AEC – key to bridging Vietnam’s trade deficit
Vietnam will have a better chance to boost exports and reduce trade deficit if it makes full use of preferential tariffs by 2015, when the ASEAN Economic Community (AEC) is formed.
Nguyen Thanh Hai, Deputy Head of the Import-Export Department under the Ministry of Industry and Trade (MoIT), made the statement at an export forum in Hanoi on April 17.
Vietnam imports tens of billions of US dollars worth of goods annually, mostly machinery, equipment and consumer products, for domestic production. MoIT statistics show that the country’s import value hit US$113.79 billion in 2012 and increased to US$132.12 billion in 2013.
Vietnam always runs a huge trade deficit with China, with import surplus from the market rising from just US$210 million in 2001 to a staggering US$23.8 billion in 2013.
Boosting exports to big economies such as the US, EU and ASEAN, is the key to reducing trade deficit.
Pham Thi Hong Thanh, Deputy Head of the MoIT’s Asia-Pacific Department, said bilateral trade ties between Vietnam and other ASEAN countries increased 4.5 fold from US$8.9 billion in 2003 to US$40 billion in 2013.
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She forecast that exports to these markets will continue to grow steadily as more than 99% of tax lines of six ASEAN countries – Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – will be slashed to zero in 2015 under the ASEAN Trade in Goods Agreement (ATIGA) signed in Thailand in 2009.
This will provide plenty of opportunity for Vietnam to balance trade, Thanh added.
She also pointed out challenges for Vietnamese products in the context of fierce competition, especially when barriers to protect domestic products no longer exist.
Thanh suggested domestic businesses should accelerate exports of key products to ASEAN, such as mobile phone handsets and components, computers, electronics and components, means of transport, tools, machinery, equipment, steel and rice in the short term. They should also devise long-term business strategies to take full advantage of incentives post 2015.
MoIT Deputy Minister Do Thang Hai said ASEAN is one of Vietnam’s leading trade partners, accounting for 15% of the country’s total trade. The regional grouping made up 22.4% of total foreign direct investment (FDI) capital in 2013 with Singapore, Malaysia and Thailand being key investors.
AEC and free trade agreements (FTAs) have helped promote Vietnam’s exports to ASEAN, Hai stressed.
