On 3 March 2017, the Central Institute for Economic Management (CIEM) collaborated with the Graduate School of Public Policy (GraSPP) of the University of Tokyo to organize Vietnam – Japan Emerging Researchers Forum 2017 on “Enhancing Vietnam-Japan Industrial Cooperation to Effectively Implement the Regional Comprehensive Economic Partnership Agreement”. The event was held at Pullman Hanoi Hotel with the financial support from the Toshiba International Foundation (TIFO).
The Forum was honoured to have the participation of H.E. Dang Huy Dong, Vice Minister of the Ministry of Planning and Investment, Mr. Keisuke Omori, President of TIFO, Dr. Nguyen Dinh Cung, President of CIEM, Prof. Toshiro Nishizawa from GraSPP (University of Tokyo). Speakers at the Forum include Dr. Vo Tri Thanh, senior expert of the CIEM, Prof.Fukunari Kimura, Chief Economist of Economic Research Institute for ASEAN and East Asia (ERIA) and Dr. Nguyen Thi Tue Anh, Vice President of CIEM. There were more than 80 people from other international organizations (e.g. the IMF, JICA), government bodies, academic institutions and mass media attended the Forum.
Welcome remarks by Mr. Keisuke Omori, Dr. Nguyen Dinh Cung and Prof. Toshiro Nishizawa all highly appreciated the cooperation between Vietnam and Japan and the right timing of the Forum as part of efforts to strengthen Vietnam-Japan relationship amid the new global context and particularly ahead of RCEP.
In Session 1 on “New global context: regional integration and RCEP”, Dr. Vo Tri Thanh provided an overview of the current situation in the world economy, which has experienced slow recovery, stagnant trade growth and social pressures (such as income inequality and populism). Also, the global economy is facing many uncertainties and high risks, including geo-political issues (conflicts, terrorism), the reallocation of FDI, new developments in production network connectivity and impacts of the 4th industrial revolution. The world has also witnessed the rise of populism against globalization, with can be seen through the 2016 presidential election in the US and Brexit in the UK. It is noted that protectionism has occurred in developed countries which have ever taken the lead in globalization and liberalization. In this context, RCEP has emerged as the most promising option to sustain integration and liberalization efforts.Vietnam and Cambodia are considered to be the biggest winners amongRCEP’s members. Dr. Vo also reemphasized the central role of ASEAN in RCEP and raised several challenges for ASEAN, which include how to balance different ambition levels among the negotiating parties; how to deal with liberalization and non-traditional security issues; and how to design an effective implementation mechanism for RCEP.
Comments and suggestions by participants emphasized the need to redefine and reiterate core values of globalization toward “smart” and sustainable integration, which should address effectively core concerns of regional integration, including paying due attention to equal prosperity, inclusive growth and narrowing development gaps among members. As such, regional economies, including Vietnam, must continue and strengthen reforms with special attention to institutional reforms and improvement of human resources, thereby enhancing resilience to global shocks and adaptability to tendency of the 4th industrial revolution.
In Session 2, the presentation by Prof. Fukunari Kimuraon “RCEP and Implication for Regional Production Network” focused on the changing international commercial policy regime in consideration of Trump’s era and Brexit, highlighting the crucial role of East Asia to advocate freer trade and investment, where RCEP is very important for further deepening of AEC. Accordingly, economic integration including AEC and RCEP must be designed for further promoting effective usage of GVCs for economic development. Experiences and lessons learnt through industrial agglomeration in some regional cities such as Bangkok, Jakarta, and Hanoi revealed two major ways to narrow geographical development, including (i) pushing out frontiers of GVCs or production networks through reduced service link costs and improved location advantages; and (ii) moving people from rural/informal to urban/formal sectors. In this connection, Prof. Kimura stressed the need to remove typical bottlenecks for labour movements through focusing on narrowing education gaps and avoiding too high minimum wages in the formal sector. Prof. Kimura also emphasized on the fact that each country has regions/industries in different tiers with corresponding development agenda, therefore ASESAN/RCEP economies should set a schedule for deeper integration in either two-tier or bit-by-bit approach.
In response to Prof. Kimura’s presentation, Mr. Jonathan Dunn, IMF Resident Representative for Vietnamexpressed his views that for Vietnam, given its advantageous geographical location, addressing challenges related to both hard and soft infrastructure is critically important. More specifically, Vietnam should address various issues, including seeking finance for infrastructure upgrading, pushing up administration reforms (e.g., further reduction of time for customs clearance), improving limited capability and weak linkages between domestic firms and TNCs, etc. It is also important for Vietnam to take into account of providing adequate supports todisadvantaged/vulnerable social groups affected by industrial transformation. Sharing the similar views, Prof. Kimura further stressed that Vietnam should exert more efforts on accelerating reforms, supporting SMEs development and addressing social concerns. More broadly, ASEAN countries need to further promote business start-up models and create advantageous institutional framework for domestic businesses to effectively participate in GVCs.
In Session 3, Dr. Nguyen Thi Tue Anh reviewed opportunities and challenges of Vietnam’s industry ahead of RCEP. Challenges are various, including meeting Rule of Origin requirements, underdeveloped supporting industries, meeting stricter requirements on labor and environment, SPS, TBT, increasing competitive pressure from RCEP partners given a high level of complementary in a large number of export products of Vietnam and RCEP members, low utilization rate of FTAs, etc.Meanwhile, RCEP also broadens opportunities for Vietnam to promote exports of advantageous products and imports of inputs for domestic production, to improve legal framework for industrial development; to attract targeted FDI and take advantage from technological transfer, etc. Regarding industrial cooperation between Vietnam and Japan, it is noted that the participation of Vietnam’s firms in the industrial production network of Japanese firms remain limited, just in simple stages and limited spill-over effects of Japanese firms. Dr. Nguyen raised possible causes which may lie in limited capability of domestic firms and inadequate incentive mechanism/policies. The presentation also highlighted some recommended actions to promote Vietnam – Japan industrial cooperation, including continuing Vietnam’s focus on prioritized sectors/industries, including high-tech industries, human development for industrial sectors, supporting industries for prioritized sectors, implementation of international standards, supporting start-up.
In the panel discussion session, participants shared common views on limited participation of Vietnamese firms in the production network of Japanese firmscompared with other regional countries including Thailand and Indonesia. In this regard, domestic firms need to improve productivity and quality, where JICA is providing supports for Vietnam in various forms such as ODA, human development, etc. Vietnamese firms may consider to join in certain stages of production network of Japanese firms with more supports from the government, including more relaxed regulations and incentives.In this regard, again, emerges the need of institutional reforms to further improve the domestic investment-business environment./.