Vietnamese businesses may face challenges when Vietnam fulfills its WTO commitments to market openness next year, said an expert in economic integration.
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Speaker Pham Van Chat of the Ministry of Industry and Trade told local businesses at a conference in Ho Chi Minh City on Monday that local enterprises should rapidly prepare themselves to cope with the challenges arising from for the country’s market openness as committed to the World Trade Organisation (WTO).
Chat, who is also an arbitrator at the Vietnam International Arbitration Centre of the Vietnam Chamber of Commerce and Industry, told the Daily on the sidelines of the meeting that Vietnam would nearly fulfill its tariff cut commitments early next year.
Most of the goods imported by Vietnam will enjoy the lowest tariffs from January 1 next year as per the country’s commitments to WTO, he added.
“About 60% of tariff lines will be cut as committed. We have seven months from now to open up the market,” Chat said. “It’s urgent now for local enterprises to make preparations to compete on the home market.”
He added foreign companies had been trying to expand their retail sales networks to rural and remote areas of Vietnam after having set up their distribution channels in major cities, such as Hanoi, Ho Chi Minh City, Danang and Can Tho, since 2009.
With an increasing local market share held by foreign firms, coupled with further market openness, domestic companies will face fiercer competition, he said.
An assessment by the Government, he said, shows local businesses have remained weak since the country joined WTO four years ago. The weaknesses found in the local corporate sector are difficult access to loans and lack of skilled labour, competent managers, materials for production and updated technology.
In line with the market openness commitments, foreign businesses are allowed from this year on to buy rice in Vietnam for export, instead of having to set up a joint venture with local partners.
Next year the right to export activity will be expanded, with more products in Vietnam to be added to the list of items which foreign companies can buy locally for export. This means local firms’ monopoly of export operations will be over.