Vietnam’s electronics exports up, but Vietnamese enterprises dying
Vietnam officially joined ITA in 2007. The 2012 White Book showed the great progress of the industry in the year in comparison with 2007. Especially, the hardware electronics industry has been growing very rapidly with the export turnover in 2012 reaching $23.2 billion, much higher than the $1.3 billion in 2007. Meanwhile, the software export turnover reached $1.2 billion, and digital content industry $1.3 billion.
A report by the Ministry of Information and Communication showed that ITA has had big impacts on Vietnamese electronics enterprises with most of them having gone bankrupt or shifted to the trade or service sectors. Vietnamese brand computers cannot cement their positions it the market, now holding the modest market share of 10 percent. The domestic electronics market has been controlled by foreign imports or foreign invested enterprises’ products.
ITA has made Vietnam lose much money in tax collection, while it has affected a series of policies and the management mechanisms.
Since ITA is generally understood as a tariff cut mechanism, since the day of joining ITA, Vietnam has suffered the big loss of revenue due to the tariff cuts. In 2007, the loss was $3 billion, while the figure rose to $200 billion. Foreign invested enterprises, including Samsung, Sony, Panasonic… now control 90 percent of the electronics market.
Vietnam would rather suffer loss in revenue…
However, despite the losses in tax collection, most of the Vietnamese have voted for continuing joining ITA.
Bui Manh Hai, Chair of the Vietnam Informatics Association, affirmed that Vietnam should maintain its ITA membership.
“We have lost big sums of money due to the tariff cuts, but we have gained more than lost. The products and services have become cheaper, which has allowed Vietnamese too access the world’s advanced products and technologies,” Hai said.
“The quality of the Vietnam labor force has also been improved, because Vietnamese workers now have to make products and services in accordance with the international standards,” he added.
Also according to Hai, ITA also helps encourage the creation in the information technology. ITA could be seen as the great opportunity for the government to
Tran Quang Hung, Vice Secretary General of the Vietnam Electronics Association, thinks it’s not the time to discuss on whether to join ITA, saying that joining the agreement is a must, because this is a common playing field of the countries all over the globe.
The most outstanding feature of the electronics industry is the strong globalization and the deep professionalization. The world’s electronics industry is interested much in WTO and ITA.
“We should set a sprat to catch a mackerel,” Hung said, explaining that in the immediate time, Vietnam may lose many things, but it would get benefits in the long term.
The things to lose in the immediate time are the loss in the tax collection and the removal of the tariff barriers to protect Vietnamese enterprises, which would lead to the death of many domestic businesses.
However, Vietnam would be able to attract more foreign invested enterprises which can see their great opportunities from the tariff cuts. Though the Vietnamese electronics industry goes down, its electronics export turnover has jumped from $1.3 billion in 2007 to $23.2 billion in 2012.