InfoQuest (March 25) -- Mr. Adul Chotinisakorn, director general of the Department of Foreign Trade of the Ministry of Commerce (MoC) of Thailand, revealed that since economic slowdown has happened in Thailand's major export markets, including China, US, EU, and Japan, one way to maintain the country's exports growth is to find other potential markets. After assessment, enterprises have focused on Vietnam as an export market. Vietnam offers an import tariff reduction and exemption policy for Thailand, and Thai products can meet Vietnamese consumers' needs in product quality.
According to the ASEAN Free Trade Agreement (AFTA), Vietnam must exempt and reduce the import tariffs of 10,250 kinds of Thai export products and products with Thailand as the country of origin. Such products account for 99.55 percent of all exports. To obtain the above-mentioned rights, an enterprise has to hold a Certificate of Origin (Form D) to declare to Vietnamese customs.
According to the estimate of IMF on economic growth, it is found that the annual economic growth of Vietnam is about 6.5 percent. If this rate continues to 2020, it will be consistent with the trend of export value to Vietnamese market boosted by sustained economic growth of Thailand. Since the beginning of 2017, Thailand's export volume to Vietnam has reached 10 billion U.S. dollars. In 2018, the number was 12.836 billion U.S. dollars.
Currently, Vietnam is the fourth largest export market after China, US, and Japan, and is becoming the largest one in ASEAN. Major products exported to Vietnam includepetroleum, air conditioners, pick-up trucks, fresh and dry fruits, auto parts, PE, refrigerators, washing machines, frozen shrimps, tires, and others. These products are import duty-free. In 2018, exports worth 7.98555 billion U.S. dollars to Vietnam enjoyed tariff reduction and exemption, accounting for 29.69 percent of total value of products enjoying tariff reduction and exemption in ASEAN.
Except major export industries, such as air conditioners, pick-up trucks, auto parts, home appliances, tires, and others, Vietnam also offers many export opportunities for other Thai products, especially food and beverage products. At this point, Vietnam is seen as the third largest beverage market in the world.
It is estimated that by 2020, the beverage demand of Vietnamese market will reach 100 billion liters. Under normal conditions, the tariff rate for beverage products in Thailand is 27-41.5 percent. Holding a Form D certificate, an exporter can enjoy zero tariffs which are also applied to finished food products, cosmetics, ready-made clothes, accessories, and children's goods.
"We can say that the rights endowed by the AFTA have brought huge benefits to Thai enterprises. Currently, Vietnam is a market with growing consumer purchasing power, and consumers are starting to choose desirable products rather than cost-effective ones and necessities. Therefore, Vietnam will offer opportunities to Thai enterprises of all grades, including emerging enterprises. As long as they can create quality products and interesting design, they can cater to the needs of Vietnamese consumers, said the director general of the Department of Foreign Trade.
Mr. Adul reiterated that over 10,193 types of products (99 percent of all products) can be exempted from import duty in Vietnam. Therefore, Thai manufacturers producing export products will be able to apply for tariff privileges when they export goods to Vietnam.
But they must hold a Form D certificate issued by the Department of Foreign Trade and show it to Vietnamese customs. The application and checking of the certificate can be conducted via the electronic system of the Department of Foreign Trade. Though enterprises still have to go to the Department of Foreign Trade to obtain the Form D certificate, on-line operation can save time and money for them. As for exports to Vietnam, currently exporters cannot exchange e-Form D certificates between the Department of Foreign Trade and Vietnamese customs. But currently, the Form D certificates between Thailand and Malaysia, between Thailand and Indonesia, and between Thailand and Singapore can be exchanged and used completely.
To avoid problems when materials are sent from Vietnam and for the comprehensive use of the e-Form D system, the Department of Foreign Trade called for cooperation to solve technical problems in Vietnam. In this way, enterprises will find it more convenient, faster to enjoy benefits endowed by the AFTA, with less time and costs.
The Department of Foreign Trade will use the success stories of the e-Form D system in trading with Malaysia, Indonesia, and Singapore to push for the implementation of the system, and use it in other ASEAN members, such as Brunei, the Philippines, Laos, Cambodia, and Myanmar, to play a better role of Thailand as a rotating president of ASEAN.
Source: InfoQuest, by Kasamarporn Kittisamphan / Rachada, translated by Xinhua Silk Road
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