Domestic firms will have to face tough competition as thousands of goods from other South East Asia countries have been exempted from duty tax in accordance with the ASEAN Trade in Goods Agreement (ATIGA) on January 1.
Supermarket is an important retail channel
Do Phan Thanh Bao, director of Dona Newtower Food and Beverage JSC, said even though some of their materials were exempted from tax, others still have high import duties. That's why the prices of their products are still high and they will be at disadvantage compared to other tax exempted products.
According to Van Duc Muoi, General Director of the Vissan Company, the productivity of Vietnamese farms is low and the cost for animal feed is high. Food companies will be in difficulties, especially when frozen meat will not have to bear import duty.
If the Trans-Pacific Partnership (TPP) also took effect, domestic firms would not only have to face competition from South East Asian countries but also from large agriculture industries such as the US.
Foreign firms are carrying out strong promotion programmes in Vietnam. Thailand have hold various fairs and opened a number of convenient stores. Thai products are also favoured by Vietnamese customers.
Meanwhile, a retail company showed optimism and said customers would have more choices but it's unclear what products they would stick with. The retail companies only choose to import products that suitable with their targeted customers.
Domestic firms should upgrade their product's appeal and quality as well as other customer services for future competition.
The ATIGA was signed in February 2009, replacing earlier Agreement on Common Effective Preferential Tariff of the ASEAN Free Trade Area. ATIGA aims to establish an integrated market and production base with a free flow of goods by 2015.
Since then, the government have reduced the import duty of some products to 5% or eliminated the duty completely. Starting from January 1, 1,715 tariff lines have been exempted from import duty.
