Local and international experts discuss TPP opportunities, challenges at a conference held in HCM City on Friday by the Investment and Trade Promotion Centre of HCM City and HR Media. — VNS Photo

HCM CITY (Biz Hub) — The Trans-Pacific Partnership agreement is likely to bring benefits to Viet Nam but also challenges, a conference heard yesterday in HCM City.

Trương Dinh Tuyen, the former commerce minister and the Government's senior advisor in the TPP negotiations, said the trade deal would bring investments to Việt Nam, expand its exports, create jobs and promote economic growth.

It would bring new technologies and management expertise, transforming the country's growth model and creating a framework for institutional reform and improving the business environment, he said.

But the competition would be fierce, he warned.

"Agriculture and rural areas will be vulnerable if their products cannot compete and food safety standards and disease prevention are not ensured.

"It will be difficult for Vietnamese goods to enter markets that have FTAs with Viet Nam even when the import tax is reduced to zero, while their products can easily penetrate our country."

The opportunities would not by themselves turn into benefits or market strength, he said, adding that it depends on whether the country can undertake timely and effective reforms, both economically and politically, to meet the challenges and capitalise on the opportunities offered by the agreement.

With FTAs not likely to have any great impact on the economy this year, slow recovery of the global economy and difficulties in the domestic economy, growth is expected to be only 6.5 per cent, or even lower depending on the outcome of the restructuring and improvement in the business environment.

The TPP is expected to take effect in 2017 and, along with other FTAs and a recovery of the world economy in 2017 and 2018, would create new momentum for Viet Nam's economy to grow, he said.

"Based on these factors, Viet Nam's economic growth in 2017 is expected to be higher than in 2016 and could get even better in 2018," he said.

Rules of origin

Speaking about the challenges in complying with TPP trade commitments, Nestor Scherbey, senior advisor to the Viet Nam Trade Facilitation Alliance, said rules of origin is the greatest challenge for a producer in Viet Nam.

"Multinational FDI companies will have to identify, plan for and make changes in their global supply chains because of the Rules of Origin (ROO) of TPP.

"They must do this to take advantage of the duty and tax preferences granted by these agreements to trade in finished goods when they are exported to TPP markets.

"The ROO of TPP and other new FTAs provide the greatest opportunity for new investment by these global companies in Viet Nam as well as by their suppliers in Viet Nam.

"These rules will also provide new opportunities for Vietnamese companies to become suppliers to … global companies in their global supply chains."

So businesses in Viet Nam should be ready to make new investments to secure raw materials and produce goods, he said.

Producers must demand that suppliers of materials and components should provide documentation proving the origin of the materials and components supplied, he said.

The Government should establish a database of foreign-invested companies and domestic suppliers for the purpose of identifying opportunities for the latter to become suppliers to FDI companies, he said.

Herb Cochran, executive director of the American Chamber of Commerce in Viet Nam, said Vietnamese small and medium-sized enterprises should understand the requirements of global businesses and the global supply chain.

He said companies should check out websites of major US retailers like Target and Walmart to find out what the latter need and what they should do to get orders.

Nguyen Thi Thanh Ha of the National Office of Intellectual Property said the TPP sought to set high standards on intellectual property protection, including introduction of criminal procedures and penalties for commercial-scale infringements of intellectually property, which are seen as stricter than regulations under the WTO.

The enforcement of such regulations would be a challenge for Vietnamese firms.

In the long run, however, better protection of intellectual property is expected to provide stronger incentives for businesses to invest in creative industries that Việt Nam is seeking to develop, according to delegates. — VNS