Export Beyond Expectations

Setting repeated records in value and volume, 2011 exports are taking the lead in the Vietnamese economy and stimulating the development of other sectors. The export value increased 33%, highest in the past 14 years and three times the plan.

According to Mr Nguyen Thanh Bien, Vice Minister of Industry and Trade, Vietnam’s 2011 export value was US$96.3 billion. Agricultural produce, foods, wooden and fine art articles were highly valued in the world market. The higher growth of export value over import value has significantly contributed to the economic growth, reduction of inflation, stabilization of macro-economy and security of social welfare.

 

 The export value exceeded by far the plan of US$80 billion, and hit US$24 billion more than the previous year – the record so far. It made up 80% of GDP and exceeded export value per capita of US$1,083.

 

 2011 witnessed the increase of export items in the “US$1billion club” with 23 export items surpassing the US$1 billion level, including five items reaching over US$5 billion namely garment, crude oil, telephone and parts, footwear and aquatic products.

 

Higher export prices are the main cause of the increase in export value. According to Ministry of Industry and Trade, the average prices of cashew nut, coffee and pepper increased 66.5%, rice 9.1%, rubber 37.3%, coal 17.3%, and crude oil 43.6%.

 

In quantity, several items saw unexpected increases, such as steel 43.4%, and cassava root and products 58.5%. Meanwhile some items fell in quantity, such as coal and plastic.

 

Regarding markets, export value to ASEAN increased 30.6% (14.1% of the total export value); to Japan, 38.2% (11% of the total); to the US, 19.2% (17.6%); and to the EU, 48.2% (17%). There were 23 markets with export value of US$1 billion and upwards, including seven markets of US$2 billion or more, which were the US followed by China, Japan, South Korea, Germany, Malaysia and Australia.

 

According to the statistics of the Customs Office, the import-export value of Vietnam in 2011 surpassed for the first time the level of US$200 billion. More important still, the growth of the total export value has surpassed that of import value (33% compared to 25%). As a result, the trade deficit decreased in value (from US$12.6 billion to US$10 billion) and in percentage (17.5% to 10.4%). The success is mostly due to the benefit that Vietnamese businesses get from tax tariffs of free trade agreements, both bilateral and multilateral.

 

2012 export forecast

However, the encouraging development of Vietnamese exports in 2011 cannot calm the fear of businesses entering 2012 when public debts and employment continue causing drastic reduction in their exports in key markets. It is worse still when Vietnamese exports face technical barriers of protectionism. Therefore, the export plan of 2012 will be much more modest in comparison with that of 2011, increasing only 12-13%.

 

The EU, a key market accounting for 48% of Vietnamese export value, will likely make the deepest cut in total demand. Some countries have applied austerity policies, together with monetary disputes in the Euro zone, making the door even tighter for Vietnamese exports. The garment sector, a leading Vietnamese export, also suffers with fewer orders for 2012. So far, many Vietnamese businesses have orders only to the end of Quarter I, 2012 and are still negotiating for Quarter II.

 

At the recent Meeting of Commercial Counsellors 2011, Mr Tran Cong Thuc, Commercial Counsellor to the EU, said that in 2012 the EU will change some policies regarding privileged treatment to developing countries; instead of items, they will likely fix market share or split the amount of export of each country to EU members. Consequently, some Vietnamese export items might be deleted from the previous list of privileged treatment.

 

Mr Tran Cong Thuc also cited some changes in import policy of EU members, such as more stringent control of animal and vegetable products. The EU might soon apply more regulations on attaching trademarks on products.

 

Regarding the American market, the US is implementing a law modernizing food safety standards, concerning supervision, origin monitoring, registration, and immediate confiscation of violated products. If Vietnamese exporters of agricultural produce fail to keep up with new criteria they will face the danger of product confiscation.

 

Beside the reduction in orders, Vietnamese products also face weaker competitiveness. The Ministry of Agriculture and Rural Development recently warned that 50% of early crops in 2012 are of low quality strain IR50404. Some countries have ceased importing that low quality rice. So, 50% of Vietnamese rice produced in 2012 could be kept in storage without exporting. Furthermore, the rice export price will be lower, as India and Myanmar sell at a cheaper price to the EU. While the EU has already committed to import rice from Thailand and Cambodia, it has yet to sign an agreement with Vietnam.

 

In 2012, the advantage in export price will not continue. The prices of raw materials and agricultural products (coffee, cotton, rice) will be unstable and lower. To deal with big losses in rice prices, the reserve of rice is important. In the past, with good storage networks, many businesses have stored rice when importers reduced the price. It is a lesson not only for rice, but also for Vietnamese coffee, pepper, and othẻ products.

 

Mr Nguyen Thanh Bien said that Vietnam has great advantages in agricultural products in the world market, such as first position in pepper export, second in rice and coffee. Therefore, Vietnam can regulate the prices in the market, safe from pressure by importers and cases of good harvest but low price or high price with little to export.