There is a fact that a majority of businesses seem to ignore or undermine the impact some important policies can have on their operations, especially if these are not close to home.
A recent report by HSBC Bank shows that only 31 per cent of companies in Vietnam say EU policy environment has a positive impact on their business while 66 per cent see no impact.
Data is similar for US policy environment (31 per cent and 60 per cent) while EU and US are two important markets for Vietnam’s exporters. in addition, 74 per cent of respondents say the North American free trade agreement (NAFTA) has no impact on their business.
Basing on this reality, HSBC assesses that firms are potentially missing out on key opportunities available beyond their immediate borders, by focusing on trade policy developments at a regional scale, and showing lack of awareness when it comes to the broader global trade policy environment.
The bank says that although many firms, especially in the services sector, would consider expanding to new markets to grow their business, many could end up losing their competitive advantage if they fail to recognise how trade policy is re-shaping the world’s supply chains, and where the best opportunities lie for them in the next few years.
Accordingly, the positive impact of initiatives that are ‘closer to home’ is broadly recognized. China’s Belt and Road, and ASEAN 2025 are the two policies getting the greatest vote of confidence from business leaders, peaking to 59 per cent and 56 per cent respectively in Asia-Pacific.
74 per cent of companies in Vietnam see ASEAN 2025 to have a positive impact on their business and 26 per cent see no impact.
Half of HSBC's survey participants in Vietnam say the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is relevant to their business, 63 per cent of companies in Vietnam cite CPTPP as having a positive impact on their business while 35 per cent say there is no impact.
In order to capitalize on growth opportunities unlocked by trade liberalization, better manage potentially higher supply-chain costs and retain their competitive advantage, HSBC says that it’s critical that firms get a better understanding of the global trade policy landscape, and how different initiatives can impact their businesses.
In addition, firms should join the public debate to defend open markets and advocate policies for sustainable and inclusive trade at a time when creeping protectionism poses an ongoing threat.