Take advantage of similarities to boost exports to ASEAN

With commitments to open the goods market, offer great incentives in terms of tariffs and import and export facilitations, and thanks to favourable geographical locations and cultural characteristics similarities, the ASEAN market is always wide open for Vietnamese businesses to deploy.

Many offers

According to the General Statistics Office, in the first seven months of 2021, the total two-way trade turnover between Vietnam and ASEAN is estimated at US$40.8 billion, up 38.5% over the same period in 2020; in which, export reached $16.1 billion, up 25.9%, and imports reached $24.7 billion, up 48.2%. The ASEAN market is accounting for 8.8% of the total export turnover of the country, larger than the Korean market (6.5%) and Japan (accounting for 6.4%). Two-way trade turnover between Vietnam and some major trading partners in ASEAN such as Thailand, Singapore, Malaysia, Indonesia, Philippines, and Cambodia gained billions of dollars. Of which, Thailand was number one with a bilateral turnover of $11.3 billion , accounting for 27.7% of the total import and export turnover of the whole region; Malaysia got runner-up with the bilateral turnover of $7.4 billion , accounting for 18.1%.

According to experts and businesses, the ASEAN market is not as difficult as many other markets in Northeast Asia, Europe, or the US. In contrast, thanks to favourable geographical position, goods and goods demand similarities between Vietnam and ASEAN, goods made in Vietnam can gain a dominating position in the market. According to the General Statistics Office, the participation in the ASEAN Free Trade Area (AFTA), the negotiation and signing of the ASEAN Agreement on Preferential Tariffs (CPT), the ASEAN Trade in Goods Agreement (ATIGA) have confirmed Vietnam’s advantages for trade and economic growth, and at the same time created a driving force for the production and business development.

Pham Ngoc Hung, Vice Chairman of the Ho Chi Minh City Business Association, said exports to many markets in the Americas and Europe are facing difficulties due to the blockade orders and escalating transportation prices. As a result, firms should promote ASEAN market development as this enables them to expand export markets, avoiding dependence on a few traditional markets.

Duong Viet Linh, Sales Department, 176 One Member Co., Ltd., said before the Covid-19 pandemic, the company often produced and exported items for partners in the European Union. However, exports have been stopped due to negative impact of the Covid-19 pandemic, the company has taken advantage of its machinery and labour base to produce masks and protective equipment, especially for export to the ASEAN market basing on favourable geographical location as well as facilitating import and export procedures and tariffs.

Statistics from the Vietnam Association of Seafood Exporters and Producers (VASEP) showed ASEAN is currently one of the important export markets of the seafood industry, due to the preferential treatment from AFTA and related agreements. Therefore, seafood exports such as shrimp, tuna and pangasius are increasing in both output and value.

Trade deficit high

In recent years, Vietnam's exports to ASEAN have seen a strong shift from agricultural, aquatic and mineral products to processed products and high-tech industrial goods. Textile and garment is also a potential export group of Vietnam to ASEAN. As a result, the rate of using C/O form for exports to ASEAN is always high compared to other markets.

According to the General Department of Customs, to implement the ASEAN Single Window, Vietnam continues to exchange information on electronic certificates of origin form D with all nine other ASEAN countries. Statistics from the implementation until the end of July showed the number of C/O Vietnam received from ASEAN countries is 383,446; the number of C/O Vietnam sent to other nations is 970,894. The General Department of Customs is working with the Ministry of Agriculture and Rural Development to prepare technical equipment to exchange information on ASEAN customs declarations and phytosanitary certificates with Indonesia and Thailand. Vietnam is expected to connect and exchange information on electronic export customs declarations from October 1, 2021.

Figures of the General Statistics Office show that Vietnam has recorded a trade deficit from the ASEAN market of approximately $8.6 billion in the past seven months, up 123% over the same period in 2020. This shows Vietnamese firms have not yet fully exploited the opportunities and potential to increase export volume. Moreover, the similarity in geographical location, culture, and lifestyle is not only an opportunity but also a challenge for Vietnamese goods. Currently, many similar products but from Thailand, Malaysia and Singapore are more preferred by domestic consumers. According to experts, it is high time Vietnamese enterprises must increase quality and find their own way to increase competitiveness.

The Department of Markets for Asia and Africa (Ministry of Industry and Trade) suggested that to make the best use of tariff opportunities and increase the volume of exports to the bloc, Vietnamese goods must ensure rules of origin and follow strictly customs procedures for certificate of origin. Enterprises also need to update and firmly grasp regulations on standards and quality, invest in upgrading production and preservation lines, focus on packaging, designs and packaging specifications; update consumption trends, participate in trade promotion activities, seek cooperation with reputable local distributors to be able to bring Vietnamese goods to penetrate the market more easily.

In addition to ATIGA, RCEP has also been making it easy for firms to take advantage of export opportunities to the ASEAN market and opportunities to import raw materials and accessories to maintain production and export during the interruption period due to the recent pandemic outbreak. In addition, businesses also believe that thanks to certain similarities, firms can take an active role in grasping cooperate opportunities with businesses in ASEAN countries, creating key products with high export value.

Source: Custom News