TPP is expected to stimulate an influx of foreign investment into Vietnam and Malaysia whose growth depends heavily on external trade.
Manufacturers of apparel, rubber gloves and bikes are among those considering increasing production in the Southeast Asian countries to capitalize on export boost from the accord, which clears tariffs to markets including the U.S.
Tariffs on garment exports from Vietnam to the U.S. are expected by economists to eventually drop to near zero from the current 17%, although it may take years. In the year ending July 2015, the U.S. bought $10.8 billion worth of apparel from Vietnam, according to U.S. statistics.
The final agreement looks likely to be “the best trade liberalization we’ve seen in 20 years,” said Deborah Elms, co-founder and executive director of the Asian Trade Center. “I expect there to be quite a stampede” of foreign investment in Southeast Asia when the final text of the agreement is published, she said.
Malaysian apparel firm United Sweethearts Garment Bhd. is already planning a second factory in Vietnam, and TPP will accelerate its plans, according to Tang Chong Chin, the company’s managing director.
David Hon, CEO of Duarte, Calif.-based folding bike maker Dahon, said that he’s waiting to see how much preferential treatment TPP countries will get before he considers slashing production in China and Europe in favor of Vietnam and Malaysia.
Prof. Nguyen Mai, chairman of Vietnam’s Association of Foreign Invested Enterprises, told the BizLIVE.vn newswire that the mammoth trade agreement is expected to trigger an upsurge in investment flow from the U.S. into Vietnam. American companies will increase production in Vietnam and ship made-in-Vietnam products to the U.S.