Workers at An Giang Fruit-Vegetables & Foodstuff JSC process products for export. Vietnamese firms are apprehensive about international integration. — VNA/VNS Photo Vu Sinh

The department polled 3,500 companies for its "Vietnamese automation and manufacturing sector's readiness to internationally integrate" report, done in the context of Viet Nam's many free trade agreements like the Eurasian Economic Union, ASEAN Economic Community and Trans-Pacific Partnership and FTAs with Europe, Japan and South Korea.

The survey found 32 per cent had confidence in their products and services, 26 per cent in their management ability, 25 per cent in their prices, and 17.5 per cent in their resources.

Most of the respondents know about FTAs through the media, with 84 per cent being interested in the EAC, 82 per cent in the TPP, 67 per cent in the Viet Nam – Japan FTA, 64 per cent in the Viet Nam – European FTA, and 63 per cent in the Viet Nam – South Korea FTA.

Importantly, 84 per cent supported Viet Nam's signing of FTAs, with over 53 per cent saying they "strongly supported" and nearly 31 per cent saying supported though with concern.

Only 0.6 per cent strongly objected to FTAs.

"Viet Nam is one of several countries in South East Asia to strongly integrate," Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) newspaper quoted economist Vo Tri Thanh as saying.

Though a high proportion of Vietnamese firms know about FTAs, only a small number understand them enough to take advantage. Thus, only around 35 per cent of Vietnamese products and services benefit from the lower tariffs offered by FTAs with the rest attracting up to 5 per cent higher taxes.

"Vietnamese firms have missed an opportunity since they don't pay enough attention to FTAs," To Hoai Nam, deputy chairman and general secretary of the Viet Nam Small- and Medium-sized Enterprise Association, admitted. The report found nearly 70 per cent of the polled companies saying they would like to get support with respect to FTAs and learn about guidelines and 55 per cent wishing to have international market information from the Government and 49 per cent, local market information.

How to take advantage

"To take advantage of international integration, Vietnamese enterprises should focus on three major fields: improving quality of products, expanding production and business, and exploring new markets," Thanh said.

He also warned that while technology plays a central role in improving competitiveness during integration, only 44 per cent of domestic companies plan to invest in new and modern technologies.

Local companies should change as soon as possible to avoid a situation where foreign investors come to Viet Nam and monopolise the advantages offered by FTAs, he said. Nguyen Anh Duong of the Central Institute for Economic Management's macro economic policy department said: "Authorities should create conditions and provide support to improve enterprises' capacity to enter the international market.

"Enterprises must be proactive and study about FTAs."

While FTAs provide the opportunity to promote exports, enable Viet Nam to complete its task of creating a market-oriented economy and motivate Vietnamese businesses to become more competitive, the country's low competitiveness prevents it from grabbing the opportunities thrown up by international integration, he said.

The competitive pressure on local businesses would increase as would the threat of failure in the home market, he said.

He listed five factors that would increase their competitiveness, saying authorities should connect local and FDI companies, educate the business community about value chains, help businesses hedge their risks using methods like insurance, apprise them about international standards and help them focus on other competitive aspects instead of just price. —  VNS