Japan- Vietnam economic partnership agreement Overview: Japan is now Vietnams biggest ODA provider, its second biggest

FDI investor, and forth biggest importer. The Vietnam - Japan Economic Partnership Agreement (VJEPA) was initiated during Prime Minister Nguyen Tan Dungs visit to Japan in October 2006. The negotiation on the VJEPA started in January 2007, shortly after the accession of Vietnam to the World Trade Organization. After nine official talks and a number of unofficial talks, the two nations reached an agreement in principle in September, last year and officially signed the accord on December 25, 2008. VJEPA is Japans 10th free trade agreement and the first bilateral free trade agreement for Vietnam since entering the WTO. This is a comprehensive bilateral trade agreement (BTA), covering the areas like goods services, investment, business environment improvement, labor movement, and technical standard cooperation. In addition to previously signed economic negotiations between Viet Nam and Japan, this Agreement will create a comprehensive legal framework which provides stability and favorable conditions for trade and investment activities for enterprises of the two countries. VJEPA can be considered as a landmark of 35 years of establishment of diplomatic relationship between the two countries, contributing to strategic partnership between Viet Nam and Japan. This agreement is also expected to push the bilateral relationship to a higher plane and boost economic, trade and investment exchanges between Vietnam and Japan, thus fruitfully promoting and exploiting the two countries potentialities.

Analysis: Under the Agreement, some 92% of the two sides goods will be freed from tax within ten years. Some commodities such as Vietnams agricultural produce, garments and marine products as well as Japans industrial commodities, including electronics and car equipments, will enjoy tax reduction or exemption. In addition to tariff reduction, Japan will not restrict Vietnamese service providers activities in advertising, market research, management consultancy and technical verification.

At first, Vietnam and Japan will give priority to conducting some projects to help Vietnam train nurses in Japan, develop auxiliary industries, establish a bilateral dialogue mechanism in garment and textile sector, improve food hygiene and safety, and perfect quality standard system. The dominant positive effects of VJEPA on Viet Nam economy: It is obvious that the horizon zone of practical benefits VJEPA brings to Vietnam businesses is huge. 1/ Facilitating Vietnams access to Japan market and boosting Vietnamese goods competitiveness: Japan's tariffs on Vietnamese exports to Viet Nam market will be lowered sharply. Specifically, 86 percent of Vietnamese exports to Japan will be subject to a zero percent tariff in the first year of VJEPA enforcement and this itinerary will take 10-15 years for completion. This means that Vietnamese businesses can save money if they sell products to Japan. Since the Viet Nam-Japan Economic Partnership Agreement came into effect in June 2009, reducing and eliminating tariffs on Vietnamese goods, seafood, textile and garment, and vegetable exports have been robust. The Viet Nam Seafood Export and Processing Association said the tariff reduction has increased the competitiveness of Vietnamese products compared to those from other countries in the region. Le Van Quang, general director of Minh Phu Seafood Joint Stock Co, said Japan did not buy much shrimp from Viet Nam in the past owing to high prices, preferring to import shrimp from Thailand and Indonesia. But the tariff cuts have changed all that. Japan is now Viet Nam's largest buyer of frozen shrimp, with imports of US$400 million last year, or almost 30 per cent of all the shrimp the country exports. In the first two months of this year, seafood exports to Japan were worth $89.7 million, 11.6 per cent higher year on year. Vegetable exports to Japan have surged since the end of last year, with many Japanese importers seeking the Viet Nam Vegetable Association's assistance to find sellers who can supply thousands of tonnes each month. Huynh Quang Dau, director of An Giang Agricultural Technical Service Co, said so far this year, his company's exports of taro, peas, and violet sweet potato have increased 30 per cent over the same period last year. Vegetable exporters are very confident thanks to the impact of not only the tax cuts but also global economic recovery.Japan is the third largest buyer of Vietnamese vegetables after only China and Russia. The textile and garment sector is also stepping up exports to Japan. Pham Xuan Hong, the company's chairman, said Japanese orders are up 20 per cent over last year. Under the trade agreement, Vietnamese textile and garments can enter Japan tarifffree. The tax rate used to be 10 per cent until the treaty took effect. "Opportunities are huge if businesses choose the right partners," Xuan said.

Diep Thanh Kiet, chairman of the HCM City Garments, Textiles, Embroidery and Knitting Association, said young Japanese consumers prefer fashionable products and diverse designs. The Viet Nam Textile and Garment Association said it recently joined an ASEAN project that seeks to establish close links among the member-countries' textile and garment industries and promote exports. ( Source: VOV news)

Moreover, Japan will also create more favorable conditions for Vietnamese farm products including seafood exports to this market to meet the requirements, regarding food quality, hygiene and safety. Vietnamese exporters can meet Japanese administrators to learn how to access the Japanese market more easily. These are really practical benefits for Vietnamese businesses. 2/ Launching more development-orientated projects: On the sideline of VJEPA, Vietnam and Japan have launched several important projects to create many other benefits. These include a Ministry of Agriculture and Rural Development project to establish a food hygiene and safety center, which will examine Vietnamese goods before they go to Japan. The Vietnamese Ministry of Industry and Trade and the Japanese Ministry of Economics, Trade and Industry have signed an agreement to develop an assistance project towards the support industry in Vietnam. There has also been a manpower training project for Vietnam with an emphasis on the health sector. Some other projects: Establishment of Quang Ninh economic zone authority: PM decided to combine Quang Ninh industrial zones authority with Van Don management board to form Quang Ninh economic zone authority. It is under Quang Ninh Peoples Committee, directly managing industrial and economic zones in all over the province, Tien Son Logistics-ICD Center to open in November With the total investment of 380 billion VND, the 10-hectare center was well-equipped so as to fully provide logistics packages services, Samsung Vietnam opened cell phone factory in Bac Ninh Samsung Vietnam has opened a cell phone factory in Yen Phong industrial zone (Bac Ninh and its production is estimated to be 6 and 9 million products respectively, providing jobs for 8,000 people (2010) and 12,000 people (2011), Hand over apartments to workers in

Bac Ninh Viglacera Land has just handed over an apartment building to workers of Samsung Vietnam at Yen Phong industrial site. The apartments are designed by Samsung and will be for rent in 10 years, Completion of the Cold-rolling Mill construction in Vietnam The Cold-rolling Mill of POSCO Steel Corporation with annual production capacity of 1.2 million tons has just been operated at Phu My industrial complex of Vung Tau province, 300 million USD invested in Can Tho industrial complex According to the authority of Can Tho processing and industrial complex, in the first 9 months of 2009, there were 21 new projects with registered investment of 203 million USD, and 9 expanded projects with the adding amount of 65 million USD.

The role of VJEPA to BIT Signing of Japan-Viet Nam Investment Agreement (a) The Agreement between Japan and the Socialist Republic of Viet Nam for the Liberalization, Promotion and Protection of Investment (hereinafter referred to as "the Agreement") signed on Friday, November 14, between Ms. Kawaguchi, Minister of Foreign Affairs of Japan, and Mr. Vo Hong Phuc, Minister of Planning and Investment of Viet Nam. (b) The Agreement, in principle, guarantees national treatment and mostfavored-nation treatment to the investors and their investments of both countries at the stage of pre-investment, and prohibits the respective authorities from imposing so-called "performance requirement" to provide the rules in terms of liberalization, promotion and protection of investment in a comprehensive manner. The Agreement is expected to contribute to creating a more transparent and favorable environment for the investors in each country and thereby even further reinforcing their bilateral economic relationship. [Quote] The liberation, promotion and protection agreement (BIT) signed by Japan and Viet Nam proves to be an integrated component of VJEPA, ensuring tight legal nature in the light of international practice and WTO rules. Although realizing this factor doesnt affect the two membersbenefits, the investment incentives from BIT are committed to be reserved for beneficiary companies from Japan and Viet Nam.

Things Viet Nam should take into consideration for better investment picture in the future y Our strategic ideas: Viet Nams consistent policy is treasuring and ceaselessly developing the strategic partnership with Japan. Politburo member and Secretariat permanent member of the Communist Party of Vi t Nam (CPV) Tr ng T n Sang made the statement when receiving Japans Foreign Minister Katsuya Okada on July 24. y Action speaks louder than words They need to understand the principles/regulations under VJEPA, such as the regulations already outlined in a Ministry of Finance circular, regarding the Vietnamese import tariff table, or the Ministry of Industry and Trade circular on the origin principles. Businesses should be active in learning about Japanese trade policies and find their best way to enter the Japanese market. Businesses should also contract the Ministry of Industry and Trade or related ministries and offices for more information. y Putting more efforts into enhancing our products quality and building up Vietnam branding in foreign markets The high value Japanese people set on the quality of products proves to be a high barrier for exporters. Therefore, with a view to maintaining our relationship with Japanese counterparts, we should take more notice of this. For example, besides the exercise of VJEPA, domestic exporter should take into account some issues such as food hygiene and safety and product quality, etc. when their products are exported to Japan. To make a smooth entry into Japan s market, aquaculture sector experts have recommended that Vietnamese exporters pay more attention to the quality of aquaculture exports, strategies on aquatic processing, brand name awareness and trade promotion. They added that in the near future, Japan will support Vietnam to build an aquaculture processing centre meeting international standards and the two countries will set up a joint committee to overcome any obstacles relating to the quality, hygiene and safety of products . Sources : Article: VJEPA - New opportunities for Vietnams aquaculture exports to Japan (By Viet Nam diplomatic mission)

y In order to successfully penetrate the Japanese market, Vietnamese businesses should cooperate closely with each other and with their Japanese partners.

Preferences: VJEPA Articles published on web of ministry of foreign affairs of Japan. Things Vietnamese entrepreneurs need to know about VJEPA http://www.vietnamembassy-thailand.org/en/vnemb.vn/tin_hddn/ns090723095138 http://www.uni-bros.com/en/news.php/penetrating_japanese_market_ _advantages_and_challenges/id=17839/cid=4