Experts at a Hanoi conference March 24-25 on economic reforms in Vietnam. Photo courtesy of Thoi bao Kinh te Saigon Online
Vietnam’s economic growth could shoot to 13.6 percent by 2025 thanks to reforms and tariffs removals brought by the Trans-Pacific Partnership, a Harvard professor said at a Hanoi conference.
Prof Robert Z Lawrence from Harvard Kennedy School said the removal of import tariffs to major markets like the US and Japan - and then the removal of technical barriers - will prompt Vietnam to enjoy faster export growth and larger Gross National Product growth than other members.
He was speaking at a conference held by Vietnam’s foreign ministry and the United Nations Development Program Monday and Tuesday, Thoi bao Kinh te Saigon Online reported.
TPP has entered its final rounds of negotiation between 12 countries, including the US, Canada, Australia, and Japan.
Once effective, it will cut import tariffs in the US, the biggest buyers of Vietnam’s leading export - garment and textiles - from 17-32 percent now to zero.
Changes like that could drive Vietnam’s GDP growth to 13.6 percent in 2025, compared to estimated rates of 0.4 percent in the US, 2.2 percent in Japan, 1.4 percent Peru, and 6.15 percent Malaysia, Lawrence said.
He said Vietnam’s annual export growth by that time could hit 37.3 percent, far above the US’s 4.4 percent, Japan’s 14 percent, and Malaysia’s 12.4 percent.
Dr Vo Tri Thanh, deputy head of the Central Institute for Economic Management (CIEM), told the newspaper that although he’s not clear what calculation method was used, the forecast is possible.
“Our starting point is very low, so our jump-up can be bigger.”
Lawrence said TPP commitments can boost domestic reforms, including to regulations, the operation of state-owned enterprises and the banking system.
He said SOEs usually receive privileges like tax exemptions and priority to receive investments, and are shielded from normal market regulations.
CIEM head Nguyen Dinh Cung agreed to that, saying SOEs’ contributions do not correspond to the benefits given to them.
Vietnam’s some 1,000 state firms are occupying 45 percent of its total investments and assets, and 27 percent of bank loans, but contributing less than 17 percent of industrial products and jobs for only one percent of the workforce.
Lawrence said the SOEs chapter in TPP discusses natural competition between state and private businesses and the high transparency in the operations of state firms, including their financial structure.
The trade deal thus can be a foundation for economic reforms in Vietnam, he said.
He also warned of challenges from the deal that will force the domestic market to adjust, like the fact that some farmers and producers will be replaced.
Some parts of the economy will fight this process but companies will need to change their ways of operation, he said.
Like us on Facebook and scroll down to share your comment