Foreign invested enterprises in Vietnam are speeding up investments to grab huge export opportunities as the country’s new-generation free trade agreements are due to take effect soon.
Vietnam’s seafood exports will enjoy tax incentives in the CPTPP markets
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To seize the opportunities to promote exports to CPTPP countries, Scavi has made preparations. Earlier this year, the company has put its fourth factory into operation in Thua Thien-Hue province’s Phong Dien Industrial Zone. Additionally, Scavi has proposed building the Phong Dien garment and textile supporting industrial zone to attract investment.
Another giant in the textile-garment industry, South Korean-based Hyosung Corporation, is also preparing to expand its operations in Vietnam. According to the corporation’s managing director Yoo Sun Hyung, the firm has already invested US$1.5 billion in the southern province of Dong Nai and plans to expand its fiber manufacturing projects.
South Korea-based Hi Knit Company Limited was recently also granted an investment license at the Nhon Trach 6A Industrial Zone with total registered capital of US$40 million to produce textiles and nonwoven fabric for export.
Many FDI firms in other industries, which are expected to earn better profit from the CPTPP and the EU-Vietnam Free Trade Agreement (EVFTA), have so far also boosted up investments in Vietnam.
The southern province of Binh Duong recently granted a license to Taiwan-based Vietnam Waytex International Company Limited for its US$25 million furniture manufacturing project in Bau Bang Industrial Zone.
In mid-November, Japanese firm Yuwa Vietnam Company Limited officially launched its second factory to produce moulded electronic plastic components on a land area of 2.2ha in Binh Duong province’s VSIP II. Its first factory, also in Binh Duong, was built with US$4 million in 2009.
Tax down, market up
According to experts, exports of many sectors, such as textile-garment, fishery, timber manufacturing, logistics, realty and agriculture, will benefit significantly from the CPTPP and EVFTA. This thus has compelled FDI firms to increase investments in these sectors.
For textile and garment industry, for example, once the CPTPP takes effect, both Vietnamese and Vietnam-based FDI firms can increase shipments to CPTPP member countries, which spend up to US$40 billion on garment and textile products every year.
The EVFTA will also offer ample opportunities for Vietnamese textile and garment products to ship to the European market thanks to tariff preferences.
Nguyen Thi Tuyet Mai, VITAS’s secretary general, said that the EU is Vietnam’s second largest export market. Given the current tariffs ranging between 10 percent and 12 percent which will be slashed to zero, it will boost Vietnam’s goods to this enormous market.
Wood and timber products will also benefit much from the CPTPP as most CPTPP member countries have committed to removing tariffs on Vietnamese wood and timber products immediately after the agreement takes effect.
Nguyen Ton Quyen, vice president of the Vietnam Timber and Forest Product Association, said the CPTPP will generate more opportunities for the industry thanks to the tax preferential policies.
The same trend is also seen in seafood enterprises in Vietnam as once the CPTPP becomes effective, local enterprises will also find it easier to expand export, especially to new markets like Canada, Peru and Mexico.
In tuna exports, for example, Vietnam currently competes with major traders from Thailand and China. However, neither of them are CPTPP members, enabling Vietnamese tuna to be have better competitive advantages thanks to tax incentives in markets within the pact.
The country’s shrimp exports are also expected to benefit from the fact that India, a leading shrimp exporter, is not a CPTPP member.
