Vietnam Delays Vote on TPP

Posted by Reading Time: 4 minutes

By: Dezan Shira & Associates

Vietnam has announced that the Trans Pacific Partnership (TPP) will not be submitted to a vote when its National Assembly convenes on October 20th. Overwhelmingly popular in Vietnam and widely expected to pass by authorities, the delay in TPP ratification comes a surprise to experts, and leaves many investors wondering when and if the TPP will come to pass in Vietnam. 

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Ratification & Implementation

Following the delay, the next session of the National Assembly is unlikely to take place until 2017. However, even if Vietnam ratifies the TPP at this point in time, it will remain impossible for the TPP to come into full effect in the near to medium term. Under the TPP’s implementation clause – Article 30(5)(2) – at least 6 members of the original signatories, constituting at minimum 85 percent of the agreement’s gross domestic product, must have signed the agreement. With TPP ratification stalling in the United States – which makes up more than half of the TPP’s total GDP – it is unlikely that a delay on the part of Vietnam will delay the implementation of the agreement at large or within Vietnam itself.

Understanding Vietnam’s Position

In reality, Vietnam’s choice to delay a decision can be seen as a shrewd move by policymakers to shore up support for the agreement at home, while tempering expectations of foreign investors. While initially blaming the delay on incomplete planning, officials have become more candid in recent days indicating Vietnam’s hesitance to ratify prior to larger members such as the United States. Waiting for other members to sign onto the agreement gives Vietnam the ability to attract investment without exposing itself to the risks of capital flight in the event that TPP does not come to pass. 

Related-Reading-Icon-Asean LinkRELATED: TPP Perceptions in Vietnam: Insights from Indochina Research 

Implications for Investment

Given Vietnam’s beneficial position within the TPP and the level of domestic support for the agreement, its passage within the National Assembly is only a question of time. Furthermore, although stalling as the result of a heated election cycle, the TPP is thought to have a good chance of passing within the United States, immediately following their election. With full implementation of the TPP still a year out by most estimates, a substantial opportunity remains for investors seeking to optimize entry strategies. For more information on how to tap into the TPP’s benefits, the status of the agreement in various signatory states, or general information on investment in Vietnam please contact vietnam@dezshira.com or visit us online at www.dezshira.com


About
 Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

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