‘CPTPP worked in favour of Vietnam’s success’

PETALING JAYA: Vietnam’s determination to sign bilateral free trade agreements with countries around the world has become a major factor in its explosive growth, say economic experts and stakeholders.

According to Malaysia’s Small and Medium Enterprises Association, Vietnam’s having signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) early had also worked favourably for the country.

The association’s national president, Ding Hong Sing, credited Vietnam’s success to having joined the pact early, which enabled the country to tap many markets across the globe.

“In 2021, their growth increased by 30% because they were able to produce products for the export market.

“Another factor is that with a population of 98 million, there are no labour shortages. This enabled them to carry out production even during the pandemic.

“As such, their production is steady to meet the demands of the market,” he said.

Comparatively, in Malaysia, although there is demand, issues surrounding shortages of workers have affected its growth, he added.

Ding also said that due to its smaller population, Malaysia is unable to meet the demands of production.

“Shortages of workers are an ongoing issue, and now SMEs have to adhere to stricter labour laws that require many documents and provisions that must be met to get approvals.

“We estimate the losses incurred by the SME industry to be about RM15bil,” he said.

The CPTPP entered into force on Jan 14, 2019, for Vietnam, while Malaysia ratified it on Sept 30, 2022.

Sunway University economics professor Dr Yeah Kim Leng also cited the CPTPP, which gave the country huge market access to member countries.

“Foreign investors and multinational companies are typically astute at managing political and country risks.

“They will invest based on the country’s competitive and strategic factors, including its membership in mega trade blocs such as the Regional Comprehensive Economic Partnership (RCEP) and CPTPP.

“There will be some failed ventures, but these are usually outweighed by the successful ones, as evidenced by Vietnam’s sustained economic growth and export expansion,” he said.

Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman said that Vietnam’s activeness in signing bilateral free trade agreements (FTA) with countries around the world has become a major factor of their explosive growth.

“The EU-Vietnam FTA, signed in 2020, significantly boosted Vietnam’s exports even during the pandemic, while the UK-Vietnam FTA, signed in 2021, helped boost trade between Vietnam and the UK, reaching close to US$6.6bil.

“This is in addition to FTAs signed with other Asean countries, such as the CPTPP signed in 2019, which helped expand their exports into Canada and Mexico and has helped Vietnam become a business-friendly environment for investors,” he said.