Indonesia will find Vietnam its “biggest threat and competitor” in the textile and shoe industry after that country joined the Trans-Pacific Partnership, according to Indonesia’s Trade Minister Thomas Lembong.
“Indeed, Vietnam, Singapore and Malaysia have joined the TPP but the biggest threat for us would be Vietnam. We could say that Vietnam will be our direct competitor,” Thomas was quoted as saying by state-run Antara News.
Competition with Vietnam will be tighter because the country has also already settled its free trade negotiations with the European Union, the minister pointed out.
“So Vietnam would be able access more markets in Europe, which are bigger than the United States because they consist of more than 20 countries. Their first deal is already worth almost US$20 trillion. We have indeed been left behind,” Thomas said.
He added that Vietnam will certainly benefit because besides gaining access to Europe, it will now be able to grab a bigger slice of the U.S. market with the advantage of having zero tariff.
“We consider the development very seriously. We have also prepared ourselves to fight. The President [Joko Widodo] is aware of the situation,” Minister Thomas stated.
Earlier, President Widodo said he was hoping Indonesia will be able to join the group during the next two years.
The President vowed that the barriers to the country joining free trade agreements (FTAs) would be settled in a couple of years at the latest. “At the most, within two years these could be settled. We have indeed been late, but we believe that in two years’ time, our products could compete in Europe and the United States,” he said.
In a related development, credit rating agency Moody’s in a just-released report confirms that Vietnam’s apparel and shoe manufacturers stand to profit from lower import duties with the U.S. and Japan.
The establishment of the TPP was agreed upon by 12 Pacific-rim countries on October 5, 2015, and the breakthrough deal, if approved by U.S. Congress, will become the biggest FTA to date, representing nearly 40 percent of global GDP from the Americas to Asia. The deal is seen to pave the way for lower tariffs and import quotas, reduced import and export costs, and the opening up of new market opportunities for the member countries.
Participating countries to the pact are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S., and Vietnam. The breakthrough came after years of negotiations.
Photo: Robert S. Donovan
