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New Japan-VN trade pact will restructure regional flow of goods
Vietnamese businesses expect to source more goods directly from Japan when a bilateral tariff reduction agreement goes into effect, making imports cheaper.
Ninety-two percent of goods traded between Japan and Vietnam will enjoy tariff reduction or exemption under Vietnam-Japan Economic Partnership Agreement (VJEPA). This latest milestone in Vietnam’s drive for globalization goes into effect in October. In this story, Nguoi Lao Dong, a Saigon newspaper, polls businessmen on how they will respond to new opportunities.
VJEPA covers 86 percent of forestry and farm products and seafood and 97 percent of industrial products. Among goods for which Japan has a high reputation, many kinds of home appliances and digital electronics will enjoy sharp tariff reductions. Vietnam’s tariff on parts for flat screen TVs and DVD players will fall to three percent. The tariff on digital cameras will be reduced by ten percent and on colour TVs by 40 percent.
High grade imports from Japan expected to flood into market
According to traders, the electronic and home appliance products with well-known Japanese brand names that are seen in Vietnamese stores have almost all been made in Thailand, Singapore, Malaysia and China. Meanwhile, “Japanese products” are rarely imported directly from Japan because their price has been higher. Things will change when VJEPA goes into effect in October.
The marketing director of a shopping center in HCM City said the big store is considering raising the percentage of imports from Japan in its total imports.
The business director of an “appliance supermarket” in HCM City’s Cholon section also said that his company will import high grade products from Japan, adding that demand for them is increasingly high on the domestic market. He gave this example:
A 32 inch LCD TV bearing a Japanese brand name but assembled in Vietnam is now selling at seven million dong. An equivalent made-in-Japan TV would sell today for 13 million dong – too high a price to tempt consumers. When VJEPA goes into effect, the tariff will be reduced from 20 to five percent, permitting a retailer here to offer the TV for 11.5 million dong, “a price affordable by consumers.”
Vu Ngoc Duy, a deputy director at Tan Binh Electronics JSC, a Vietnamese maker of digital electronic products, thinks that the import tariff reductions points out that not only made-in-Japan imports will decrease sharply in price. The prices of made-in-Vietnam products will also decrease because Vietnamese companies will be able to buy electronic parts more cheaply. Besides, Duy says, Japanese parent companies will help subsidiaries to make suitable adjustments, resulting in lower production costs that harmonise benefits for all involved parties.
VJEPA will affect many industries and sectors
The General Director of Sony Electronics Vietnam, Kimihiro Itoki, commented that some big factories in ASEAN countries like Malaysia and Thailand are already producing high grade “Japanese products.” [These goods enter Vietnam under a favorable ASEAN tariff.] VJEPA will reduce the relative cost of imports from Japan, but price decreases will still depend on many factors, including the exchange rate and cost of transport. Itoki expects the impact of the new trade agreement to be substantial, but, he said, it will not be fully felt for several years.
The head of a HCM City-based car trade company predicted that the VJEPA tariff reductions will have big impacts on the automobile industry, since the tariff on many car parts fall to zero percent instead of 40 percent.
The director of a chemicals trading company in HCM City said that his colleagues are very interested in the news on tax reductions and VJEPA. Japan is a good chemicals supply source, but Vietnamese enterprises dare not import products from there because of the high tariffs. If the tariffs are reduced to zero or only several percent, Ngoc will consider raising the percentage of Japan-made products in the total imports to twenty or thirty percent.
The marketing director of a paper products company said the tariff reductions will much influence the domestic paper industry, since Japan is a source of high quality paper products.
vietnamnet, nld
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