CPTPP: which are the benefits for the investors in Vietnam?

On March 8th, in Santiago, Chile, the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP) was signed by eleven countries and it will enter into force after the ratification of at least six members. Since D’Andrea & Partners has launched its new branches in Hanoi and Ho Chi Minh City this month, we believe it could be interesting to briefly analyze this Agreement which could have a big impact on Vietnamese economy.

Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam are all subscribing parties of CPTPP. While at the moment The U.S. are not interested in joining the Agreement – however the American President Trump has recently said that they could join it if it were a “substantially better deal” for The USA, however a nation who has shown a strong interest in it is The UK; Especially considering Brexit, The UK’s representatives have already held informal discussions with various members. CPTPP is one of the largest Free Trade Agreements in the world and represents 13.5% of global GDP, it is related to facilitating trade and investments between members. According to the Vietnamese Minister of Industry and Trade, the list of sectors that will benefit more than others from this Agreement includes the following: footwear, tobacco, wine and beer, food processing, garment-textiles and beverages in general.

 All foreigner investors, including European, will benefit from many advantages that are a direct consequence of the fact that Vietnam is a member of CPTPP. As CPTPP is about trade liberalization and improving market access and since it promotes transparency, Vietnam will stimulate reform overa very short time in many areas such as competition, Intellectual Property Rights, customs, e-commerce, labor standards, environment and market access for goods, services and legal issues which represents a direct advantage for all investors, not limited to CPTPP members.

According to the report published by the World Bank – Economic and Distributional Impacts of Comprehensive and Progressive Agreement for Trans-Pacific Partnership – under the CPTPP, Exports should grow by 4.2% and Imports by 5.3%. It is also said that by 2030, Vietnam GDP is estimated to be 1.1% higher than otherwise expected. All of these estimates are less impressive than the ones related to Trans-Pacific Partnership (TPP12) – as USA has since withdrawn their signature from the Agreement, ,as an example, under the TPP12 by 2030, Vietnam’s GDP was estimated to be 3.6% higher than otherwise expected.

Since Vietnam has signed the Agreement, it is easy to foresee that the amount of FDI will increase and it also represents a good opportunity for domestic business which will have more resources for improving their business.

If you are interested in investing in Vietnam or you need any clarification, please don’t hesitate to contact us via hanoi@dandreapartners.com or hcmc@dandreapartners.com

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