The enforcement of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) starting January 2019 is predicted to boost Vietnam’s GDP by 1.3% and up to 2.1% if requirements to join the country’s service sector are further eased, according to the National Center for Socio-Economic Information and Forecast (NCIF).
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The immediate impact of the CPTPP would be a positive sentiment on Vietnam’s brighter economic prospect, which is shared by both foreign investors and local enterprises, Thang said, adding that it would lead to an increase in investment activities.
According to Thang, the record high trade surplus of US$7.2 billion in 2018 is partly thanks to positive anticipation on Vietnam’s macro-economic conditions.
Thanks to the CPTPP, NCIF expected Vietnam’s exports would grow by 4% and imports below 3.8%, he added.
More importantly, the upcoming wave of FDI investment to Vietnam would help the country transform its support industry, which is one of the priority fields for investment. As a result, Vietnam’s trade deficit with China is expected to narrow as FDI enterprises could produce parts and components right in Vietnam.
The rule of origin is key to address this issue, Thang said.
Nguyen Toan Thang from Hanoi Law University said Vietnam could gain benefit of attracting FDI from member countries in CPTPP, especially partners that had not yet signed free trade agreements with Vietnam, including Canada or Mexico.
However, it is necessary to ensure compatibility between Vietnamese laws and the country’s commitment to CPTPP, which is a vital step for Vietnam to grasp opportunities from the agreement, Toan Thang added.
Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said previous lessons from current FTAs showed that Vietnam’s utilization rate of preferential treatment is less than 40%, for which the country must step up its administrative reform.
Echoing Loc’s view, economist Vo Trinh Thanh considered CPTPP a high quality agreement, requiring Vietnam to make breakthroughs in legal frameworks to ensure a competitive environments for both local and foreign enterprises.
