SMEs need support to benefit from free trade pacts

Domestic SMEs should closely co-operate with public offices to get information about FTA regulations. - VNA/VNS Photo Tran Viet

This was suggested by experts at an Asia-Pacific Economic Cooperation (APEC) public-private dialogue.

According to the APEC Secretariat, the APEC region had 148 FTAs by the end of 2014, 20 times higher than 1990. The FTAs have had immense impact on trade results in the APEC region with a growth in trade value from US$2.3 trillion in 2000 to $6.3 trillion in 2014.

The FTAs would usher in numerous benefits for large companies and multinational economic groups and firms because they have the ability to develop efficiently business opportunities that emerge from the FTAs, Nguyen Cam Tu, Deputy Minister of industry and trade, said at the dialogue in Ha Noi last week to determine and remove barriers for SMEs to take advantage of business opportunities arising from the FTAs.

However, SMEs cannot avail the advantages from the FTAs, especially in Viet Nam, an APEC member country, according to Tu. Ninety per cent of Vietnamese enterprises are SMEs and tiny companies.

They have an important role in the local economy but have faced numerous challenges in the development of production and business, especially in accepting business opportunities from the FTAs. But the FTAs will present SMEs with opportunities to expand their business in the foreign markets and integrate in the global economy.

However, Tran Ba Cuong, head of WTO Division under the Ministry of Industry and Trade's Multi-lateral Trade Policy, said that only 30 per cent of Vietnamese SMEs had studied carefully the FTAs that had already been signed and had come into effect, to take advantage of them.

"The local SMEs have no clear knowledge about regulations of the FTAs, including tariff, origin and trade barriers," he said. "They also lack market information and analysis."

The lack of staff in the SMEs and tiny firms also prevented the firms from studying carefully the FTA regulations, he said. These regulations were very complicated and the firms needed time to understand them and apply them to their businesses.

Tran Thi Thanh Tam, deputy director of the Centre of Supports for Small and Medium sized Enterprises, said that since the awareness of firms about FTA regulations was limited they were weak competitively.

Therefore, Cuong said the SMEs needed close co-operation between the Government sector and the private sector to solve difficulties, deal with challenges and accept business opportunities from FTAs after the agreements come into effect.

The ministries and sectors should further disseminate FTA regulations for the benefit of SMEs and tiny firms, he said.

Meanwhile, the firms should study the FTA regulations as soon as possible to prepare specific plans on the incoming time of export activities, he said.

For instance, they must clearly understand everything about export goods meeting origin regulations or on enjoying preferential tariff. They must reform production and business to benefit from the FTA regulations on origin, tariff and also overcome trade barriers.

One more important issue is the need to directly connect to the Ministry of Industry and Trade to solve their difficulties while doing business under the FTA regulations.

Economic expert Vo Tri Thanh said the State should have solutions on developing SMEs to find more important spots in the global value chains in the future.