The Impacts of TPP and AEC on the Vietnamese Economy: Macroeconomic Aspects and the Livestock Sector

        Viet Nam’s  international  integration over  the past  couple of decades has helped  the country gain much in terms of economic growth, investment, export and income. However, the higher degree of openness also means higher exposure to external risks and possible worsening of  internal  risks. Great  expectations came with  the accession  into  the WTO,  for  example. Increases  in  export  and  foreign  investment  were  remarkable.  Yet,  great  influx  of capital coupled with the inexperienced monetary policy (under fixed exchange rate management and greater  openness)  contributed  to  the  asset  price bubbles  and  the  returning  of  double  digit inflation in 2008. The heavily dependence of Viet Nam on imports and foreign investment, the long  lasting consequences  of  the world  economic  crisis  and  sustaining  internal weaknesses during  the post-WTO period give the warning signs for Viet Nam not to be complacent with the promising TPP and, to a lesser extent, AEC. In order to make the best of the opportunities and overcome  the challenges  from  integration, Viet Nam needs  to continue  to make  further fundamental changes in economic structure, institutions and governing policies. 

         In  addition,  the  impacts  of  this  regional  integration  are  expected  to  vary  across industries.  Comparatively  advantageous  industries  are  expected  to benefit the most  while disadvantageous  industries may  suffer albeit with different degrees. Livestock  is  the  second largest sector of Viet Nam's agriculture, following crop cultivation. However, it is considered as  unsustainable,  uncompetitive  and  vulnerable  to  FTAs.  

        Viet  Nam’s  livestock sector’s difficult conditions are reflected in the followings: (i) The size of production is small, unreliable and  based on  households  (instead  of  large commercial  farms),  using  leftovers  as  feeds  and lacking  care  of  animal diseases;  (ii) Heavy  dependence  on  foreign  breeds  and  feeds;  (iii) Disease-stricken problem  is  common  though  still under  control;  (iv) Slaughter hygiene  and food safety  remain  limited, causing  food poisoning; and  (v) Environmental pollution due to livestock industry, harming producers and neighbouring households as well. Regardless of the fact that the opportunities are mainly offered to a limited number of big commercial farms in Viet Nam thanks to reduced cost of inputs (breeds and feeds), having the above characteristics, the livestock sector of Viet Nam would face fierce competition from foreign producers when the tariffs and NTBs are reduced and removed thanks to FTAs.