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|Vietnam has just taken over its role as the ASEAN chair which comes with a huge responsibility for the whole blocPhoto: Chi Cuong|
During the first days of 2020, Nguyen Thi Le Na, founder of Phu Quy Agricultural Farm JSC in the central province of Nghe An, which provides ecological oranges, began to roll up her sleeves to commence her new project of planting mangoes in Cambodia.
“I’m happy now because my partner in Cambodia will give me 30 hectares for free to implement my ecological mango farm,” Na told VIR.
Na hoped that she could successfully provide quality mangoes for the Cambodian and Vietnamese markets. However, her project will not be the only one in Cambodia. Over the years, this nation has become an attractive investment destination for Vietnamese investors.
Currently, Vietnam is the fifth-largest foreign investor in Cambodia. A slew of major Vietnamese companies have cultivated their projects in Cambodia operating in various sectors, including agriculture and infrastructure like Vietnam Rubber Group, FLC, and Truong Hai Auto Corporation (THACO).
According to a report from the Vietnamese Ministry of Planning and Investment (MPI), as of late 2019, more than 200 Vietnamese companies have invested over $3 billion into 178 projects in Cambodia.
Land for trade windfalls
Outside Cambodia, Vietnamese investors are also seeking investment and business opportunities in other regional markets, such as Myanmar, Laos, Thailand, and Singapore. Vice versa, the country has also been increasingly attracting investment from other ASEAN countries.
According to the MPI, Singapore, Malaysia, and Thailand are Vietnam’s third, eighth, and ninth investors with total registered capital of $49.8 billion, $12.6 billion, and $10.9 billion, respectively.
Tran Quoc Khanh, Deputy Minister of Industry and Trade, said at the Symposium on Intra-ASEAN Trade and Investment last week that the ASEAN Economic Community is one of the most successful groups in the world, which proves that collective strength can bring many benefits to the region.
“Our entire trade value has increased from about $89 billion in 1996 to $520 billion in 2019. Acting for Vietnam, our trade with the ASEAN ranged from about $4 billion in 1996 to $58 billion in 2019,” Khanh said.
In his opinion, this shows the outstanding growth of intra-bloc trade. However, it does not match the region’s potential yet. “Thanks to the ASEAN Trade in Goods Agreement, 98 per cent of imported tax has been reduced to zero or 5 per cent, but trade growth reached only 5.8 per cent in 2019, lower than expected. The region’s target is to double growth by 2025,” he said. “With a population of 650 million people, the ASEAN has become the sixth-largest economy and attracted 7 per cent of the global foreign direct investment (FDI) flows. In addition, the removal of tax barriers will bring chances for the bloc to further promote intra ASEAN trade.”
Meanwhile, Aladdin D. Rillo, deputy secretary-general for the ASEAN Economic Community told VIR that in recent years, the ASEAN bloc has implemented many important initiatives to promote trade and investment. “One good example is the ASEAN Single Window which can help identify new documents to be included in the mechanism,” he said. “All ASEAN countries are now participating in the ASEAN Single Window. That was a big achievement last year, because in the beginning, only six countries were able to participate, but towards the end of the year, we were able to get all countries involved.”
Along with these good conditions, Rillo also pointed out one major barrier to intra ASEAN trade and investment: ASEAN countries have similar products. “There is a need to identify new products that would help sustain higher interregional trade,” Rillo said.
Besides this, he also emphasised difficulties brought by global situations, including trade tensions between China and the US, and increasing trade protectionism.
Fukunari Kimura, chief economist of the Economic Research Institute for ASEAN and East Asia, said that throughout the era of digitalisation, trade and investment face some challenges brought by different types of policies.
“Since we are now digitally much more connected, many small businesses and consumers can participate directly in the market. So, businesses have to act more consumer-oriented, and their sales and customer services are extremely important in that sense.”
Meanwhile, Deputy Minister Khanh mentioned two more barriers for ASEAN trade and investment, namely trade tariffs and the general level of ASEAN businesses.
According to Khanh, it is time for the ASEAN to find the right policies, which are suitable for fluent operations. He also said that most of the ASEAN businesses are not really large ones. “This is an element that keeps the value of trade and investment inside the bloc rather modest,” he added.
For a better ASEAN
At the symposium, Nguyen Quoc Dung, Deputy Minister of Foreign Affairs, emphasised that in its role as the ASEAN chair, Vietnam will strive to ensure that all deliverables under the ASEAN Economic Community would be implemented.
“Our theme is cohesive and responsive. We hope to create the glue to connect member states to support and assist each other, to create value chains from similar products of the region,” he said.
According to Deputy Minister Dung, within just one year, Vietnam cannot create or give out perfect solutions and enact programmes to achieve all of the region’s targets by 2025.
“However, at least we can start the progress and find a way to remove some barriers,” he said. “We also want to focus on widening and deepening the relations with the international community, to attract more of their investment into the region to create new kinds of products which, in turn, can promote intra-ASEAN trade and investment.”
Meanwhile, Deputy Minister Khanh said that, to Vietnam and the ASEAN, signing the Regional Comprehensive Economic Partnership (RCEP) is very important. “With 15 partnering countries, the RCEP will create a large market with half of the world’s population. Zero tariffs will guarantee that trade inside the ASEAN and with its partners will be promoted,” Khanh said.
He also reaffirmed that the ministry would work with relevant ministries and agencies from different countries to create a common criteria system which is transparent and convenient for all members.
At the initiation ceremony of the ASEAN chairmanship 2020 early last week, Prime Minister Nguyen Xuan Phuc stated that in its new role, Vietnam will build on the achievements and efforts of previous ASEAN chairs and work with fellow members in identifying future directions for the ASEAN Community until 2025 and beyond. “Vietnam will closely collaborate with fellow members to successfully accomplish the priorities of the ASEAN in 2020. This shall serve as our contribution towards a brighter future for the bloc,” PM Phuc said.