Preparing for trade and investment in the post-pandemic era

In your opinion, how does Covid-19 disrupt the global supply chain?

The Covid-19 epidemic has severely affected the global economy and is still unpredictable and continues to spread at high speed. Global trade and the economy will plunge into the worst recession ever.  Many enterprises have suspended or downsized operations admist Covid-19. Large manufacturing industries (such as automotive, electronics, machinery, industrial equipment) and services (like travel, aviation, and transport) have all suffered heavily which has resulted in stagnation. The WTO estimates that world commodities markets could decline from 13% to 32% this year, depending on the effectiveness of policy responses'.

Vietnam has integrated more deeply and widely into the global economy. Many supply chain-based industries, such as telecoms, electronics, computers, textiles, footwear, and cars (which are also key export industries and job creators in VN) are severely affected by the disruption of the global supply chain. Declines in international and domestic consumption caused by Covid-19 would be some of the major challenges for the manufacturing industry in Vietnam. Obviously, Covid-19 has impacted severely on every country’s supply chain and VN is no exception.

The global supply chain's failure due to the pandemic's impact has made countries and businesses realize the urgency of diversifying their product portfolio and supply chain, avoiding dependence on one nation. Therefore, supply chain reform is inevitable, it is only a matter of time.

That’s why many countries like the US, Japan, and Europe consider the possibility of moving the supply chain out of China in order to reduce dependence of supplies on one single nation. In addition, the move to establish a "prosperous economic network" initiated by the US is an excellent opportunity to create a global supply chain in general, and Vietnam is well positioned to seize these opportunities.

With the advantage of a stable political situation, Vietnam has been preparing not to miss the opportunity to welcome the "wave" of supply chain shifts in the post-pandemic era. Governments and each business must consider how supply chains are better resilient to disruptions, support manufacturing industries, and strengthen capacity and competitiveness capacity for Vietnamese suppliers. In the long run, Vietnamese firms must also change their production plans to ensure the continuity of the supply chain and mitigate shock and risks similar to Covid-19. 

In your opinion, what is the ASEAN's stance towards globalization and trade?  

Starting the process of implementing regional and international economic integration began in 1996. The ASEAN has liberalized almost all commodities trading, gradually opening up the domestic services and investment market within the ASEAN and strengthening cooperation with foreign partners to promote trade and investment flows at the regional and international levels.

Regarding the ASEAN's views on the issue of globalization and the liberalization of trade and investment in the region, I think that the following issues should be noted:

Firstly, the ASEAN's standard position is to always promote intra-bloc trade and investment liberalization through the strengthening of cooperation to achieve the objectives set out in the Master Plan on Building the ASEAN Economic Community to 2025. It can be affirmed that ASEAN's sustainable development has contributed significantly to the world economy and at the same time is a driving force for economies in other regions to develop faster and more sustainably in the future. 

Of course, in the context of the world and the regional economy going through complicated and unpredictable developments, with the rapid, substantial and widespread outbreak of the Covid-19 epidemic, along with the tension and escalating from trade wars and protectionist policies in some countries and regions, the ASEAN community itself needs to make appropriate policy adjustments through the midterm review process. However, the region's overall goal is still to accelerate the economic integration of the region in all areas of economic cooperation as well as other areas such as culture, education, etc.

Secondly, for the multilateral trading system, ASEAN continues to affirm the region's support for the multilateral trading system represented by the World Trade Organization (WTO) in the form of transparency, rules-based and gives some necessary flexibility to member countries with a lower level of development, which is also justified in commercial relations between a large worldwide community.

Thirdly, the ASEAN always tries to harmonize and further promote trade and investment cooperation relations with partner countries. This has long been and will be concretized by a series of initiatives to encourage negotiations on upgrading a number of ASEAN free trade agreements with a number of partner countries as well as efforts to conclude negotiations and sign the Regional Comprehensive Economic Partnership (RCEP).

Finally, due to the unforeseen and unpredictable Covid-19 pandemic that has disrupted the supply chain and left a negative impact on the regional and world economy, the ASEAN has been asserting its position to maintain commitments to open markets, to minimize the application of unnecessary trade restriction measures, not undermine existing commitments to open markets in order to restore and progress to consolidation, to diversify regional supply chains in a new situation, to fight against epidemics and develop the regional economy. 

What does the RCEP Agreement mean for the ASEAN and the global trading system?

The RCEP Agreement is an important Agreement, demonstrating the centrality of the ASEAN in regional economic linkages. It is expected that when the RCEP is fully implemented, it will create a market with about 3.6 billion consumers, accounting for nearly 47.5% of the world's population, and a GDP of approximately $27 trillion, accounting for 32% of global GDP. This is really an impressive number and is the driving force for the member countries to negotiate this Agreement to make more efforts to negotiate in the coming time.

With commitments to open markets for commodities, services and investments, simplify customs procedures and establish rules of origin to facilitate trade and reduce non-tariff barriers, the RCEP Agreement is expected to facilitate the development of new supply and production chains, help member countries improve regional economic structures, and contribute to economic recovery after the end of the Covid-19 epidemic.

The signing of the RCEP Agreement will also be a positive message on the ASEAN's support for the rules-based multilateral trading system, especially in the context of protectionism that appears in many parts of the world. In addition, the RCEP Agreement will also be the basis for strengthening the confidence of the business community and promoting economic recovery after the Covid-19 epidemic.

What are your views regarding progress on economic integration and the importance of the ASEAN becoming a separate region for production and investment?

The goal of building the ASEAN Economic Community (AEC) into a unified market and production base is being promoted by the ASEAN, including the following basic elements: (i) free movement of goods; (ii) free movement of services; (iii) free flow of capital and investment; and (iv) the freedom of movement of investors, skilled workers. The ASEAN Economic Community is expected to turn ASEAN into a closely linked economic region, facilitating dynamic and stable development, enhancing competitiveness, and bringing prosperity to member countries.

A single ASEAN unified market and production base system will act as a transparent, transparent and open market for goods and services to the world and as a tight interconnection and harmonization of production and services, along with the 10 ASEAN members' efforts, barriers to trade and investment are and will be minimized, thereby ensuring high efficiency, high production, decreased production costs, increased quality of service delivery and high competitiveness of goods and services originating from the ASEAN, of which Vietnam is one of the key players in integration process of the ASEAN.

What are your expectations for the Vietnam-EU Free Trade Agreement (EVFTA) and how it can help mitigate the effects of Covid-19 by opening opportunities for 508 million people?

The Covid-19 pandemic had a strong impact on production and trade not only in Vietnam but also in economies around the world. In that context, the implementation of the EVFTA Agreement has important implications for both Vietnam and the EU. From the business side, EVFTA is expected to strengthen the confidence of the business community, gradually stabilize and expand the market, helping the business community regain its growth momentum in the post-pandemic era.

For Vietnam, the market share of our goods exported to the EU is still quite modest. Every year, the EU imports about $2,338 billion USD, while the share of Vietnam's exports in the EU is about 2%. As a result, the strong market access commitments in EVFTA create significant opportunities for businesses that have production bases in Vietnam and seek market expansion opportunities in the EU.

Thus, in the post-pandemic period, when the EVFTA Agreement is put into effect, the two sides' businesses will gain a huge advantage from reducing tariff and non-tariff barriers to each other's markets, creating momentum for future trade relations between the two sides.

Concerning Vietnam’s side, based on the result of one-month implementation, it shows that the level of concerns among businesses is huge. Specifically, although the tax rate has not decreased much in the first phase, the export turnover that is enjoying tariff preference in the first month has reached about $277 million.

In the coming time, Vietnam's import turnover from the EU is expected to increase approximately 15.28% by 2020; 33.06% in 2025 and 36.7% in 2030. From this perspective, Vietnamese enterprises will also benefit from imported goods and raw materials with good quality and stability at a more reasonable price from the EU. Especially the source of machinery, equipment, and high technology/technology from EU countries will improve productivity and improve product quality in Vietnam.

Notably, with EVFTA, a new value chain of Vietnam with an important partner in the world will be formed. A more open and favorable investment environment, when the export prospects are more attractive, will attract more FDI from the EU to Vietnam, especially in sectors such as services, finance, automobiles, and processing, information technology, high technology, processed agricultural products, etc. 

Vietnam recorded impressive export revenue of $260 billion in 2019, how important a role has the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) played in achieving that number?

In recent years, in implementing comprehensive and extensive international integration policy, especially international economic integration, Vietnam has negotiated and signed many Free Trade Agreements (FTAs).

Among the signed FTAs, CPTPP is a new generation of free trade agreement, opening up opportunities to promote Vietnam's exports to the market with 11 member countries with nearly 500 million people (In 2019, the total GDP of the member countries reached $11.26 trillion, contributing about 13% to global GDP, with the total trade turnover accounting for 14.4% of total global trade). In addition, Vietnam's advantageous manufacturing industries such as seafood, textiles, footwear, wooden products, etc., also have a deep commitment to participating in the CPTPP.

Joining FTAs and opening markets helps boost export growth. Vietnam's export turnover in 2019 reached $264.3 billion, up 8.4% compared to 2018, higher than other countries in the region and around the world, which are suffering many impacts from trade conflicts.

In the positive results of the country's overall exports, there is a contribution attributed to the implementation of the CPTPP Agreement. The total export turnover to 6 CPTPP partner countries, Australia, New Zealand, Singapore, Japan, Canada and Mexico in 2019 reached $34.3 billion, up 8.1% over the previous year.

With the CPTPP, Vietnam has more FTA partnerships with Canada, Mexico, and Peru. In 2019, two of the above three partners, Canada and Mexico, have implemented commitments, and exports to these member countries have increased sharply compared to 2018. Exports to Canada reached $3.9 billion, up 29%, while exports to Mexico reached $2.8 billion, up 26.2%.

In the coming time, we hope that businesses will improve their understanding of the CPTPP Agreement, and transform production and business activities to ensure they take advantage of opportunities brought by CPTPP; thereby, the contribution of CPTPP to export growth will be even higher.

During a meeting in Hanoi on November 8, 2019, US Secretary of Commerce Wilbur Ross thanked the Government of Vietnam for their efforts to improve the investment climate and facilitate favorable conditions for US companies in particular, and foreign businesses in general, to operate effectively in Vietnam. Can you point out the tremendous economic advantages between the two countries in the field of trade and industry? What strategies do you have for building a sustainable commercial relationship?

In July 1995, Vietnam and the United States established diplomatic relations. Since then, the relationship between the two countries has developed comprehensively in politics, diplomacy, economics, education and science, and security and defense.

After 25 years of establishing diplomatic relations between Vietnam and the United States (July 12, 1995 - July 12, 2020), the import-export turnover between Vietnam and the United States has steadily increased year on year.

In 2019, Vietnam's merchandise exports to the United States reached more than $61.3 billion, increasing more than 35% compared to 2018. The US has become Vietnam's largest export market, accounting for over 23% of the total merchandise export turnover; many key products increased, such as textiles, footwear, phones and accessories, electronics, computers and components.

Vietnam is increasing its position as the leading supplier in the ASEAN region to the United States. Not only are exports increasing in volume, high-quality  and value-added goods are exported to the United States more and more.  Regarding imports, Vietnam's main imports from the United States are machinery, equipment, raw materials, and auxiliary materials for production. Recently, agricultural products, fruits, meat, and meat products have also been imported more.

In the coming time, in addition to continuing to support businesses to promote exports to the United States, the Ministry of Industry and Trade will act as the Chairman of the Vietnam subcommittee in the Vietnam-US Trade and Investment Council’s (TIFA) current work program to promote commercial relations between the two countries.

The Ministry of Industry and Trade of Vietnam and the United States Trade Representative (USTR) have always worked closely in developing the Action Plan towards a sustainable and harmonious balance of trade between the two countries. In parallel with the increase in export value, Vietnam will import more from the United States, especially from the industries in which the US is strong, such as agricultural products, pharmaceuticals, machinery and equipment for production.

In addition, the Ministry of Industry and Trade continues to participate in solving problems of US businesses in doing business with Vietnam, promoting investment projects and importing raw materials to balance trade. In particular, there is a focus on removing difficulties in technology services, advertising, and trade in services; to introduce and expand opportunities for Vietnamese businesses to access US goods.

The Ministry of Industry and Trade believes that the two sides' trade-economic-investment relations are developing well, becoming the driving force for the Vietnam-US relationship; and believes that the relationship will continue to grow tighter and tighter in the future. The relationship is built on the spirit of frankness, balance and mutual benefit; thereby making a practical contribution to peace, stability, cooperation and development in the region.

What is the role of building an effective brand identity system for Vietnamese products? What ways do you have in place to help businesses build, grow and protect their brands?

Building a brand identity system plays a key role in developing stably and sustainably and helping businesses improve their competitiveness in domestic and international markets. The brand identity system is considered an effective tool to promote Vietnamese brands to potential export markets to position and distinguish Vietnamese brands in the minds of domestic and foreign customers. An effective brand identity system will make brand value more and more enhanced through an increase in customer awareness, understanding, and loyalty to the business, contributing to the brand value development in a sustainable way.

In the era of multi-dimensional information channels, the brand competition strategy is taking place very firmly and extensively, not only at the enterprise level but also at the local, industry, and national levels. In that context, the Vietnam National Brand Program (THQG) was approved by the Prime Minister in Decision No. 253/2003 / QD-TTg dated November 25, 2003, assigning the Ministry of Industry and Trade to be the regular agency to be responsible for coordinating with ministries and branches in implementation.

On October 8, 2019, the Prime Minister signed Decision No. 1320 / QD-TTg approving the Vietnam National Brand Program from 2020 to 2030. This is a typical, long-term trade promotion program of the Government that aims to build and develop national brands by supporting enterprises to build and develop strong brands in the economy to promote the image of Vietnam as a country with quality goods and services, build prestige and enhance competitiveness for Vietnamese enterprises in the domestic and international markets.

The Ministry of Industry and Trade, as the management agency of the Vietnam National Brand Program, has implemented activities to support enterprises in building, developing, and promoting brands of enterprises inside and outside countries like:

- Implement promotion methods for appropriate National Branded products during the pandemic period such as advertise on digital media (electronic newspapers, social networks, VOV, etc.) and through reports, articles published on newspapers, television

- Actively coordinate with the ministries and branches, especially the Ministry of Foreign Affairs, the Ministry of Information and Communications, the Ministry of Culture, Sports and Tourism to implement propaganda and promotion programs for the program and business products that have achieved the National Brand on domestic and international media and in key export locations, in order to enhance the position and value of the National Brand as well as to support enterprises in reaching customers, consumers, improving the added value of export products.

- Coordinate with the Ministry of Agriculture and Rural Development and industry associations to promote brands of agricultural and food products at trade fairs and international trade promotion events.

- Regularly coordinate with international trade promotion organizations to organize Online International Trade Conferences to connect with potential customers and direct exchange with customers on e-commerce platforms, creating an essential initial basis for the business to continue the next transactions. Guide enterprises to manage the quality of exported goods, develop and implement a traceability system, meet regulations and standards according to international practices to promptly respond to the redirecting plan exports to new markets.

- Carry out consultancy activities and support enterprises to improve market research capacity; packaging design, product and brand identity system; building, developing and promoting the brand in order to improve the competitive position of Vietnamese products in the international market.

- Actively coordinate with industries, localities to build content and plans, promotional strategies, promote geographical indications, collective trademarks, and develop communication products to increase awareness of Vietnamese products in international markets.

The above measures on the one hand support businesses to promote their brands at home and abroad, enhance domestic trade transactions, help companies to consolidate and increase the strength of product brands, on the other hand, help promote the role of the national brand name of Vietnam in the international market.