Keynote speaker : AEC 2016 - Challenges & Opportunities for VN Economy MR. LE DANG DOANH Member of the National Board of the Vietnam’s Association of Economists Member of the National Board of the Society Vietnam - US.

1. AEC 2016: Challenges and Opportunities for
Vietnam’s Economy
Lê Đăng Doanh

2. AEC 2016: A Historic Milestone
• On November the 22 2015 in Kuala Lumpur the ten ASEAN-Leaders
have signed a Declaration on the establishment of the Asian Economic
Community on December the 31 2015 and adopt a 10 years roadmap
for further integration of the AEC.
• The ASEAN-Economies cover a land area of 4.4 million square
kilometres, 630 million people or 8.8% of the world population and a
GDP of USD trillion 2.800. If AEC is a single economic entity it
should be the seventh largest economy of the world. It aims to create:
a single market and production base, competitive economic
region, region of equitable economic development and fully integrated
into the global economy.
• Asean's 10 members have implemented 92.7 per cent of the 506
targeted measures under the AEC. But the implementation rate of a
full AEC scorecard of 611 measures - which includes some targets
that have been deferred until after this year - stands at 79.5 per cent.

3. Size of AEC

4. Pillar 1: Single Market and Production Base
Five Core Elements
1. Free flow of goods;
2. Free flow of services;
3. Free flow of investment;
4. Freer flow of capital; and
5. Free flow of skilled labour.
Where do we stand?

5. Progress toward goals
Tariffs already near zero.
The ASEAN Trade in Goods Agreement created a legal framework
to realise the free flow of goods within the AEC.
The ASEAN Framework Agreement on Services eases restrictions
on cross-border trade in at least 80 subsectors.
The ASEAN Comprehensive Investment Agreement liberalises and
protects cross-border investment activities and embraces international
best practices in the treatment of foreign investors.

6. Pilot program for the ASEAN Self-Certification System for exporters
launched.
Member States testing preliminary exchange of trade data and
information through the ASEAN Single Window Gateway.
Mutual Recognition Arrangements (MRAs) in place on testing
standards in many areas.
Stock exchanges from ASEAN-5 and Viet Nam have collaborated to
form ASEAN Exchanges.
MRAs concluded in eight professions to facilitate the movement of
ASEAN professionals in these areas through recognition of their
qualifications.
Progress toward goals

7. Pilot program for the ASEAN Self-Certification System for exporters
launched.
Member States testing preliminary exchange of trade data and
information through the ASEAN Single Window Gateway.
Mutual Recognition Arrangements (MRAs) in place on testing
standards in many areas.
Stock exchanges from ASEAN-5 and Viet Nam have collaborated to
form ASEAN Exchanges.
MRAs concluded in eight professions to facilitate the movement of
ASEAN professionals in these areas through recognition of their
qualifications.
Progress toward goals

8. Pillar 2: Competitive Economic Region
AEC seeks to foster a culture of fair competition, including institutions
and laws that underpin the effort, including protection for consumers
and guarantees for intellectual property rights.
ASEAN Member States intensifying their efforts to introduce
competition policy and law by 2015.
Outreach activities underway to educate the public on the
importance of competition policy.
Progress toward goals

9. The ASEAN Highway Network is physically connecting key
roadways, including the priority Transit Transport Routes, a vital
infrastructure and logistics component.
Six (out of planned 16) cross-border connections of the ASEAN
Power Grid already in operation. The Trans-ASEAN Gas Pipeline
will connect ASEAN’s gas pipeline infrastructure.
The agreements and protocols under the ASEAN Open Skies
Policy have been concluded and implemented.
Telecommunication infrastructure is also undergoing continuous
enhancement.
Progress toward goals

10. Progress toward goals
Pillar 3: Equitable Economic Development
 There are thirty business incubators and innovation centres under the
ASEAN Business Incubator Network to promote business matching
and development.
The ASEAN SME Guidebook towards the AEC 2015 has been
developed.
The Initiative for ASEAN Integration has developed new approaches
so that the benefits of the AEC are evenly shared between all Member
States.
The ASEAN Framework for Equitable Economic Development
was introduced in 2011.

11. Progress toward goals
Pillar 4: Integration into the Global Economy
 “ASEAN+1” FTAs with the People’s Republic of China, Japan, the
Republic of Korea, Australia, New Zealand and India position ASEAN
at the centre of global supply chains.
ASEAN is negotiating the Regional Comprehensive Economic
Partnership (RCEP), a regional agreement involving ASEAN and its
six FTA partners. RCEP will represent a combined GDP of about
US$21.2 trillion, which is about 30% of global GDP, and a market of
3.4 billion people (48% of the world’s population).

12. ASEAN Economic Community (AEC)
Some achievements
From 2007 to 2014:
+ Nominal per capita income of AEC has nearly doubled to US$ 4,130
+ Export valued has increased by 50% to US$ 1.3 trillion
+ Total FDI inflows have more than double to US$ 136 billion
+ Total intra-ASEAN FDI flows ups about two times to US$ 24 billion
+ High saving rates of close to 30% of GDP
+ Poverty has declined substantially in AEC over the last decade: number
of poor people living with $1.9 per day down from 130 million in
2002 to an estimated about 39 million in 2014
12/2/2015

13. ASEAN Economic Community
Trade is an important factor
• The AEC’s regional integration process has
already had several important beneficiary effects:
ASEAN tariffs on regional trade have been virtually
eliminated and tariffs on trade with other countries have
been reduced
Regional trade has been facilitated by setting up the
ASEAN Trade repository, national “single window” and
customs transit system
Trade in services has been liberalized, and FDI has been
boosted
• The integration process has helped stimulate the
development in particular of the lower-income
Cambodia, Laos, Myanmar12/2/2015

14. Impact of AEC on GDP (Cumulative percentage
increase over baseline 2011-2015 in 2015)

15. Economic Impact (on GDP) of ASEAN’s FTA and Five
ASEAN+1 FTAs (Percentage Point, accumulated from
2011 to 2015)

16. Population : 92,547 million (2014) (14th./209 countries)
GDP: US$ 186,202 billion (2014) (50th./194 economies)
GDP Growth Rate : 5.98%/year (2014)
GDP/capita: US$ 2052 (2014) (116th), GNI 1890 USD
GDP/capita(PPP): ~US$ 4249
Export: USD billion150 +13,6%)(2014)
Import: USD billion148 +12,1%) (2014
CPI: 1.84% to the end of December 2013, annual average 4,0%
( 2014)
5

17. Vietnam’s Impressive Trade Performance thanks
to International Integration
0
20
40
60
80
100
120
140
160
180 JoinedASEAN-AFTA…
JoinedAPEC(1998)
VN-USBTA(2000)
ASEAN-China(2002)
JoinedWTO(2007)
Vietnam-JapanFTA…
TPPnegotiation(2010)
AEC,TPP…(2015)
Vietnam Exports-Imports
(billion USD)
Exports Imports
12/2/2015

18. Vietnam Trade with ASEAN
Increasing in value but declining share of total
0.0
5.0
10.0
15.0
20.0
25.0
Vietnam Trade with ASEAN (in
USD billion)
Vietnam exports to
ASEAN
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
1998 2000 2002 2004 2006 2008 2010 2012 2014
Vietnam Trade with ASEAN (share
of total, %)
Vietnam exports to ASEAN
12/2/2015

19. Hi-tech exports have become the main driver of
manufacturing export growth, but relying most on FDI
12/2/2015

20. Overwhelming majority of Vietnamese private
firms are small and very small
12/2/2015

21. Ranking in Doing Business in 2016 elevated 3
points, 90/189 economies
Topics DB 2016 Rank DB 2015 Rank Change in Rank
Starting a
Business
119 125 6
Dealing with
Construction
Permits
12 12 No change
Getting
Electricity
108 130 22
Registering
Property
58 58 No change
Getting
Credit
28 36 8
Protecting
Minority
Investors
122 121 -1
Paying
Taxes
168 172 4
Trading Across
Borders
99 98 -1
Enforcing
Contracts
74 74 No change
•
=Doing Business reform making it easier to do business. =Change making it more difficult to do business.

22. GCI (Global Competitiveness Index) of Vietnam
improved 12 points to 56/140 economies (30.09.2015)

24. Benefit and Challenges for Selected Products
• Opportunities for textile and garment, footwear, furniture
could benefit from FTA thanks to cheap and skillful labor
forces if they could attract investment and fulfill the various
requirements on country origin, labor conditions.
• Selected agrarian and aqua products have to join value-
chain and meet SPS.
• IT-engineers could have new employment opportunities.
• Retail market, domestic super-market chains face tough
competition.
• Vietnam moves to a time of big changes without a clear
orchestration. The Government has promulgated Action
Plan for implementation of FTAs but the implemention
takes more efforts.

25. Challenges and Opportunities for Reform
• AEC is an external pressure for Vietnam to market and
institution reform.
• How industrialization in Vietnam should continue under the
conditions of trade liberalization with huge restriction on
supporting measures (credit subvention, market protection etc.)?
How could the weak emerging private sector compete and
survive?
• The impact of foreign super-market chains on the domestic retail
trade market is pressing: agrarian and industrial products;
• Vietnam has to implement rigorous institution reform on
transparency, regulation coherence, customs, government
procurement etc.
• Labor market and AEC, reform of education and training system;
• Banking ,financial institutions and other services face tough
competition.
• Trade Balance and Fiscal Balance will be affected.

26. Thank you