Vietnam's export market share of garments and textiles to the US can increase from 10 percent to 35 percent after joining the Trans-Pacific Partnership (TTP), according to a report from the Peterson Economic Research Institute.
Speaking at the meeting to announce the Vietnam Commerce Report released by Maersk Line this week, Damco director in Vietnam and Cambodia Marco Civardi said Vietnam's GDP could increase by US$37.5 billion from $142 billion in 2012.
The TPP is a proposed trade agreement being negotiated by 12 Asia-Pacific countries - Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Negotiations have been controversial and lengthy but it is expected that a deal of some sort will be reached next year.
Civardi said Vietnam's exports could reach $307 billion by 2025 if it joined the TPP, or $239 billion if it did not.
The report said TPP was the next process in the country's integration into the global economy and Vietnam was shaping up as the next production powerhouse of Asia.
Of the 12 countries participating in TPP, Vietnam has the lowest labour costs, making it attractive for manufacturers, especially in the production of garments and textiles.
Foreign investors from across Asia-Pacific are entering Vietnam to exploit advantages presented by the TPP where, for instance, the garment and textile industry will enjoy preferential tariffs at zero percent compared to 17-35 percent at present.
However, there are many challenges and limitations associated with TPP, especially in the development management sector, the support industry and regulatory constraints on the origin of fibres.
Regulations on origin of fibres are large challenges for Vietnam and are likely to reduce the benefits of the TPP for the garment and textile industry. However, TPP allows a three-year grace period for member countries to allow them to seek supply sources from countries not belonging to TPP.
This is an opportunity for small and medium sized enterprises in Vietnam to develop support industry, the report said.
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