SMEs urged to get ready for ASEAN EC

During a recent forum organised yesterday at HCM City University of Technology, local and foreign experts have expressed concern about the preparation of Vietnamese enterprises.

Le Dang Doanh, a renowed economic expert, said the GDP of Vietnam would increase 13% within five years and the annual growth rate of the GDP would be 2% after AEC begins next year.

With AEC, the market for Vietnamese enterprises will expand dramatically up to 600 million people, offering larger export markets for agricultural products both in and outside ASEAN, especially products with low production costs.

Under the AEC, input costs for production will be much lower for local enterprises.

At the forum, AEC 2015: Opportunities and Challenges for Vietnamese Enterprises, Doanh predicted that the flow of skilled Vietnamese workers to neighbouring countries with higher wages could cause serious issues for local companies.

The expert warned that Vietnam will be one of four countries in ASEAN to become a good market for the other six ASEAN members.

"73% of Vietnamese enterprises do not know about AEC and have not prepared, which shows the weakness of local enterprises, especially small- and medium-sized enterprises," Doanh said.

"Six countries are very eager for the AEC to start, while the other four countries (Cambodia, Laos, Myanmar, and Vietnam) have not been very active in preparing for integration," he added.

Six other ASEAN members are eagerly awaiting the opportunity since they can expand markets and use labour and resources at lower prices in the four countries with less developed economies.

In 1993, the ASEAN Free Trade Area was established. ASEAN-6 including Singapore, Malaysia, Thailand, Philippines, Indonesia and Brunei have nearly completed the process of tariff reductions and non-tariff barriers, leaving a great deal of pressure for enterprises in the less developed countries.

Suchat Sawetkamon, director of research and economic development for Trade and Investment (Thailand – Vietnam), said that SMEs in Thailand have prepared for AEC 2015, including improving factories, building SME business clusters, SME Corporations and others.

Besides the opportunities for Vietnamese SMEs, the Thai expert warned that Vietnamese enterprises will encounter goods with high competitiveness and high quality as well as cheaper product flows in the AEC market.

As a result, several SMEs will lose their markets or go bankrupt.

While the transfer of skilled labour will also be a concern, the Vietnamese SMEs will need to improve technology, management and products, he said.

The Thai expert suggested that the Vietnamese government further develop infrastructure and logistics as well as offer loans for SMEs, and organise seminars to support SMEs on manufacturing, management, products, labour and others.