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What will ACFTA bring to Vietnam?
Economist Pham Chi Lan shares her views on ACFTA and its possible effects in Vietnam.
Lan, a renowned economist, was once Deputy Chairwoman of the Vietnam Chamber of Commerce and Industry (VCCI) and Member of the Prime Minister’s Research Team, Member of the Vietnam Institute of Development Studies.
The Government of Indonesia, under pressure by its business community, is considering a delay in the implementation of some ASEAN-China Free Trade Agreement (ACFTA) commitments. The country fears that industries such as garment, footwear and steel production may suffer from an overflow of Chinese goods when the import tariff is cut.
Commenting on the situation, Pham Chi Lan, an economist who has spent years researching Vietnam’s integration process and the impact on business, offered her observations in a recent interview with Saigon Tiep Thi.
She agreed that the Government of Indonesia has every reason to worry about Chinese goods flooding the domestic market.
“Their worry proves to be very practical and they are considering taking actions to protect their businesses,” Lan noted. “Developing countries, like Indonesia or Vietnam, or other ASEAN members, are all facing stiff competition from Chinese goods.”
“Vietnam has five more years than other countries to prepare for ACFTA, but I am afraid that this will not be enough,” she added. “The economic downturn narrowed export gaps have been burdening businesses. Now their pieces of the “cake” of the domestic market are in danger of becoming smaller because of low cost products from China.”
Saigon Tiep Thi: Do you think that China must now seek other markets, such as the ASEAN market, to consume its huge volume of products, since other big markets of the world such as the US and the EU, have been narrowed in the global crisis?
Pham Chi Lan: Yes, I think so. China itself has to subdue the export of some products to the US and the EU such as steel, footwear and garment, because the products are considered “sensitive” in the context of the global crisis. Since China has excess capacity, it will certainly find A way to bring products to other markets, including ASEAN. Former Minister of Trade Truong Dinh Tuyen stated when the crisis broke out that some $50-70 billion worth of Chinese goods were carried to the south of China to get ready to go to ASEAN markets.
SGTT: Why hasn’t the Vietnamese business community petitioned the Government like Indonesian businesses have?
Lan: It’s a pity that Vietnamese businesses were not consulted during the negotiation process and they do not know about the market opening roadmap. In fact, I think that some big enterprises were consulted, but in many cases, their benefit does not truly benefit the whole business community.
For example, in the early harvesting programme, under which several hundreds of product items see tariff cuts every year, businesses are only informed about the tax cuts early each year, when the Ministry of Finance releases notices.
SGTT: Do you think that this should also be blamed on the weak voice of the associations?
Lan: In many associations, big enterprises that are mostly State-owned have the decisive voice, while small businesses do not.
SGTT: Do you think that Vietnam should install technical barriers to protect its businesses and consumers?
Lan: The stronger the trade liberalization is, the more technical barriers are installed. No country wants to open its doors widely to “welcome” foreign goods that may kill domestic goods.
Vietnam has an ordinance on safeguard measures and an ordinance on anti-dumping, but they have not been used. As far as I know, to date, there has been only one request to investigate Chinese construction materials for alleged dumping activities.
VietNamNet, SGTT
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