Satisfying rules regarding the origin of goods will be a big challenge for Vietnamese shoes and garment makers to benefit from ASEAN-Japan Comprehensive Economic Partnership tax cuts, which took effect from Dec 1, the Vietnam Investment Review reported.
The ASEAN-Japan Comprehensive Economic Partnership (AJCEP), signed in April 2008, includes Laos, Myanmar, Singapore and Vietnam, which have all ratified the partnership. Japan completed ratification of the economic partnership agreement last October.
Under the agreement, Japan will remove tariffs on 94 per cent of imports from ASEAN countries for 10 years, while six major ASEAN members, including Brunei, Singapore, Thailand, Malaysia, Indonesia and the Philippines, will eliminate tariffs on 90 per cent of imports from Japan within 10 years.
A more gradual tariff cut has been set for the four smaller economies, Vietnam, Laos, Cambodia and Myanmar.
Enterprises in the footwear, garment and textile industries said it would not be easy for them to take advantage of the tax cut to promote exports to Japan because of strict rules about the origin of goods.
The Ministry of Industry and Trade said that local enterprises can export shoes, apparel and textile products into the Japanese market tax-free if they use materials produced in Vietnam, Japan or within the ASEAN bloc.
Products that are made from materials or parts imported from other countries will be taxed at levels not exceeding 10 per cent.
Footwear makers in Vietnam currently have to import 80 per cent-90 per cent of their materials from China, Taiwan and Korea. It will be very hard for local firms to source materials or parts from Japan or ASEAN, which are more expensive than those from other Asian suppliers, said the Vietnam Leather and Footwear Association (Lefaso).
The origin of goods will be one of the major challenges for local shoe manufacturers to expand into the Japanese market in the years to come, the association said.
Currently, Vietnamese garment and textile companies are only able to source 20 per cent of cloth from local producers. The remaining cloth is imported from China, Taiwan and Korea.
Deputy General Director of the Ministry of Industry and Trade’s Department for Export and Import, Ho Quang Trung, said the AJCEP will encourage local enterprises to use more materials made in Japan and other ASEAN countries, which are of high quality and would therefore help increase product quality. (VIR)
Vietnamese
