Opportunities from RCEP for Vietnam's exports to the Indonesian market
Advantage from harmonized rules of origin and expanded options for preferential tariffs when exporting to Indonesia
With its large membership, the RCEP offers an advantage in harmonizing rules of origin, which creates favorable conditions for increasing the ability to obtain tariff preferences for exports to Indonesia. Specifically, RCEP allows the cumulation of originating materials from all 15 member countries, thereby making it easier for enterprises' goods to satisfy the rules of origin and enjoy preferential tariffs under the Agreement compared with ATIGA or the ASEAN+1 FTAs.
In practice, most RCEP member countries, including China, Japan, and ASEAN members, are major sources of raw materials and inputs for Vietnam. Therefore, Vietnamese goods are more likely to meet RCEP rules of origin, and the rate of utilization of tariff preferences under RCEP is also expected to be better than under ATIGA or the ASEAN+1 FTAs.
RCEP does not replace other FTAs; rather, it takes effect in parallel with them. This gives Vietnamese enterprises more options in choosing preferential tariffs and rules of origin in the direction most beneficial to them, thereby providing additional choices for exporting goods to Indonesia at preferential tariff rates. For example, preferential tariff rates under ATIGA may be more favorable than those under RCEP, but compliance with the rules of origin under ATIGA may be more difficult than under RCEP. In such cases, enterprises may choose to apply the rules of origin and enjoy tariff preferences under the RCEP Agreement, as this may be the most advantageous option for them.
Opportunities from the Reduction of Non-Tariff Barriers
The RCEP Agreement includes numerous commitments on simplifying customs procedures and facilitating trade, as well as creating favorable conditions for the recognition of equivalence in SPS measures and encouraging the recognition of conformity assessment results in the area of TBT. These commitments help reduce unnecessary trade barriers between Vietnam and Indonesia, thereby making it easier for Vietnamese goods to access the Indonesian market.
Opportunities to Reduce Costs and Improve Competitiveness
Thanks to the advantage of harmonized intra-regional rules of origin, Vietnam can import raw materials and fuels - products for which it does not have a competitive advantage in domestic production - from RCEP member countries at more favorable prices. As a result, the finished products manufactured in Vietnam can be more price-competitive in the Indonesian market.
In addition, RCEP also includes a wide range of commitments in services and institutional areas that can help manufacturing and exporting enterprises reduce production costs and enhance competitiveness. For example:
Commitments to open service markets that support production, such as finance, telecommunications, and logistics, will help improve competition in these sectors, thereby enabling manufacturers to access higher-quality services at more reasonable costs, which in turn helps reduce service costs in product prices.
Commitments to promote a competitive environment, modern trading methods, and business support mechanisms, such as competition policy, e-commerce, and support for small and medium-sized enterprises, create favorable conditions for manufacturers, especially small and micro enterprises, to improve their competitiveness and better reach customers.
Moreover, it can be seen that throughout RCEP, there are commitments aimed at liberalization, non-discrimination, transparency, and the facilitation of trade and investment among member countries. These commitments help make Vietnam's business and legal environment increasingly more favorable, reducing costs and time for enterprises, thereby making production, import, and export activities more convenient and efficient.
Furthermore, to a certain extent, Vietnamese enterprises have an advantage over businesses in many other RCEP countries in that they do not have to incur additional compliance costs to meet RCEP's standards. This is because Vietnam has already complied with stricter rules under other new-generation free trade agreements with standards equal to or even higher than those of RCEP, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). Therefore, Vietnamese goods are considered to have a certain competitive advantage over those from some other RCEP member countries in this respect.
Source: Center for WTO and International Trade - VCCI
