Yarn manufacturing at Ha Nam Textile Company in Phu Ly, the northern province of Ha Nam. (Photo: VNA)In its latest Global ResearchReport titled “Vietnam–RCEP: Opportunities and challenges”, the bank said the membership in the pact further strengthens Vietnam’s trade position and should contribute to the post-pandemic recovery this year. Major export categories that are expected to benefit from the RCEP include information technology, textiles, footwear, agriculture, automobile and telecommunications.
The deal is expectedto eliminate about 90 percent of tariffs on trade between the signatorieswithin 20 years.
Over the longer term, the deal could form a basis for anew supply chain in the region, with Vietnam playing a key role. The countrytargets average export growth at 6-7 percent a year from 2021 – 2030.
“SMEs, which account for 98 percent of all enterprises inVietnam and contribute 40 percent of GDP, are poised to benefit as the pactprovides opportunities for them to move up the value chain,” the report said.
However, Vietnam is also likely to face more competition,both in export markets and domestically, as a result of the RCEP. For exports, thepact increases competition from other Southeast Asian countries, some of whichare strong in similar product categories to Vietnam.
Over time, this could prompt Vietnam to move into high-techmanufacturing, said the report. The RCEP should facilitate this process, making iteasier to source high-quality materials from other member countries andimproving market access for higher-value-added goods.
More broadly, the RCEP is likely to accelerate China’seconomic integration with the rest of the Asia–Pacific region; in contrast, theUS is not an RCEP signatory. Vietnam will continue to benefit from its role asan alternative manufacturing hub as companies adopt a “China plus one”diversification strategy.
At the same time, however, China’s low-cost products willgain better access to Vietnam’s domestic market under the RCEP, posing potentialchallenges to domestic competitors, it added.
Standard Chartered Bank’s economists expect a strong currentaccount (C/A) surplus and FDI flows to remain the key pillars of support forthe Vietnamese currency over the long run. The RCEP is likely to further boostVietnam’s exports, supporting the C/A balance, and help attract increaseddirect investment flows./.
Over the longer term, the deal could form a basis for anew supply chain in the region, with Vietnam playing a key role. The countrytargets average export growth at 6-7 percent a year from 2021 – 2030.
“SMEs, which account for 98 percent of all enterprises inVietnam and contribute 40 percent of GDP, are poised to benefit as the pactprovides opportunities for them to move up the value chain,” the report said.
However, Vietnam is also likely to face more competition,both in export markets and domestically, as a result of the RCEP. For exports, thepact increases competition from other Southeast Asian countries, some of whichare strong in similar product categories to Vietnam.
Over time, this could prompt Vietnam to move into high-techmanufacturing, said the report. The RCEP should facilitate this process, making iteasier to source high-quality materials from other member countries andimproving market access for higher-value-added goods.
More broadly, the RCEP is likely to accelerate China’seconomic integration with the rest of the Asia–Pacific region; in contrast, theUS is not an RCEP signatory. Vietnam will continue to benefit from its role asan alternative manufacturing hub as companies adopt a “China plus one”diversification strategy.
At the same time, however, China’s low-cost products willgain better access to Vietnam’s domestic market under the RCEP, posing potentialchallenges to domestic competitors, it added.
Standard Chartered Bank’s economists expect a strong currentaccount (C/A) surplus and FDI flows to remain the key pillars of support forthe Vietnamese currency over the long run. The RCEP is likely to further boostVietnam’s exports, supporting the C/A balance, and help attract increaseddirect investment flows./.
VNA
