Vietnam still Facing Export Challenges

Vietnam’s May export revenues are estimated at US$4.4 billion, up 2.8 per cent month on month but down 24.4 per cent year on year. The export earnings are forecast at US$22.86 billion in the first five months of 2009, down 6.8 per cent from a year earlier. Sharp declines happened to most Vietnam’s key exports like footwear, wooden furniture, electronic parts, electric cables, rubber and coal.

 

Although domestic enterprises actively expanded local sales and sought new partners, the results were not really satisfactory. Prices of exported goods fell sharply in the past months, sending down revenues of most exports. According to statistics, the average export prices of goods in the first five months tumbled up to 27.2 per cent from the same period of 2008. The price decline took away US$8.5 billion from Vietnam.

 

Moreover, trade deficit tended to increase, estimated at US$1.1 billion in May, or equal to 5 per cent of export earrings. If export of gemstone and precious metals, the trade deficit amounted to US$3.7 billion, equal to 18.4 per cent of export revenues. Worryingly, spending on materials, machines and equipment slumped while the expense for consumer goods surged.

 

Many expressed their deep concerns over production and business activities at the moment because export revenues only approximated US$23 billion. To complete the full-year plan, Vietnam has to earn US$6 billion from exports each month. This is an extremely difficult task amid soaring crude oil price.

Many specialists worried that Vietnam limited imports while global prices were seen at the bottom but it increased import while prices climbed. Vietnam’s import spending was estimated at US$23.985 billion, down 37 per cent so from the same period of 2008 (import slumped 55.21 per cent in January, 44.5 per cent in the first two months, 41.3 per cent in the first three months and 40.2 per cent in the first four months.) Trade deficit was only US$1.128 billion, or equal to 4.94 per cent of export earnings. This figure was very small in comparison with US$13.546 billion in the same period of 2008, which equalled 55.23 per cent of export turnover.

 

The limited import of “bottom priced” goods will force Vietnamese enterprises to spend more in the coming months. Global prices rose nearly 10 per cent in May from April. The uptrend may continue in the coming time.

 

Clearly, if this scenario happens, Vietnam missed a “golden opportunity” to buy cheap materials and had to accept import of dearer materials in the future.

At the meeting, Industry and Trade Minister Vu Huy Hoang said, at the fifth sit of the National Assembly 12, the Government proposed revising down several macro indicators, including export growth. However, the Ministry of Industry and Trade still has to seek measures to earn over US$60 billion from exports and cap trade deficit at US$12 billion, or equal to 20 per cent of export turnover. Consumer price index (CPI) will be capped at 6 per cent. This is an extremely hard job for the industry and trade sector under the current circumstance.

 

The ministry has coordinated with the Ministry of Finance to lower import duties on essential goods and adjust domestic material prices, especially petroleum prices.

Thus, the Ministry of Industry and Trade needs to cooperate with banks, ministries and branches to facilitate export activities and limit consumer goods import. At present, Vietnam is relying on exportation of food and minerals.

 

Minister Vu Huy Hoang has told departments, institutes and agencies to keep an open eye on business and production movements to resolve difficulties for enterprises to expand production, boost export and narrow trade gap.