Vietnamese SMEs to Join ASEAN Goods Self-Certification

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By: Dezan Shira & Associates
Editor: Koushan Das

Vietnam’s Ministry of Industry and Trade (MoIT) has made changes to the pilot implementation of self-certification of goods origin as per the ASEAN Trade in Goods Agreement (ATIGA). This will be applicable for Laos, the Philippines, Indonesia, and Thailand. Earlier, only enterprises with an export turnover of US$ 10 million could conduct self-certification of goods origin. But now, even small- or medium-sized enterprise (SME) or larger firms will be able to do so. These changes, already in effect from December 2017 are expected to boost Vietnamese exports to ASEAN markets, further increasing their regional integration.

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Self-certification of product origin

As per the self-certification of product origin, traders or exporters may declare the origin of their exported products through their commercial invoice instead of the C/O form D (Certificate of Origin). This reduces the documentation for traders while claiming preferential tariff treatment. 

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Changes in the self-certification scheme

The new Circular No.27/2017/TT-BCT supplements and amends some items of Circular No.28/2015/TT-BCT, issued on August 20, 2015.

As per Circular 28, a firm could conduct self-certification of goods origin if its total export turnover to ASEAN member states was at least US$ 10 million. In the amended Circular 27, this regulation is removed, allowing small- or medium-sized enterprise (SME) or larger firms to conduct self-certification. SMEs are defined as enterprises with less than 200 social insurance payers and having a capital resource not higher than VND 100 billion (around USD4.4 million) or total preceding year income under VND 300 billion (around USD13.2 million).

To be entitled to self-certification of goods origin as per Circular 27, the trader must be the producer and the exporter of the produced goods. Furthermore, they should not have committed violations against goods origin regulations in the two years preceding their application date. 

In addition, as per Circular 27, at least one of the trader’s employees should have completed a training course in goods origin certification from the MoIT’s Department of Export and Import or a government-appointed training institution.

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What it means for SMEs

Small and medium-sized enterprises continue to play a major role in Vietnam, accounting for 98 percent of all enterprises, 40 percent of GDP, and 50 percent of employment. However, they have suffered from limited market access and competition. Even larger firms were unable to meet the export revenue criteria of US$10 million from ASEAN markets, as most of the SMEs major export markets are not the ASEAN countries but US, EU, China, Republic of Korea, and Japan. Until now, only Vinamilk and Nestle Vietnam were the firms eligible to self-certify their goods origin within the ATIGA.

The new changes will allow exporters of all sizes (SMEs and larger) in Vietnam to conduct self-certification of goods origin, as long as they also meet the remaining conditions mentioned in Circular 27. This will give the firms access to the ATIGA tariff incentives, leading to an increase in exports to the ASEAN markets.

Vietnam’s 2017 exports to the ASEAN member states reached US$21.7 billion, an increase of 24.5 percent year-on-year. However, Vietnam had a trade deficit of US$ 6.3 billion with ASEAN, same as 2016. Now with the self-certification of goods origin, Vietnamese SMEs will be able to boost their exports and reduce the country’s growing trade deficit with the ASEAN member states.

 


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Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com

 

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