Miracle of US$500 Billion

11:08:01 AM | 13/1/2020

Vietnam’s total import and export value officially surpassed US$500 billion in 2019, ending the year beyond the growth target of 7-8%.

Record trade surplus

Prime Minister Nguyen Xuan Phuc said, “Exports reached US$264 billion, ranking 22nd in the world. Trade surplus reached a record of approximately US$10 billion - a figure that Vietnam could not have imagined a decade ago.”

Amidst global decline, the feat of Vietnam in 2019 is amazing (GDP growth of over 7%, improved growth quality, increased labor productivity and low inflation, incremental capital-output ratio index - ICOR falling from 6.42% in 2016 to 6.07% in 2019, macroeconomic stability, and responsive monetary policy.) “This achievement, we think, comes from uncompromising contributions of the industry and trade sector and of all industrial and trade enterprises,” Prime Minister Phuc affirmed.

In 2019, as many as 32 exports brought home over US$1 billion, with eight exceeding over US$5 billion each and six surpassing US$10 billion. The biggest export remained telephones and components (US$48.73 billion), followed by garment and textile (US$29.89 billion), computers, electronic products and components (US$32.4 billion), machinery, equipment, tools and parts (US$16.47 billion), and footwear (US$16.49 billion).

Notably, the domestic business sector continued to be a bright spot in Vietnam's commodity export in the first 11 months of 2019, expanding 18.1%, doubling the overall growth rate and nearly five times higher than that of FDI enterprises (3.8%). Thus, the export share of the domestic economic sector continued to increase to account for 30.95% of total exports.

In this structure, although the domestic merchandise export value is not as high as that of FDI, according to the Prime Minister, this showed the growth of Vietnamese enterprises. Besides, the rate of crude exports decreased and processed goods increased instead.

Effective application from FTAs

Vietnamese goods continued to expand traditional markets and seek to develop new markets by taking advantage of effective FTAs and negotiated trade pacts. By better utilizing FTA opportunities, the business community will be a positive factor to boost exports.

By market, the United States continued to be the largest export market of Vietnam with US$55.6 billion, up 27.9% year on year, followed by the European Union, China, ASEAN, Japan, and South Korea.

All markets with FTAs signed with Vietnam performed well, showing that country actively and effectively capitalized on signed FTAs. For examples, exports to Japan rose by 7.6%; to South Korea by 10.1%; to ASEAN by 2.5%; to Russia by 9.1%; and to New Zealand by 6.8%. Particularly, export shipments to CPTPP-member markets achieved good growth, illustrating our good use of this multilateral trade pact. Exports to Canada rose 27.2% to US$3.5 billion in the first 11 months of 2019, while shipments to Mexico jumped 29.5% to US$ 2.7 billion.

Goals for 2020

Given that 2020 is an important milestone in the 2016-2020 period and a premise for the next period, the Prime Minister assigned the export target of US$300 billion in 2020. “This is a very big number that requires solutions and efforts. In addition, the trade surplus will rise to US$15-17 billion,” he said.

Mr. Tran Tuan Anh, Minister of Industry and Trade, said, in 2020, the world economy is forecast to show no signs of prosperity. Protectionism is still complicated and will have strong impact on Vietnam's exports. In the country, labor productivity is still low in many fields and the competitiveness of some industrial products is still weak. This will require the whole industry and trade sector not only to work harder but also act more creatively, urgently and responsibly to accomplish the planned goals.

He emphasized that, in the coming time, to sustain exports, it is important to improve the quality, efficiency and regularity of exporting activity, further diversify export markets, create a better connectivity between agricultural production and marketing, proactively and seriously advance international economic integration and ensure a fair competitive environment for domestically produced goods against imported goods.

Minister Anh said with determination, “The Ministry of Industry and Trade defines that 2020 will be a year of special significance and the final year to fulfil the 5-year Socioeconomic Development Plan in 2016-2020 and create momentum for the next 5-year Socioeconomic Development Plan in 2021 - 2025 and the 10-year Socioeconomic Development Strategy in 2021 - 2030. 2020 also witnesses many momentous celebrations such as the 90th founding anniversary of the Communist Party of Vietnam, the 75th founding celebration of Vietnam, the 130th birthday of President Ho Chi Minh, and Party Congresses at all levels to prepare for the 13th National Party Congress. With the action philosophy of “Discipline, Integrity, Action, Innovation, Responsibility, Efficiency”, the Ministry of Industry and Trade pledges to make the best effort to successfully complete the tasks assigned by the Government and the Prime Minister."

Huong Ly (Vietnam Business Forum)