Mr. Nguyen Anh Duong from the Central Institute for Economic Management under the Ministry of Planning and Investment, made this statement at an interview given to a reporter of the People’s Army Newspaper.
He added that when coming into effect, CPTPP becomes one of the world’s largest free trade blocs with a combined market of nearly 500 million people and GDP of around US$ 10.1 trillion, accounting for 13.5 percent of the global GDP.
Reporter: Vietnam is preparing for ratifying CPTPP. What does the move mean in the present context?
Mr. Nguyen Anh Duong: CPTPP is a strategic free trade agreement, especially when protectionism is rising in the world. As one of the founding nations of the CPTPP, Vietnam demonstrates its active role in the progress, marking a new stage for the country in implementing its external policy of independence, self-reliance, multilateralization and diversification in international relations.
Vietnam’s CPTPP membership helps heighten the country’s position in the international arena and in the world trade map. Thus, its ratification of the trade pact is a necessary move to speed up institutional reforms in Vietnam, serving as a driving force for its socio-economic development.
Reporter: Could you please clarify CPTPP’s impacts on Vietnam?
Mr. Nguyen Anh Duong: Regarding long-term benefits, CPTPP will help Vietnam boost institutional reforms, promote the country’s transition to a market economy, and create a clearer and more transparent business and investment environment. International economic integration is no longer seen as a momentum for the country to reform its institution. Presently, institutional reforms are a self-demand of the Vietnamese State, Government, people and businesses.
As for Vietnam’s economic outlook, multilateral trade pacts like CPTPP will foster Vietnam’s investment- and export-driven growth model. Vietnam is said to gain the largest benefit from CPTPP among the other members. The deal covers traditional fields, such as tariff reduction and the opening of service market as well as non-traditional issues of labor, environment, government procurement, and state-owned enterprises.
According to the World Bank, by 2030, under conservative assumptions, Vietnam’s GDP will only increase 1.1 percent; whereas assuming a modest boost to productivity, the increase would be 3.5 percent. Hence, CPTPP would impact and bring about comprehensive benefits in terms of politics, external affairs, and economics to Vietnam.
Reporter: People say CPTPP is a sound response to protectionism. What do you think about that?
Mr. Nguyen Anh Duong: CPTPP is a high-quality trade deal, which will change the game in trade liberalization. The increase in protectionism has more or less slowed down negotiation progress of free trade agreements, especially in deals involving many parties. However, protectionism and bilateralism, which attempt to bar free trade, are only temporarily meaningful to certain countries, but not to the global economy as a whole.
In my opinion, CPTPP is an important voice of many member states and also of others who are interested in this trade deal. CPTPP is a meaningful trade bloc comprising regional countries and is able to generate benefits, whereby it will impact those who are considering to join the agreement and boost multilateral cooperation. Thus, the road-map to back the liberalization of trade and investment will be promoted in the coming time.
Reporter: What are challenges of CPTPP to Vietnam?
Mr. Nguyen Anh Duong: Institutional reforms will facilitate Vietnam. It is seen as both need and mandate for Vietnam when it participates in the common playground. Thus, the country has to promote a process of institutional reforms continuously and effectively right after joining CPTPP. If the country is not active in promoting institutional reforms, it will face more challenges than opportunities. So, the Vietnamese Government will have to stand a huge pressure on institutional reforms.
In addition, Vietnam has to build up a sound relationship with foreign investors. CPTPP will boost investment flows in Vietnam, but there is still a question of how the country takes advantage of the benefits from foreign investment to develop the domestic business community as well as manages reference exchange rate. We do not want to see a scenario that the country attracts more investment and achieves an increase of exports, but local firms only earn a small share of the profits. As a result, Vietnam should select appropriate partners and focus on sectors with potential and advantages.
Reporter: What should Vietnamese enterprises do in order to reap benefits from CPTPP?
Mr. Nguyen Anh Duong: CPTPP offers a good opportunity for Vietnamese businesses to increase their competitiveness, improve product quality, and expand production capability with at the aim of keeping pace with the development trend in the world, so that they will further effectively join the global supply chains.
Domestic firms should actively study and find appropriate business strategies. CPTPP requires high standards for regional commerce. Though most of the Vietnamese enterprises are small- and medium-sized, they can still play the game well, if they have good business strategies and visions.
Medium- and big-sized enterprises can directly get access to the CPTPP market. Meanwhile, small-sized ones should follow the roundabout route, which means that they should, in the short term, take full advantage of smaller trade deals to gather more production experience, relationship, trade names, and partners. CPTPP is a long-term game.
So far, Japan, Mexico, Singapore, New Zealand, Canada, and Australia have ratified CPTPP, which is expected to take effect on December 30 this year. Vietnam’s National Assembly will also vote on the pact in its on-going sixth session.
Reporter: Thank you, Mr. Nguyen Anh Duong!
Translated by Van Hieu