Catching opportunities from ASEAN economic community – Part 4

Part 4: An opportunity to boost exports

If the ASEAN Economic Community (AEC) is established, this will be a big advantage for Vietnamese enterprises to expand their markets. With opportunities from AEC and advantages of Binh Duong province, this will be a chance for provincial enterprises to boost exports, thereby boosting local economic growth.

A common opportunity

AEC is a production, trade, and investment bloc that creates a common market for a 600-million-people region having an annual GDP of 3,000 billion USD. Therefore, the AEC will be a big advantage for Vietnamese enterprises to expand their markets, boost exports. Besides, many favorable things will be applied, such as: ASEAN OSS-customs mechanism, self-certification of goods origin; standard harmonization and mutual recognition ... In addition, ASEAN will also promote non-tariff measures and dispute resolution mechanisms. Regarding services and investment, ASEAN orient towards a high degree of liberalization, especially in the service sector, through ASEAN Framework Agreement on Services (AFAS) and ASEAN Comprehensive Investment Agreement (ACIA).

The formation of AEC will be an opportunity for Binh Duong to boost exports, economic growth. Image: ICD Warehouse of Tan Cang Song Than ICD Company in Thuan An town

According to Ambassador Vu Dang Dung, Head of Vietnamese delegation in ASEAN, AEC will create a prosperous, dynamic, and highly competitive economic region; a common market and unified production standards; ensuring a free movement of goods, trade, services, investment and skilled labor among ASEAN countries. In addition, most of tariff and non-tariff barriers will be eliminated; ASEAN OSS-customs procedures will be applied; connected transportation networks will be developed; sectors of agriculture, tourism, energy, transportation and information technology will be linked to create a close cooperation.

Pham Van Xo, Chairman of Binh Duong Association of Export Import, said Vietnam was importing 70% raw materials. The AEC with tax incentives will impact on input sources, lower prices, facilitating the strong growth of Vietnamese textile and footwear industry. Furthermore, regarding human resources, this will be for Vietnam to utilize highly qualified personnel from partner countries to help Vietnam in boost industrial production development as well as exports.

A particular advantage

In 2015, Binh Duong was ranked third nationwide in exports. Some key sectors of the province, like: wood, textiles, footwear …, accounted for a large proportion of the national total exports. This year, provincial exports continued o maintain high and stable growth rate compared to the previous year;  trade surplus reached 3.7 billion USD. Provincial wood processing sector made up over 50% of the national wood exports; export turnover in 2015 was estimated at 2.4 billion USD, up 12.4% compared to 2014, and accounted for 11.5% total exports of the province.

A good news is that timber businesses in the province have continuously innovated technology, design, thus the quality of wooden products has been improved to be competitive to other countries’ products. Besides, abundant raw materials, stable price of domestic and imported materials created favorable conditions for the timber industry’s development. Textile sector also gained an export and import turnover in 2015 of 2.09 billion USD, up 11.6% compared to 2014.

Meanwhile, the mechanics industry has increasingly made up high proportion of 19.1% of provincial total industrial production value in 2015. Electric and electronics sector has also absorbed more and more investments. The AEC will give opportunities for this sector to expand export markets into the member countries.

Regarding agriculture field, although rubber exports, rubber latex price of Vietnam has slumped from the beginning of the year, this sector still plays an important role in Binh Duong. The established AEC will enable rubber industry of the country as well as of Binh Duong to broaden their markets.

Nguyen Van Luong, Deputy Director of Vietnam Esquel Garment Manufacturing Company located in VSIP 1, Thuan An town, said the formation of AEC would bring more opportunities for the company in terms of orders and customers, but challenges of a competitive labor market. To utilize this opportunity, the company will invest more in machinery, automation, skills training for employees to heighten labor productivity, sustainable growth of the company.

Binh Duong has implemented administrative procedure reform in order to create favorable conditions for businesses. Namely, in the field of taxation, the synchronous application of interconnected OSS system according to ISO 9001: 2008, and online tax declaration have helped businesses and taxpayers to save time, simplify procedures and papers. In the field of customs, Binh Duong has attempted to shorten goods clearance time, apply information technologies, VNACCS/VCIS automatic customs clearance system at customs branches in order to bring practical benefits to customs authorities and businesses.

Binh Duong province has another big advantage. That is its location in the southern key economic zone adjacent to seaports, airports. To utilize this advantage, the province has upgraded infrastructure systems of transportation, warehouse, river port, ICD port, and customs declaration support services. Therefore, the province has now 4 river ports, including An Son (Thuan An town), Thanh Phuoc (Tan Uyen town), Binh Duong (Di An town), and Ba Lua (TDM City); 64 inland wharves providing cargo transport and loading services. Besides, the province has developed synchronous infrastructure materials; arterial roads linking Binh Duong New City with urban centers in the province and other provinces in the southern key economic zone.

With the aforementioned advantages, Binh Duong province will have a chance to boost exports, thereby economic growth, when the AEC is established.

Reported by P.Le – Translated by Ngoc Huynh