VietNamNet Bridge - Vietnam has joined 15 free trade areas (FTAs) at the same time, which has worried businesses of overlapping regulations. In its cooperation relationship with Japan, for example, Vietnam has participated in three different FTAs.

Of the 15 FTAs, eight FTAs have taken effect, and seven FTAs are under negotiation. Ms. Phung Thi Lan Phuong, Head of the FTA Division of the WTO and Integration Center of the Vietnam Chamber of Commerce and Industry (VCCI), said that in the process of integration, enterprises can apply any FTA because the signed FTAs and those which are under negotiation exist in parallel, and the latter would not eliminate the former. Companies need to research agreements to apply the more beneficial one. Later FTAs usually have a higher level of liberalization.

At this moment, particularly in cooperation relations with Japan, Vietnam is engaged in three different FTAs, including the Agreement on ASEAN - Japan Comprehensive Economic Partnership (AJCEP), and the Vietnam - Japan Comprehensive Economic Partnership Agreement (EPA), and Japan is also one of the countries participating in the Trans-Pacific Partnership (TPP). Vietnamese businesses are confused as they don’t know which FTA will be applied.

"For example, the ASEAN - Japan FTA does not commit low taxes as the Vietnam – Japan FTA, but the rules of origin are more expanded. Raw materials and goods can come from the intra-community countries of ASEAN and Japan. Both are effective in parallel so businesses should consider, with reference to the actual activities to choose from tax incentives or preferential rules of origin, to apply the more favorable," VCCI’s Phuong said.

Small- and medium-sized enterprises have to help themselves

According to the General Statistics Office, small and medium-sized enterprises (SMEs) account for 97.6% of the total enterprises in the country (about 500,000 companies), contributing 43.2% of GDP, 61% of employment, 31% of exports and nearly 30% of budget revenues. In the coming time, SMEs will be subject to the strongest impact from trade agreements.

Mr. Mac Quoc Anh, Vice President and General Secretary of the Association of Hanoi SMEs, said: "The heat of the TPP is blowing on the neck. If Vietnam does not take advantage of the TPP, Vietnam’s economy – which is the weakest in the 12 participating countries - will be 'invaded' by mighty foreign corporations. We'll lose at home!"

Recalling nine years ago when Vietnam joined the WTO, many were positive, saying that Vietnam would soon become a dragon or a tiger. But Vietnam has not turned into a dragon yet. The main reason was inner weaknesses. Even enterprises, the pioneers in integration, do not yet know clearly about the FTAs.

Ms. Phung Thi Lan Phuong said in the coming time when Vietnam’s integration in FTAs is deeper and wider, direct support for SMEs will no longer exist. To enjoy the advantages of integration, SMEs will have to help themselves and enhance their capabilities through thorough research of the FTAs with which Vietnam is engaged.

Economist Nguyen Tat Thinh also said that SMEs need to study and team up to become the "kitchen" of the world in supporting, processing, and manufacturing industries.

Thinh predicted that after integration, in the next 4-5 years, the number of SMEs will increase, accounting for 98% of all enterprises in Vietnam. More and more SMEs will be established in districts and communes, and most leaders will be young. For Vietnamese people to not lose at home, Thinh said that the most important things to change should be three factors: organization, financing and standards!

Na Son