Vietnam Export’s on the Threshold of Recovery

 

According to General Department of Statistics, the export value of the first 8 months was nearly US$37.3 billion, 14.2 % less than the same period last year, including main export items. The decrease is recorded both by local and foreign investment enterprises. The export value of local enterprises was only US$2.32 billion while the import value was US$3.9 billion. The main cause of the trade deficit is the decrease in Vietnamese main exports such as rice, coal, crude oil, garment, footwear, tea, etc. Crude oil, the biggest export item of Vietnam, decreased to 48 %, followed by rubber 41 %, coal 21 %, coffee 17.7 % and cashew nuts 13.5 %. Though rice export decreased slightly in volume, the export value fell after repeated increases since the beginning of the year. In the first 8 months, Vietnam exported nearly 4.7 million tonnes of rice, worth US$2,15 billion, 43 % up in volume but 1.4 % down in value compared to the same period last year.

 

The same situation occurred in aquaculture. In the first 5 months of 2009, the export volume was nearly 400,000 tonnes worth US1.4 billion, 5.6 % less in volume and 9.4 % less in value compared to the same period of 2008.

 

Garment decreased by 1.4 % against the same period last year after several months of growth and post at US$5.9 billion in the first 8 months.

 

Footwear is also an important export. According to Vietnam Leather and Shoes Association (Lefaso) in view of the export in the first 8 months, the export value of 2009 is expected to be US$4.59 billion, or US$178 million less than 2008.

 

However, export growth rates were recorded in other exports such as coffee, cable and wire, etc.

 

Mr. Dinh Van An, Head of Central Institute of Economic Management (CIEM) said that there are several factors that cause negative growth in Vietnam export this year, including the fluctuation of oil price, decrease in prices of other exports as well as those of FDI enterprises, an important part Vietnamese export. However, it is expected that the decrease cannot be worse as good signs have emerged.

 

While the Ministry of Trade and Industry expects a growth rate of 3 % this year, NCEIF forecasts the export value this year to be US$58.7-61.3 billion, or 2.2-6.4 % less than 2008. Mr. Le Dinh An, Director of NCEIF said that in recent years, the export in the first 6 months often stood at 45-47 % of the annual value and that of the last 6 months was 53-55 %. Accordingly, the export value this year will be around US$58.7-61.3 billion.

 

Mr. An believes that the State Bank should continue to regulate interest rates by increasing them to 6 then 7 % at carefully calculated times to avoid adverse impacts on the economy. The State should also have regulations and a mechanism to diversify the use of foreign currencies for exports instead of depending on US dollars, which causes a shortage of US dollars for export activities. The Government should use part of the stimulus package to support direct credits to export enterprises that have delivered commodities and in process of payment formalities so that they can overcome the present difficulties.

 

He also thinks that with signs of recovery of the world economy and great efforts of the government, the export value of 2009 could be equal to that of 2008. The decrease in export value is somehow less critical compared with other economies such as China (22 % in the first 6 months) and Thailand (23 % in the first 5 months).

 

According Mr Bui Xuan Khu, Vice Minister of Trade and Industry, the recession will be less serious towards the end of the year. In 2010, the economy will recover and the export value will increase in coming years (at least 12 % a year). He also thinks that related offices and enterprises should proceed in line with endorsed strategy and planning. Associations and economic groups should focus on production and consumption solutions to achieve the plan and ensure workers’ welfare, promote investment and trade, expand markets and increase export value in the coming years.