ASEAN is in the process of upgrading agreements for long-term opportunities, photo Le Toan

Since last week, Vietnam’s Ministry of Industry and Trade (MoIT) has been rolling up its sleeves to work with its peers in ASEAN on schemes to review tariff policies and investment attraction policies as part of the bloc’s efforts to woo more funding and facilitate intra-bloc trade.

“We are now revising regulations and policies on high technology for projects as part of commitments by ASEAN leaders at the recent ASEAN Summit,” an expert from the MoIT’s Department of Science and Technology told VIR. “Any improper regulations will be removed in order to make Vietnam a more attractive destination for foreign direct investment (FDI) and an important link in the region’s supply chains.”

The MoIT, the Ministry of Planning and Investment (MPI), and the Ministry of Finance have been assigned to jointly work on incentives for FDI with ASEAN member states, especially given the global minimum tax will take effect in early next year. In Vietnam, a draft resolution on that tax is currently under preparation and will be submitted to the National Assembly next month.

ASEAN member states have vowed to have a shared mechanism on harmonised tariffs as they aim to make the region a more attractive investment destination. They are studying the latest FDI trends and emerging developments such as international supply chain restructuring, international minimum tax, and energy transition investment, including investment in the electric vehicle industry in the region.

“We looked forward to a thorough study on the impact of international minimum tax on FDI flows to the region and strategy to bolster ASEAN’s investment competitiveness,” stated the chairman’s statement of the summit. “We also look forward to the publication of the Special ASEAN Investment Report 2023, prepared by the UN Conference on Trade and Development and with the support from the Indonesian government, at the earliest opportunity.”

According to the statement released over two weeks ago, regional nations stressed the importance of promoting investment that contributes to sustainable development goals as mandated by the ASEAN Comprehensive Recovery Framework, and the importance of enhancing ASEAN’s attractiveness as a sustainable investment destination.

Therefore, they looked forward to the development of the ASEAN Sustainable Investment Guidelines for a conclusion in 2024. “We were also of the view that investment in higher added-value industries is central to achieve ASEAN as a seamlessly integrated single market, and production base,” read the statement.

Currently, ASEAN member states are also working on the ASEAN Trade in Goods Agreement (ATIGA) upgrade negotiations.

The bloc aims to upgrade the ATIGA to be comprehensive in scope and cover not only traditional trade-in-goods elements but also emerging and future issues to ensure that the upgraded agreement will be a modern, comprehensive, forward-looking agreement and relevant to business communities and more responsive to regional and global developments.

Over a week ago, they also substantially concluded of the Fifth Protocol to Amend the ASEAN Comprehensive Investment Agreement to provide greater certainty and transparency to investors on the investment regime in ASEAN, as well as to ensure ASEAN’s own internal agreement for investment has continued relevance vis-à-vis its external agreements. It is expected that the protocol will be signed in 2024.

Vietnam’s Prime Minister Pham Minh Chinh underlined advantages in ASEAN for investors. According to PM Chinh, many new initiatives are being boosted for ASEAN to seize opportunities from global development trends, such as the Digital Framework, Circular Economy Framework, Blue Economy Framework, and Carbon Neutrality Strategy.

Additionally, ASEAN is now also upgrading its ATIGA and negotiating upgraded versions of trade deals with China, South Korea, Japan, and India.

“This will make ASEAN a more lucrative shared market. ASEAN also needs to make long-term commitments on market opening and facilitating trade and investment,” PM Chinh stated.

The ASEAN Secretariat said trade reforms will benefit Vietnam. “The investment environment has improved over the years, as corroborated by foreign chambers of commerce based in the country. The government has introduced measures to simplify requirements and streamline processes to facilitate investment.”