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HSC: the TPP to help Vienam to attract more FDI projects
Thu Minh 11:28, 2015/10/10
North Asia and ASEAN countries could move a significant portion of their supply chains to Vietnam to benefit from the tax reduction and better market access.
The outlook was revealed in the report by Ho Chi Minh City Securities Corporation (HSC) on impacts of the Trans-Pacific Partnership deal TPP) to Vietnam.
For Vietnam, which is the least developed country in the TPP members, however, TPP certainly will help the country take full advantage of opportunities brought by regional and international restructuring and international economic integration in the next decade. 
Notably, the number of Vietnam's FDI projects will increase sharply when North Asia and ASEAN countries could consider moving significantly their parts of supply chain in some sectors to benefit from the tax reduction and to better market access.
According to the report, the pact will help to increase Vietnam's gross domestic product (GDP) by about 1% year-on- year from 2017. The TPP is expected to help to raise the country’s GDP by an additional 23.5 billion USD in 2020 and 33.5 billion USD in 2025, and adding 68 billion USD to the country’s total export earnings in 2025.
About 18,000-20,000 products will be cut tax in the next decade under the direct impact of the TPP.

 
Illustrative image
Illustrative image
Some of these products will be cut  immediately when TPP takes into effect, some other products will be reduced tax under the schedule.
The TPP will also have positive effects to other sectors such as textiles, fisheries, steel products, wood, especially in infrastructure and  logistics in the long term.
The increase of FDI in Vietnam will help the country improving infrastructures such as electricity, roads.
The new investment mechanism will create a wave of private investment in BOT projects in the medium term.
However, some sectors will have lasting negative effects from the TPP as pharmaceuticals. This sector will be reduced from the current tax of 2.5% to 0%.
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