Gradually reduced tariff barriers under the Free Trade Agreement (FTAs) has sent the turnover of imported goods from Japan and the Republic of Korea into Vietnam, increasing sharply and this momentum is expected to continue ata high level in the coming years.
According to Deputy Director General of the International Cooperation Department, under the Ministry of Finance Pham Tuan Anh both Vietnam and Japan are members of the Japan-ASEAN Comprehensive Economic Partnership Agreement (AJCEP) and the Vietnam-Japan Economic Partnership Agreement (VJEPA), which were signed and took effect in 2008 and 2009, respectively.
Accordingly, Vietnam’s tax commitments under the FTAs have been made after collecting opinions from relevant ministries and agencies and the business community.
Pursuant to the tax reduction commitments for 2016-2018 , a number of products imported from Japan into Vietnam will enjoy special preferential import tariffs of 6.2% in 2016, 5.6% in 2017 and 4.2% in 2018 based on a year by year gradual tax reduction.
Vietnam and Japan have maintained balanced trade with two-way export-import turnover reaching US$11 billion in the nine-month period, including US$13.41 billion from Vietnam’s imports andUS$13.7 billion from its exports.
The General Department of Vietnam Customs reports that import turnover from the Japanese market in September reached US$1.4 billion, bringing the total turnover in the first quarter to US$11.8 billion, an increase of 8.55% when compared to last year’s same period.
Vietnam’s key imports from Japan include machinery, equipment, computers, electronics products, iron and steel. In particular, machinery and equipment saw the highest turnover of more than US$3 billion, up 2.47% from last year, followed by computers, electronics products at US$2.1 billion up 10.79% and iron and steel at US$1 billion, up 11.48%.
Among other imports from Japan were cloth materials petroleum and pharmaceutical products, paper and rubber. Since the Vietnam-Korea FTA (VKFTA) came into force in 2015, the RoK has become a nation with which Vietnam has the highest trade deficit.
The Korean products imported into Vietnam have showed a sharp increase with import turnover expanding by nearly 47% to over US$38.3 billion by the end of October compared to the corresponding period last year.
The highest revenues were seen in the group of computers and electronics imported from the ROK at US$12.51 billion, accounting for nearly a third (32.7%) of the total import turnover from the ROK, up an impressive of 72.3% from last year.
Import turnover of machinery, equipment, and spare parts rank second, reaching US$7.37 billion up 61.8% against the same period last year, trailed by telephone and components at US$4.97 billion, up 63.8%.
Import turnover from the RoK in the past ten months of the year saw a sharp increase with several groups of goods also displaying an upward trend in turnover such as rubber glass, gems and precious metal, confectioneries and cereal products, and fruit and vegetables.
Notably, the price of imported gas from the RoK increased a remarkable 100% over the last year. Vietnam’s exports to the huge market have also grew by 28.6% to US$12.15 billion but its imports only made up one-third of import turnover from the market thus elevating Vietnam’s trade deficit with the RoK up to US$26.15 billion – the largest deficit Vietnam has with any trading partners.