Since ASEAN’s members lowered tariff to create a common market, goods from these countries is flooding the Vietnamese market. On the other hand, Vietnam’s companies are fumbling about how to sell their products in markets of regional countries. What are the reasons?

At the 2007’s trade fair of Thai products that took place from 16th to 19th August, Thai goods could partly prove their attraction. This is the fifth time the fair has been held in Ho Chi Minh City. Thai Export Promotion Department decided to organize it twice a year and in both Hanoi and Ho Chi Minh City.

Understanding the rules of the game on the guest playgrounds

Although Newlink Company has imported Thai cosmetics branded C-Care since April 2006, up to now, every two months, it imports 1.5 containers of these items to sell in Vietnam market. “The 5% import tariff raises the competitiveness of Thai cosmetics. Without the Certificate of Origin form D (C/O form D), these items would not be imposed the preferential tariff above. With the normal tariff of 70%, these items would have not get in the Vietnam market,” told Mr. Tran Dai Cat, General Director of Newlink Company. Thanks to low import tariff, this company has just marketed another Thai product, Vamino Soya Milk, in Vietnam.

“Vietnam has always been in excess imports over exports with ASEAN since imposing import tariff under CEPT/AFTA. In addition to the high competitiveness of quality and design, goods from Singapore, Malaysia, or Thailand are flooding the Vietnamese market partly thanks to the preferential tariff from 0% to 5% under CEPT/AFTA,” confirmed an official of Vietnam’s Ministry of Industry.

According to experts in the field of export and import, the main reason why the goods of regional countries have quickly broken into the Vietnamese market is the self-motivation of their Trade Mission Agencies in Vietnam.

An official of Thai Trade Mission Agency in Ho Chi Minh City informed the main duties of this organization are to survey the market carefully and to spread their brands widely with the State financing. For example, when attending trade fair of Thai products in Vietnam, the Government funds up to 2/3 of the expenditure for its companies. Moreover, every year more than ten trade fairs are held in Thailand with the financing of the Thai Government. Thai Trade Mission Agency in Vietnam invites from five to ten Vietnam’s importers to take part in to find the sources of products for their importing purposes.

It is difficult to prove that 40% of Vietnamese goods are from ASEAN’s members.

Different from goods from ASEAN’s members, the most Vietnamese goods do not make use of this preferential tariff when getting into the regional countries. Mr. T, an owner of a small garment factory in Ho Chi Minh said he gave up the intention to export ready-made garment and textile products to ASEAN’s members because of being unable to prove that 40% of materials used to make these items origin from ASEAN.

Although Kinh Do has exported its cakes to ASEAN’s members with the preferential tariff from 0% to 5% for three years, the Certificate of Origin Form D is a strict requirement because it is difficult to “get” a Certificate of Content with 40% from ASEAN, said Ms Le Thi Thanh Thuy, Vice-Director in charge of International Trade. “Our R&D Department takes the responsibility for completing the procedure to apply for this certificate. A full, lawful, and valid set of receipts, invoices, vouchers, records, and documents have to wait for ten days to be inspected in the Center No. 3, and then the Ministry of Industry will issue the Certificate of Origin Form D,” Ms Thuy shared.

“We think the procedure is simple. If the documents are full, lawful, and valid, the company will be issued the C/O Form D within 2 to 4 hours. However, many companies do not have the staff specialized in this area so they do not understand the process clearly, which causes many times of correction and extend waiting time,” stated Mr. Vuong Dinh Ngan, Vice Head of Ho Chi Minh City Import-Export Management Department under the Ministry of Industry.

“Proving that 40% of content are from ASEAN is a quite strict requirement for companies. This requirement stems from that fact that ASEAN wants to encourage the use of materials in the area and take advantages of each member,” admitted Mr. Bui Huy Son, Vice-Head of Multilateral Trade Division. He thought Vietnam’s companies had more difficulties because of their lateness and limitation of production mechanism and technological standards.