New Hurdles to Vietnam’s Export Activities

In the first half of 2009, Vietnam export value post at US$27.6 billion, 10.1 percent less than the same period last year and 42.7 percent of adjusted year plan. The figure displeased exporters as it leaves out heavy burden for the second half to attain the target of US$60 billion.

 

Minus growth rate in export value has never been the case in Vietnamese export in the past. It is expected that in the coming months, the export value will continue at low level while there is no sign of improvement in the world market. However, while export values of other economies in the region such as Taiwan, Singapore and South Korea decreased at 30-40 percent, the decrease by 10.1 percent in Vietnam can be understandable. In fact, it is caused by world economic recession and lower purchasing power affects Vietnamese export, Moreover, protectionism applied by certain countries creates additional hurdles. Meanwhile, main exports of “US$1-billion club” in Vietnam also decreased considerably in 2008 including footwear, wood based products, rubber, coffee, aquatic products, cashew nut, and especially in ceramics, cable and wire and crude oil.

 

Among four Vietnamese major export markets : US, Japan, China and Australia, only the US increases its import from Vietnam in last quarter 2 of 2009. Except Switzerland (with gold re-export in early 2009), the US, Japan, China and Australia maintained export value of over US$1 billion in the first half of 2009. The export value to the US continues the plus growth rate due to the increased export in garment, wood-based products, computers, electronic parts.

 

Also in the first half of 2009, the total import value of Vietnam was US$29.7 billion, 34 percent less and the same period of 2008. Most of import products decreased in volume and turnover, including production materials for export with 10-20 percent less.

 

In June, the trade deficit was US$1 billion, third month in a row after trade surplus in the first three months of 2009 due to gold export. In total, the trade deficit in the first half of 2009 was over US$2.1 billion, or 7.6 percent of the export value.

Evidently, 2009 export plan poses a heavy responsibility for businesses and managers. Due to economic recession continues in important countries, reducing purchasing power and prices. Production of many Vietnamese exports have already reached the limits of their supply such as aquatic products and cashew nut started importing materials for processing. Therefore, to attain the year plan, in coming months, the export value must be US$5.85 million a month instead of US$4.6 a month in the first half of 2009. The increase of US$1.25 billion cannot be made except by some drastic measures. It is expected that the government stimulus package will help improve the situation.

 

Meanwhile main exports in the first half of 2009 are in danger of slow down. The price of coffee continues to fall and is at the lowest in 2008-2009 crop making it difficult to achieve the plan. The fluctuation of coffee price makes it impossible for both farmers and businesses to operate their occupation, causing big losses especially in Dak Lak.

 

Mr. Truong Dinh Hoe, Secretary General of Vietnam Aquatic Products Processing and Export Association (VASEP) predicted that in the coming months there will be more difficulties as the main export of tra and basa fish to Mid-East and Europe (making up 26 percent of Vietnamese export) is under inspection of toxic residue. Furthermore, Agricultural Law 2008 of the US is also a hurdle to tra, basa as well as shrimp and tuna from Vietnam. Due to difficulty in the supply of fish meal and at high price, farmers loss over VND1,000 a kg of fish. Misinformation in mass media in Italy, Egypt and the US were also harmful to Vietnamese exports.

 

Concerning wood-based products, Vietnamese businesses are lacking orders from abroad and lower prices by 10-15 percent while expenses for materials, transport, electricity increase, causing losses to over 70 percent of businesses.

 

Crude oil and coal exports decrease due to higher demand for home consumption. The turnover of the sector is expected at US$5.92 billion, US$5.97 or 50.2 percent less than last year.

 

Those difficulties coupled with natural calamities, diseases, mismanagements in export, distribution, marketing, etc. make it more difficult for the export.

 

Though the export of agricultural produce increases (cassava 3 times, rice 56.2 percent, pepper 40,4 percent, coffee 22.3 percent, tea 10.9 percent, but the prices decrease (crude oil 53 percent, rubber 33 percent, coffee 28.3 percent, rice 21.6 percent, coal 7.5 percent) causing the decrease in export value.

 

Though aquatic products export continues with plus growth rate, the export value in the first half of 2009 was only US$1.7 billion, 10.7 percent less than last year, and uneven in some markets for examples US$450 million in EU or 11.3 percent less, US$300 million in Japan or 18.4 percent less.

 

Garment also increases but the export value was only US$4 billion or 1.3 percent less than the same period of 2008.