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The promotion of cooperation initiatives in the field of customs to increase intra-regional trade flows. Source: Internet

Benefits from trade stress

The 5th meeting of the ASEAN Minister of Finance and the Governor of the Central Bank has just been held successfully in Thailand. Here, the Finance Ministers and the Governor of the Central Bank reviewed the figures in 2018 and forecast the situation in 2019 through reports by international organizations and the ASEAN + 3 regional Macro-economic Research Organization (AMRO).

Accordingly, the macroeconomic situation of ASEAN in 2018 and forecast for 2019 had the following outstanding features: the region's overall GDP growth continued to maintain an average level of about 5.1% in the period of 2019-2020, a slight decrease compared to the growth rate in the period of 2017-2018 (5.3%); inflation continued to remain stable at 2%, equivalent to 2018. Vietnam's economy is expected to achieve 6.6% growth in 2019; inflation will be maintained at about 2%.

ASEAN regional trade continues to grow at a slow pace. Total trade value of goods in 2018 is estimated at 157.3 billion USD, up by 12.9% over the previous year, but still lower than the growth rate of 15% in 2017. Regarding investment, according to preliminary data, in the first half of 2018, foreign direct investment (FDI) into ASEAN was at US$68.4 billion, up 12.4% over the same period in 2017.

The conference also made comments on the macroeconomic prospects and challenges for ASEAN in 2019. Regarding economic growth, the growth of domestic demand and domestic investment will continue to support the regional economy despite ongoing trade tensions, undermining external trade and global uncertainties.

Regional trade identified in the short term may benefit from trade stress, especially for Vietnam and Indonesia, in the production of intermediate and highly integrated goods in the global value chain. However, in the long term, the tension will still present more difficulties for the region than short-term benefits. Regarding investment, the conference identified a better situation, as mentioned above, FDI investment in ASEAN region will continue to increase, mainly due to a significant increase in trading activities and cross-border mergers and investments in new green projects.

More investment opportunities

Speaking about the benefits that Vietnamese businesses will enjoy from the results of financial cooperation in the ASEAN region, Vu Nhu Thang - Director of International Cooperation Department, Ministry of Finance said at the conference, the Minister highly appreciated cooperative activities in the fields of tax, customs, and securities and insurance in the ASEAN region. These activities have brought about common benefits and cost savings for Vietnamese people and businesses.

International organizations appreciate Vietnam's regional business environment. The strong reform of administrative procedures, the application of information technology, simplification of tax procedures and customs have facilitated trade and enhanced competitiveness for enterprises.

Specifically, regarding trade, connecting all member countries to ASW helps strengthen the connection of ASEAN infrastructure, so that businesses have more investment opportunities. In meetings on the sidelines of the conference, the ASEAN business community also expressed expectations on promoting cooperation initiatives in the field of customs to increase intra-regional trade flows.

Regarding investment, according to Thang, the efforts of member countries towards the completion of bilateral networks on the Double Taxation Avoidance Agreement (DTA) will create a unified investment environment in ASEAN. The promotion of signing the Regional Comprehensive Economic Partnership Agreement (RCEP) also creates a favorable investment environment, creating momentum to continue to increase the value chain in the ASEAN Economic Community.

In terms of services, the signing of the Round 8 Commitment Package on ASEAN Financial Services Liberalization and the Negotiation of the Round 9 Commitment Package as well as the signing of new service agreements will help expand market access in the area.

The level of financial services openness of some member countries is very positive as Cambodia liberalizes some securities services (asset management, portfolio consulting and research, provide and transfer financial information) and Myanmar opens disaster reinsurance service.

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Thereby, the business community will have the opportunity to invest and provide financial services in ASEAN, while people will benefit from financial connectivity in the region.