Export Travelling in All the Right Directions

Export Travelling in All the Right Directions

Total export turnover of the first half of this year is estimated at US$11.5 billion, up 17 per cent on last year. If this growth rate is maintained, this year's total export value is expected to reach US$23 billion, an increase of 16 per cent against that of 2003.

Exports up, trade deficit down

According to authorised agencies, export turnover of June saw an increase of 3.8 per cent over that of May. This great result was driven by a high growth rate in crude oil exports and encouraging results of the textile and garment industry export value of US$400 million, up by 14.6 per cent against that of May; footwear exports saw a turnover of US$240 million, up by 7.1 per cent; seafood exports made US$180 million, up 9.8 per cent; woodwork exports reached US$85 million, increasing by 3.7 per cent; fruit and vegetables hit US$15 million, up by 7.1 per cent; electronic products saw US$20 million, up by 11.1 per cent; and cashew nuts with US$30 million increased by 3.4 per cent. Other successful industries include rice with 280,000 tonnes, up by 8.9 per cent; rubber with 15,000 tonnes, up by 36.4 per cent; and peanuts with 3,000 tonnes and an increase of 200 per cent. It is possible to argue that these results were mainly driven by the growth rate of products and goods of domestic enterprises, while products and goods of foreign-invested enterprises, including PCs, electric wire and cable, bicycles and accessories, did not increase, some of them even experiencing a sharp fall. The combination of both elements has produced an export value of US$2.05 billion.

Export turnover in the first half reached 54 per cent of the yearly plan. So far, only four out of 20 major export items have seen their export volume and value drop in comparison to the same period last year. These include rice with a fall of 3.3 per cent in volume, rubber with a drop of 37.6 per cent in volume, fruit and vegetables with a fall of 2.7 per cent in value, and peanuts with a substantial fall of 55.4 per cent in volume.

Despite some constraints, the foreign-invested sector continued to make important contributions to Vietnam's export development. In June, exports of the sector (including crude oil) reached US$1.18 billion, up by 2.4 per cent against that of May. The sector's export value in the first half (including crude oil export turnover) was put at US$6.46 billion, an increase of 29.8 per cent from one year earlier. The non-oil export value reached US$3.96 billion, increasing by 30.8 per cent. The sector continued to be a leader in exports, serving as a driving force behind Vietnam's export growth rate of 19.8 per cent.

An outstanding feature of import-export activities of Vietnam in the first half is the slower growth rate of imports than exports. Total import turnover of the first half reached US$14.162 billion, up by 14.7 per cent against that of the same period last year. Of this figure, US$5.068 went to the foreign-invested sector, an increase of 18.2 per cent. This has resulted in a trade deficit of US$2.364 billion in the first six months, lower than the US$ 2.501 billion in the same period last year. This fact shows that Vietnam can control its trade deficit while being able to promote an increase in export turnover. In other words, while facing a sharp increase in prices of imported materials, Vietnam's enterprises have gradually been able to produce part of the materials required to replace imported ones and have become more effective at saving materials and fuel.

Textiles, garments and seafood to face difficulties in final half

The achievements in export and import in the first half of this year are indeed significant. However, they were attained mainly thanks to a high increase in prices of crude oil and agricultural produce. The increase in prices of these products, however, implies higher input costs. As a result, profits from exports may not increase by much. Facing the present price fever, if enterprises do not improve their effectiveness at saving materials during production, they will likely face difficulties in the coming time, as they will not compete with foreign rivals.

Therefore, according to Trade Minister Truong Dinh Tuyen, from now until late this year, new and strong measures are required. According to Tuyen, apart from efforts to increase exports, the major target for the final six months will be to maintain a sustainable economic growth rate and stability of prices in the domestic market. This means that it is necessary to maintain a stable and sustainable growth rate of export, as it is an important base for the growth of gross domestic product (GDP) and stability of the domestic market, thus stimulating consumption.

Implementing this approach, the Ministry of Trade said that in the short term, a review would be made on export items, with a focus given to major and developing export products. According to Deputy Trade Minister Mai Van Dau, the review will be implemented with a division of export items into two groups: export items of high value and export items with great potential. Export items of high value include textiles, garments, seafood, footwear and woodwork products, which the Ministry of Trade should focus on and take concrete measures to increase export turnover in the coming months. Items of great potential, such as electronic products and agro-produce, will receive careful attention, as they will help increase export proportion and value.

However, to carry out these plans effectively is not easy at all, especially for items with a high value. Trade experts say that export items of high export value, such as textiles, garments and seafood, may have face difficulties as they depend too much on the US and the EU markets. In reference to seafood, export proportion and value of the product may experience a significant fall in the market due to the fact that Vietnam may face a court case on shrimp dumping in the US. To achieve the target of US$2.5 billion export turnover this year, the Ministry of Trade has advised seafood producers and exporters to maintain their traditional markets and consider a shift to other potential markets. For textiles and garments, changes in the market will create a great challenge, which requires suitable reactions to achieve set targets. According to trade experts, the greatest hindrance to textiles and garments is the quotas imposed by the two major markets of the US and the EU. To overcome this difficulty, the Ministry of Trade has planned to promote export to quota-free markets, including Japan and Africa, export quota-free items and exploit expanded quotas to the EU as negotiated. For footwear and other export items of great potential, it is necessary to better handle technology, materials and quality management systems to create products of high added value and competitiveness. Dau said that if solutions for this problem were implemented well, a sustainable export growth rate would no longer be a difficult problem.

• Hai Chi