditional partners as China, Japan and South Korea, and between Vietnam and two other partners, Australia and New Zealand, will increase sharply. Investment attraction from these countries will also increase," he stated.

Like Vietnamese officials and experts, many local businesspeople told Xinhua recently that they have pinned hope on the RCEP's implementation, especially on opportunities at the huge Chinese market and after ASEAN members and China established a comprehensive strategic partnership in November 2021.

"Due to the global pandemic COVID-19, which has disrupted production and business in many countries, our revenues have been affected by it. With over 1.4 billion consumers, the Chinese market is so huge that it will surely help our revenue skyrocket if Vietnam can fully tap relevant FTAs, especially the RCEP," said Luong Thanh Thuy, general director of Luong Gia Food Technology Corporation in Ho Chi Minh City. The firm's dried fruit products branded Ohla are selling well in China, she noted.

Nguyen Tat Quyen, director of Rang Dong Agricultural Products Import-Export Company in the southern province of Long An, said his company specializes in exporting fresh dragon fruits to China, with export turnovers annually growing on average 30 percent in recent years.

"We hope to export more fresh dragon fruit to China, especially after China and Vietnam have basically contained COVID-19 outbreaks...China, Japan and Australia are members of the RCEP so I think the RCEP with lower and even zero import taxes on many kinds of products, including fruits, will benefit all of us," he said.