20 August 2015
“TPP”, “EVFTA” and “AEC”. You may not have heard of them but they are expected to have a considerable, some might say major, impact on Vietnam as an investor environment. Let me go into some detail, starting with the TPP.
The Trans-Pacific Partnership (TPP) free trade agreement is one of the largest international trade and investment agreements ever to be negotiated and is aimed increasing the market access for all goods and services in the signatory countries, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
According to the Vietnam Institute for Economic and Policy Research Vietnam’s economic growth could see a huge boost from the TPP. Indeed, according to Harvard professor, Robert Lawrence, the country’s GDP growth could reach 13.6%/yr by 2025 due to reforms and tariff removals.
Unsurprisingly for such a broad, sweeping agreement, the TPP has been in negotiations for some time now. Whether the 2015 deadline for concluding the agreement will be met is not yet clear, however, according to Canadian Prime Minister, Stephen Harper, talks are “well-advanced”.
The EU Vietnam Free Trade Agreement (EVFTA) has now reached ‘agreement in principle’ and will remove almost all the tariffs on goods traded between the two economies. According to Vietnam’s Minister of Industry and Trade, Vu Huy Hoang, “The FTA will help Vietnam’s gross domestic product increase 4-6 per cent per year”. The agreement is expected to be signed late Oct 2015.
Last but not least is the Asean Economic Community (AEC), which came into effect in 2015 with the goal of facilitating a free flow of funds, goods and labour within the region. It is expected that, along with Myanmar and the Philippines, Vietnam will likely benefit the most from the region, partly due to the growing number of labour-intensive businesses setting up in the country. Indeed, Vietnam is already enjoying the benefits of new production and recently posted a trade surplus.
Obviously these new economic agreements are designed to deliver economic growth and stability via a large number of mechanisms. When you combine them with the steady modernization of Vietnam’s approach to its mineral wealth and mining industry, we could well be seeing some very exciting times here.
Evan Spencer, CEO of Asian Mineral Resources
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