Vietnam PM urges closer Asean trade ties as risk of protectionism looms

HANOI — Vietnam Prime Minister Nguyen Xuan Phuc yesterday warned of the risk of returning protectionism as South-east Asian nations brace for potentially tighter trade controls in the United States.

“The world and Asean region are facing big challenges in various areas, including security, finance, climate change and risk of returning protectionism,” said Mr Phuc at the Bloomberg Asean Business Summit in Hanoi yesterday, referring to the Association of South-east Asian Nations.

The government will boost efforts to improve the nation’s investment climate and increase the number of its companies, he said.

Asian economies face significant risks should US President-elect Donald Trump follow through with imposing trade barriers and opposing the Trans-Pacific Partnership (TPP) — a 12-nation preferential trade agreement that covers about 40 per cent of the global economy.

Economists have said that Vietnam’s export-dependent economy would be one of the biggest beneficiaries of the TPP. According to a study by the Peterson Institute for International Economics based in Washington DC, this is because it is still a relatively closed economy.

This trade deal would have given Vietnam tariff-free access to its rice, seafood, textiles and low-end manufactured goods.

Some estimates say that Vietnam could have seen a 10 per cent boost to its economy by 2025 under the TPP.

Vietnam has so far evaded the export collapse that is hurting its neighbours, with shipments abroad rising 10 per cent in the first nine months of this year, according to the World Bank.

In contrast, Indonesia’s exports shrunk 9 per cent, while they were little changed in the Philippines and Singapore.

That is helping the Vietnamese economy, with the World Bank predicting expansion of at least 6 per cent this year through to 2018, which is among the fastest in the world. Growth will reach 6.3 per cent this year, said Mr Phuc.

Mr Phuc called on the 10-member Asean, which includes Singapore and Indonesia, to deepen economic ties and build infrastructure to boost trade, investment and services.

“Each Asean country can’t develop if it only relies on exploiting natural resources and using basic labour,” said the Prime Minister. “It needs to improve competitiveness and better participate in global supply chains for higher added value.”

“As a trading block, this is a sizable population we are talking about,” said Mr Vivek Pathak, a director at the International Finance Corporation, in Hanoi on Wednesday. “If you can get Asean countries to work together in a boundary-less world — free flow of goods, free flow of capital — I think this has got the potential to become very powerful.”

Vietnam is seeking more private investment in infrastructure projects, said Planning and Investment Minister Nguyen Chi Dung at the summit. The government will soon issue a law to help small and medium-sized companies, he added. AGENCIES