17 Aug, 2018

CPTPP: Opportunity for Vietnam’s wooden furniture manufacturers to thrive

Reduced tariffs and competitive prices will facilitate the growth of the Vietnamese timber industry after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) comes into force.

Out of the 11 remaining countries (1) in the CPTPP, Vietnam’s timber industry has long-standing relationships with strong markets such as Japan, New Zealand, Australia and Singapore. Export turnover of wood in these countries is also very large such as Japan with over $ 1 billion; Australia, New Zealand with several hundred million US dollars. In recent years, the Vietnamese timber industry has developed a good relationship with Canada, Peru, Chile. According to Mr. Nguyen Ton Quyen, deputy chair of the Vietnam Timber and Forest Product Association (Vifores), woodwork export turnover is expected to reach $9 billion in 2018. In addition, with CPTPP, FDI inflows will increase. Previously, the investment capital came to the wood industry from China but now Japan also has considered Vietnam as a suitable place of investment.

Mr. Quyen believes that the agreement will bring three benefits to Vietnam’s woodwork industry:

  1. The tariff will be cut to zero percent, thus paving the way for Vietnamese products to enter CPTPP markets.
  2. The lower import tariff on technologies and equipment will allow Vietnamese enterprises to buy more modern technologies and equipment from developed countries such as Japan and Canada which will help local enterprises improve their productivity.
  3. Vietnamese enterprises will have opportunities to connect and cooperate with strong global partners which will help them improve their corporate governance.

(1)11 countries in CPTPP: Vietnam, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore.