Leather footwear would have additional opportunity for growth when Viet Nam joins the Regional Comprehensive Economic Partnership (RCEP). -- Photo vietbao.vn

HA NOI (Biz Hub)— Viet Nam will be able to access a huge market of 3.4 billion people when it joins the Regional Comprehensive Economic Partnership (RCEP).

Countries in RCEP will have a combined GDP of US$21 trillion, accounting for 29 per cent of the world's GDP, said Nguyen Anh Duong, Deputy Director of the Central Institute for Economic Management (CIEM).

Speaking during a workshop held in Ha Noi yesterday on the impact of RCEP on Viet Nam's economy and the opportunities and challenges it would pose, Duong said regulations on origin in RCEP would be simpler and more liberal than in other economic pacts. In addition, the parties would make more commitments on freedom of trade in goods and services and investment, he said.

Negotiations on RCEP officially began in 2012 with six countries: Australia, China, India, Japan, South Korea and New Zealand. The pact aims to build a regional free trade area. The RCEP states' total GDP will be higher than the combined GDP of countries in the Trans-Pacific Partnership (TPP), which will account for 26 per cent of the world's GDP, and it will have a rapidly growing middle class.

According to Duong, RCEP is expected to offer major opportunities to Viet Nam by improving its access to investment and export markets in the member states of the Association of Southeast Asian Nations (ASEAN), as well as partners with demand for diverse goods. At the same time, it could make imports of technology and machinery cheaper, thus creating opportunities for Viet Nam to join the region's production value chain, Duong said.

The pact could also help Viet Nam reduce transaction fees, create a friendly business environment and enhance its role in resolving trade and investment disputes, he said.

Sectors such as seafood, agriculture, construction, garments and textiles, as well as leather footwear, would have additional opportunities for growth, he added. For example, the country would have major opportunities in distribution and in the hotel and restaurant business in the countries in RCEP, especially in Japan and the ASEAN states, besides opportunities in providing services to Australia, Duong said.

However, Viet Nam would also face challenges in banking services as the RCEP countries in the region, such as Singapore, Japan, South Korea and Australia, have highly developed banking sectors.

Vo Tri Thanh, CIEM's deputy director, said RCEP and TPP would not clash but support each other to help Viet Nam integrate further into the world economy.

"The two pacts have a common feature of commitment to freedom in trading goods and services, and in investment. Talks on both RCEP and TPP are expected to end this year," Thanh said.

In RCEP, ASEAN is looking for cooperation and equal development. The TPP is a free trade agreement aimed at resolving the issues of labour standards, a competitive environment, State-owned enterprises, State purchases and intellectual property.

"Several people thought that TPP and RCEP will compete with each other and overlap. However, in my view, the two pacts could supplement each other," Thanh added.

Viet Nam would have more benefits than challenges by joining RCEP, he noted.

Earlier, an ANZ Bank report said that Viet Nam and Thailand would be the countries to benefit the most from RCEP.

Viet Nam's GDP is expected to grow 8 per cent in five years after signing the RCEP, while Thailand's GDP is expected to grow 13 per cent. The RCEP states will account for 85 per cent of the world FDI flow.

Thanh suggested that Viet Nam should take advantage of RCEP by improving the competitiveness of domestically produced items and focusing on some industries that could benefit from the deal. — VNS