Vietnam to benefit most from RCEP: World Bank

The World Bank expects Vietnam to enjoy the highest trade and income gains among Regional Comprehensive Economic Partnership (RCEP) members. In a latest report, the bank said the average trade weighted tariff imposed by Vietnam declined from 0.8 per cent to 0.2 per cent, while the tariffs faced by it reduced from 0.6 per cent to 0.1 per cent between 2000 and 2035.

In the most optimistic scenario, where all benefits are applied, Vietnam has the highest gains of all RCEP member countries, Vietnam Briefing, an unit of Japan’s Dezan Shira & Associates, reported citing the World Bank document.

Vietnam’s income levels will increase by 4.9 per cent relative to the baseline, higher than other countries, where the income level increases by 2.5 per cent. Trade will also increase the most in this scenario, with exports expanding by 11.4 per cent and imports by 9.2 per cent relative to the baseline, the report said.

The World Bank expects Vietnam to enjoy the highest trade and income gains among Regional Comprehensive Economic Partnership members. In a latest report, the bank said the average trade weighted tariff imposed by Vietnam declined from 0.8 per cent to 0.2 per cent, while the tariffs faced by it reduced from 0.6 per cent to 0.1 per cent between 2000 and 2035.

All RCEP member countries will see an increase in exports and imports. Vietnam’s exports will expand by 11.4 per cent and imports by 9.2 per cent.

Sectors that recorded the highest growth include textile and garments, mainly due to the reduction of non-tariff measures.

In the scenario where only the tariff reduction is implemented, the impact on Vietnam’s economy is negligible, with real income close to zero, the World Bank said. Trade will also witness a small reduction relative to the baseline, with both exports and imports declining by 0.3 per cent. It is attributed to the fact that Vietnam enjoys relatively low tax rates thanks to other free trade agreements.

According to the report, RCEP also provides an opportunity to promote growth and support recovery after the COVID-19 pandemic.

RCEP will help Vietnam access consumer markets which is twice the size of the markets in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as RCEP includes China, the Republic of Korea and Japan. However, it required Vietnam to raise standards to meet higher demand and stiffer competition, the report said.

Another advantage that RCEP brings to the country is that it is creating more equality in the job market because sectors that employ women are expanded, such as textiles, apparel, electronics and some service sectors. The wage of female workers will increase faster than that of male ones, especially in Vietnam.

Fibre2Fashion News Desk (DS)