Vietnam manufacturing with opportunities from RCEP

Vietnam can be one of the countries receiving many benefits from RCEP when there are strong products such as agriculture and fisheries to meet the needs of most members. The RCEP Agreement will bring Vietnam economic benefits in the following aspects:

First, RCEP is an easier access to investment and export markets of ASEAN and partners. RCEP is the region with the largest market of which Vietnam has participated. Many enterprises expect RCEP to create a "huge" market, and Vietnam has opportunity to access markets with diverse needs for goods and services.

Import and export opportunities will be created from RCEP, of which tariff preferences policies, behavior regulation, uniformity in customs procedures, trade facilitation will be improved gorgeously. Moreover, cost reduction under the impact of market opening of manufacturing services will help member’s economy soar up. Joining RCEP, Vietnam has chance to increase by 2% to 4% of GDP (2020) compared to the case of not participating agreement. RCEP region will account for 32.5% of the global investment flow, signing RCEP helps investors to be treated fairly, equally, safely protected and pushed enough.

Second, this Agreement will open opportunities to promote import and export with cheaper cost, especially the input materials for manufacturing and modern technology machinery and equipment. When the RCEP is signed and comes into force, the source of raw materials imported by Vietnamese enterprises from ASEAN + 6 countries will be considered as a source of raw materials originated from Vietnam when exporting products to other countries, which signed bilateral and multilateral Agreements with Vietnam. Importing cheaper merchandise such as steel from China, plastic products from Korean and Japanese. RCEP facilitates the import of suitable modern machinery and equipment from Korea, Japan and some ASEAN countries with reasonable tariffs.

Third, participating in the regional production and value chain network of RCEP Agreement will make opportunities for SMEs, which helps them take advantage of abundant resources of value chain. RCEP covers the production chain of manufacturing large number of goods in Vietnam. For example, in the textile - garment sector, the CPTPP does not have China as member, so it is difficult for Vietnam to take advantage of the tariff preferences because of textile - garment materials majorly imported from China. With RCEP, Vietnam can fully take advantage thanks to the joining of China in the RCEP. This makes great difference between RCEP and other free trade agreements.

Markets in the RCEP currently cover almost the entire production chain of many goods that Vietnam has strengths, such as electronic products, textiles, footwear, processed food, textile industry, etc. with low production costs. Moreover, joining RCEP helps Vietnamese exporter access wealthier consumer markets in Australia, New Zealand and China. With the participation of supply partners of raw materials from China, Korea, Japan, etc., the harmonization of origin regulations and trade facilitation regulations in RCEP will create new regional value chains, supporting businesses to make better use of tariff preferences in the RCEP.

Finally, RCEP helps to cut transaction costs and make a more friendly business environment. RCEP is a market region with strong economic development, so the demand is great. The characteristics of consumers in RCEP (16 countries) do not require too much of product quality. The RCEP market has great demand for products that Vietnam has competitive edges such as telephones, electronic products, textiles - garments, footwear ... thanks to the harmonization of current regulations and general application in different FTAs ​​of ASEAN, further improved tariff preferences, and more harmonized internal regulations of origin.

Whether the scenario of RCEP 16 (with India) or RCEP 15 (without India) in the context of the US-China trade war continues, Vietnam is considered to be the country that most get benefits with the increase by 0.70% of GDP (RCEP 16) or 0.66% (RCEP 15) by 2030.

Source: https://tapchitaichinh.vn/