SOEs Speed up Export

2:17:54 PM | 28/8/2019

Vietnam's export value rose 7.5% year on year to US$145.13 billion in the first seven months of 2019, bringing its total export and import value to US$288.48 billion in the seven-month period, up 7.9% year on year or US$21.08 billion.

State economy accelerates

Exports expanded 7.3% year on year in July, with the domestic sector growing by 16.4% and the foreign-invested sector (including crude oil) rising by 6.4%.

Notably, the domestic economic sector earned US$44 billion from January to July, up 12.2%, higher than that of the foreign-invested sector (5.6%) and its export share tended to increase, accounting for 30.3% of total export value (compared with 29% a year ago). Domestic enterprises continued to fare well in the reporting period.

In the first seven months, 24 exports each brought home over US$1 billion, accounting for over 88% of total export value (four exports were worth over US$10 billion). Manufactured industrial exports continued to play a major role in the overall export growth and accounted for 83.6% of total export value, 9.5% higher than a year earlier.

Most key manufactured exports continued to grow from a year earlier, with garment and textile shipments rising by 10.5%; computers, electronic products and components by 14.9%; footwear by 13.8%; and wood products by 16.4%.

However, the biggest export - telephones and accessories - marginally looked up 3.1% over the seven-month of 2018 to US$27.3 billion.

On the other hand, the export value of agricultural and aquatic product group and fuel-mineral group dropped by 6.6% and 5.3% year on year, respectively.

By market, the United States was Vietnam's largest export market where the latter earned US$32.5 billion, up 25.4% year on year.

FTA catalyst

Vietnam saw good export growth with all market with which it signed free trade agreements (FTAs), showing that FTA preferences ​​have been effectively utilized. Export shipments to Japan grossed US$11.4 billion from January to July, up by 9.3%; exports to South Korea looked up 4.4% to US$10.7 billion; and shipments to ASEAN rose 5.4% to US$15.17 billion.

Especially, exports to CPTPP-member markets increased significantly. This showed that this multilateral pact has been effectively tapped. Exports to Canada soared 31% year on year to US$2.18 billion in the first seven months and shipments to Mexico leaped 24.2% to US$1.6 billion.

For example, the textile and garment industry is enjoying a good growth catalyst mainly due to opportunities and prospects of market development and expansion impacted by FTAs like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with a tax reduction roadmap to zero plus  a wealth of preferential terms according to the “yarn forward” origin rule and the prospect of signing the EU - Vietnam Free Trade Agreement (EVFTA) on June 30, 2019, which will help Vietnam’s textile and garment firms penetrate more deeply into this market.

The leather and footwear industry also started its annual growth cycle. While the sector is taking advantage of opportunities from orders redirected away from China but it is also facing with certain difficulties such as rising labor costs, lower hourly labor productivity than other countries in the region. Footwear exports were estimated to grow 13.8% year on year to US$10.4 billion.

To grasp opportunities in the long term, businesses need to have solutions to go deep into value chains because Vietnam's cost advantages will fade away and competition will grow from Cambodia and Bangladesh. Vietnamese garment and textile companies need to link and share with each other and connect with customers to form production chains and to meet rules of origin according to FTA commitments to utilize all available preferences.

Huong Giang