Vietnam Emerges as the Biggest Beneficiary of RCEP Launch

[Image source=AP Yonhap News]

[Asia Economy Hanoi Correspondent Jo Ara] Vietnam is expected to become the biggest beneficiary of the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade agreement (FTA) involving South Korea, China, Japan, and Southeast Asian countries. Significant export promotion effects are anticipated in telecommunications technology, textiles, and the footwear industry.

According to local media on the 1st, Jason Yek, an Asia risk analyst at economic analysis firm Fitch Solutions, told Vietnam Express International that Vietnam's participation in RCEP "can lower trade barriers and improve market access for goods and services," adding that it is advantageous in information and communication technology, textiles, footwear, and agriculture. Earlier, in August last year, the World Economy Journal projected that Vietnam's gross domestic product (GDP) would increase by 0.7% by 2030 amid the launch of RCEP and the US-China trade conflict.

Tran Kim Nga, from the corporate development team at Mega Market, a Vietnamese retail chain, said, "Other RCEP member countries are very interested in importing Vietnam's agricultural and fishery products," and predicted that "Vietnam will be one of the countries to gain the most benefits." Furthermore, due to RCEP's effects simplifying procedures such as tariffs and rules of origin, more small and medium-sized enterprises have opportunities to enter the massive market of 2.3 billion people (30% of the world's population).

Local ANZ Bank explained in a report that Vietnam and Thailand will be the countries benefiting the most from RCEP. Vietnam's GDP is expected to grow by 8% within five years after signing RCEP, while Thailand's GDP is projected to grow by 13%. The report also added that RCEP will account for 85% of the world's foreign direct investment (FDI) flows.

RCEP, which accounts for 30% of the world's GDP, is the largest FTA globally, raising expectations for increased trade through the formation of a new trade order, tariff reductions, and expanded market openings. Especially amid the strengthening of protectionism due to the COVID-19 pandemic, the launch of RCEP is seen as a positive signal for economic integration among member countries.

However, there are also disadvantages for Vietnam. The Vietnam Chamber of Commerce and Industry predicted that in cases where member countries have similar export items, price competition could become fiercer because Vietnam's products have lower added value. Additionally, since this agreement is Vietnam's first trade agreement with China, it faces the challenge of competing with diverse and price-competitive Chinese imports.