Businesses need to prep for ASEAN integration

From January 1, Viet Nam continued adjusting an additional 1,720 tax lines to zero per cent (equivalent to 18 per cent of total tax lines). The remaining of 687 tax lines will be cut to zero per cent by 2018, including products such as automobiles and motorbikes. Photo hanoimoi

Chairman of the Viet Nam Association of Small and Medium Enterprises, Cao Sy Kiem, said the 10 ASEAN countries created a production area with a market of more than 600 million consumers.

ASEAN was the world's most dynamic development region and one of the top four business partners of Viet Nam, he said.

Together with the integration process, tax reduction would create conditions for Viet Nam to export commodities to ASEAN countries, he added.

Kiem said ATIGA had brought many opportunities for domestic businesses to import material resources at cheaper prices and better quality machines. Vietnamese farm produce, such as rice, rubber and coffee, would also have a better chance of being exported to countries in the region.

Deputy Minister of Industry and Trade Tran Quoc Khanh, who doubles as head of the Government negotiation delegation on economy and trade, said ASEAN countries were second in supplying goods to Viet Nam, after China, and the third export market for Viet Nam, after the US and the European Union.

However, Deputy Director of the Finance Ministry's Department of International Cooperation, Ha Duy Tung, said Vietnamese business capacity remained low.

The private sector had been developed, but on a small scale. It also had many shortcomings in terms of both financial capacity and technology, he said.

Domestic production sectors were facing quality and price competition from imported products, he said, adding that issues relating to management and administration of businesses remained a big challenge when the road map for ATIGA tax cuts was approaching.

Under the map, Viet Nam cut 6,859 tax lines to zero per cent by the end of 2014, accounting for 72 per cent of total import and export tariffs.

From January 1, Viet Nam continued adjusting an additional 1,720 tax lines to zero per cent (equivalent to 18 per cent of total tax lines).

The remaining of 687 tax lines will be cut to zero per cent by 2018, including products such as automobiles and motorbikes.

Deputy Director of the Central Institute of Economic Research and Management Vo Tri Thanh said integration was both an opportunity and challenge and had many risks.

The commitment to Free Trade Agreements needed to match reforms and economic restructuring requirements as well as changes to the economic growth model of Viet Nam, he said.