Vietnamese enterprises are successfully utilizing the CPTPP market’s resources, resulting in positive growth in investment attraction and import and export.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has been in effect for about 5 years now, and numerous encouraging developments have been noted, particularly in trade with the markets of CPTPP members. Vietnam’s export turnover and trade surplus have significantly increased in recent years thanks to the growth of import-export activities with the markets of the CPTPP members.
The rate of using C/O CPTPP for staples increased significantly
According to the Ministry of Industry and Trade, trade turnover between Vietnam and CPTPP countries would reach 104.5 billion USD in 2022, up 14.3% from 2021. Of which, Vietnam’s export turnover to CPTPP countries reached 53.6 billion USD, an increase of 17.33% compared to 2021. Import turnover from CPTPP countries reached 50.9 billion USD, an increase of 11.3% compared to 3021.
In terms of markets, Vietnam’s export turnover to 8 out of 10 CPTPP countries grew positively, with some markets increasing by 163% like Brunei. Regarding the three new markets with FTA relations, the largest market, Canada, nonetheless saw growth of approximately 20.1%, despite Mexico and Peru seeing growth declines of 0.5% and 5.5%, respectively.
Notably, in comparison to 2021, the rate of use of CPTPP Certificates of Origin (CPTPP C/O) for the majority of Vietnam’s staple exports continues to increase favorably and significantly in 2022. In particular, the rate of using CPTPP C/O for seafood increased by 41.7%, footwear by 51.7%, textiles by 185.2%, coffee by 140.1%, vegetables and fruits by 62.32%, cashew nuts by 39.4%, wood and wood products by 23.5%, machinery and equipment by 152.3%,…
The two countries with the highest usage rates of C/O form CPTPP are Canada and Mexico, with 13.7% and 30.8% of all C/O forms CPTPP issued for exports to CPTPP countries, respectively.
The trade balance is tilted towards surplus exports
In the opposite direction, import turnover from 8 out of 10 CPTPP countries recorded positive growth, especially Vietnam’s traditional import markets such as Australia increased by 27.3%, New Zealand increased by 12.42%, Japan increased by 2.5%.
Meanwhile, imports from new CPTPP members with FTAs, such Canada and Peru, fell by 6.4% and 5.9%, respectively. These markets make up a very small fraction of Vietnam’s total import turnover, with Canada accounting for 0.2% (down from 0.23% compared to 2021), Mexico for 0.15% (up 0.15% compared to 2021), and Peru for 0.02% (unchanged compared to 2021).
In contrast to 2021, when Vietnam’s trade deficit with CPTPP countries was approximately 74.5 million USD, Vietnam had a surplus of 2.63 billion USD in 2022. In particular, the trade surplus from trade exchanges with three new FTA partners -Canada, Mexico, and Peru – in 2022 reached 11 billion USD, making up 94% of Vietnam’s overall trade surplus and rising by 6.7% from 2021. However, although new FTA markets bring a large trade surplus to Vietnam, the proportion of these markets in Vietnam’s total export turnover is still very modest, with Canada only accounting for 1.7%, Mexico for 1.22%, and Peru for 0.14%.
By locality, the Ministry of Industry and Trade said that among the provinces and cities reporting import and export data, 52 out of 63 provinces have generated export activities with CPTPP countries, an increase of 11 provinces from 2021. The locality with the largest trade exchange with CPTPP countries is Ho Chi Minh City, followed by Binh Phuoc, Bac Ninh, Hanoi and Thai Nguyen.
Highly exported items from locals to CPTPP countries include textiles, machinery, equipment, other tools and spare parts; computers, electronic products and components; phones and components; transport vehicles and spare parts,…
FDI from CPTPP countries increased in number of projects and investment capital
In terms of investment, Vietnam received nearly 11.5 billion USD in total from CPTPP countries in 2022, an increase of 2.6 billion USD from 2021. 577 new projects were licensed, which is an increase of 77 projects from 2021. CPTPP members with the most total registered capital invested in Vietnam are Singapore with 6.4 billion USD and Japan with 4.7 billion USD.
Regarding capital rise, 3 out of the 10 CPTPP countries reported an increase in investment capital, with Japan having the strongest rise (598 million USD and 4 projects). Singapore (a decrease of 3.8 million USD), Australia (a decrease of 31 million USD), Malaysia (a decrease of 13.9 million USD), and Canada (a decrease of 8.42 million USD) are the CPTPP countries with the highest declines in investment capital in 2022 among CPTPP countries.
By successfully utilizing the CPTPP market, Vietnamese enterprises and goods have been able to overcome obstacles and challenges in the current global economic fluctuations, promote trade cooperation with CPTPP markets, and contribute to the expansion of the economy as a whole.
Along with encouraging outcomes, Vietnamese enterprises still face challenges when trying to take advantage of the CPTPP market’s resources. For instance, although new FTA markets have experienced rapid growth, their proportion is still quite modest. The rate of utilizing incentives has not met expectations; FDI enterprises still account for the majority of Vietnam’s high-turnover export products; There is still significant potential to grow and develop the Vietnamese brand in the CPTPP market,…
Connect and support enterprises to better utilize CPTPP
In the near future, in addition to institutional solutions, propaganda, and guidance on implementing the Agreement, measures to support businesses to better utilize CPTPP will continue to be focused.
Accordingly, the Ministry of Industry and Trade will coordinate with ministries, branches and municipalities to create an ecosystem to take advantage of opportunities presented by FTAs in general and the CPTPP in particular. It is anticipated that each province and city will concentrate on picking 1-2 core fields or industries to develop an ecosystem due to the limited resources available. It will extend to other fields if it is successful.
“To support this ecosystem, central and local management agencies need to work closely with each other to develop policies and specific support measures suitable for selected key fields or industries ”, the Ministry of Industry and Trade suggested.
In addition, it is necessary to consider setting aside separate capital to support enterprises to take advantage of FTAs. The Ministry of Industry and Trade proposed that the State Bank coordinate with the Ministry of Industry and Trade and relevant ministries and branches to work in more detail with commercial banks to build appropriate credit sources to support businesses that want to improve production capacity to take advantage of opportunities from FTAs (could be preferential interest rates in line with international commitments, more favorable credit access conditions…).
In addition, it is necessary to proactively seek, connect and cooperate with international credit institutions such as IFC, WB, ADB or other legal financial sources to create capital to help Vietnamese enterprises carry out digital transformation and green transformation to promptly meet increasing standards from export markets as well as consumer tastes around the world.
In addition, a comprehensive policy must be in place to encourage companies to access and use “internal” raw materials available in order to satisfy the origin requirements outlined in each FTA’s regulations, including the CPTPP.
It is necessary to improve the quality and competitiveness of Vietnamese export enterprises towards more balanced exports and imports, diversify export markets, aiming at stability and long-term, and improve the efficiency of the entire economy,…
Source: Tap Chi Cong Thuong