Sharing at a recent seminar on "Vietnam's textile, footwear, furniture and beverage industries under the opportunities and challenges from CPTPP,” which was co-organised by the Vietnam Chamber of Commerce and Industry and the Australian Embassy in Vietnam, economists projected that CPTPP and its tariff commitments will open up markets of the 11 economies participating in the agreement offering great opportunities for many Vietnamese export items.
Experts held that among the export sectors gaining more opportunities from the CPTPP, the wood and textile industries will be the two to benefit the most. Specifically, with zero import tax tariff, experts said that the CPTPP will bring great opportunities for the lumber industry, as once the CPTPP is implemented, 95 tariff lines will be reduced to 0%.
For that reason, timber enterprises will benefit from importing raw materials from the markets such as Canada and Japan in the CPTPP, while exporting products within the bloc they will also enjoy the zero percent tax rate. In addition, the benefit of zero import tax is also a great opportunity for businesses to cut their costs for renewing machinery and equipment by 20-30%.
In recent years, export turnover of Vietnam’s wood industry has continuously increased. Vietnam is now the second largest timber exporter in Asia and among the Top 5 timber exporting countries in the world. In 2019, the export turnover of Vietnamese wood and forest products is expected to reach about US$11 billion. With that growth, in addition to the export tax advantages from CPTPP, the Government and Vietnam's timber industry have set a target of reaching a total export value of about US$20 billion by 2025 for the sector.
Both the wood and textile industries are facing great opportunities from CPTPP.
Along with the wood industry, it is also expected that there will be more growth opportunities from CPTPP for the textile sector. Currently, Vietnam's leather and footwear exports are the second largest in the world, behind only China. Vietnam’s textile and apparel exports are also ranked third in the world, behind China and approximately equal to India.
Before the CPTPP took effect, the CPTPP member countries' markets accounted for 12.5% of Vietnam's total footwear exports, 16% of total textile exports, 20% of total wooden exports and more than 23% of the country’s total beverage exports to the world.
However, experts also warned about the new challenges that will arise from the CPTPP. Besides creating opportunities to access new markets, CPTPP with commitments on market opening will also result in considerable competitive pressure for enterprises, even in the domestic market.
Especially, the detailed and complex conditions of CPTPP's rules of origin would be another obstacle for businesses, as not all of them could meet to take advantage of tariff preferences, not to mention that the CPTPP also includes other commitments on labour, environment, intellectual property, etc., that could increase the cost for businesses.
With the two sectors identified as gaining the most opportunities – the wood and textile sectors each have different commitments on tariff reduction and rules of origin. Therefore, in order to boost exports in the future, experts suggested enterprises to have appropriate business plans and sustainable development solutions to effectively take advantage from the CPTPP.