Export Market Restructuring: Potential Direction

10:42:23 AM | 9/19/2014

"Export-driven economic policy is still one of the pillars of Vietnam's industrialisation strategy,” said Dr Tran Du Lich, Member of the National Assembly's Economic Commission, at the Export Forum 2014 held by the Ho Chi Minh City Trade and Investment Promotion Centre (ITPC). According to statistics from the Ministry of Industry and Trade, in the 2011 - 2014 period, Vietnam’s export growth rate is always three times higher than its GDP growth rate and higher than its import growth rate. Merchandise export growth was 19.4 percent a year on average. Export value jumped from US$96.9 billion in 2011 to estimated US$147 billion in 2014. Export structure was shifted in a positive direction, featured by a lower proportion of crude exports and a higher proportion of processed products and industrial products. Export scale was expanded, focusing on key exports. More exports brought in over US$1 billion a year for the country year after year. In 2014, Vietnam is expected to have 24 exports each generating over US$1 billion of income, accounting for 86 percent of total export items. Export markets are being expanded and have reached most markets around the world. Many products have established strong standings and competitiveness in demanding markets like the European Union (EU), Japan and the United States (US). However, an official from the Ministry of Industry and Trade cited existing weaknesses in export in the past period. Some agricultural products were exported in raw forms or with simple processing, which brought in low added value. Industrial and processed products are mainly outsourced for foreign partners and they have low localisation ratio, featured by low added value for Vietnam’s side. The connectivity of input suppliers, processors and exporters has not been effectively established. Dr Lich said foreign direct investment (FDI) enterprises have stable markets thanks to the reliability of their foreign parent companies, while Vietnamese companies do not have stable markets because of their weak corporate and product competitiveness and their reliance on intermediaries, resulting in limitations in market access and expansion. Moreover, in spite of export-driven economic policy, State investment for trade promotion and market promotion activities remain inadequate. To address this shortcoming, export market restructuring has become more urgent than ever. The primary objective is to drive exports but make exportation inseparable from the domestic market. Regarding export items, apart from high-tech electronics and mechanical products, Vietnam must still rely on traditional items like processed agricultural products, seafood, apparels and footwear, woodworking and handcraft items, said Dr Lich. “With huge potential for tourism, Vietnam necessarily regards its on-site export as the most effective export. Tourists always have four primary needs: where to live, what to eat, where to relax and what to buy. Meeting these four needs opens up a broad on-site export market for Vietnam,” he added. Regarding export markets, Vietnamese companies are expanding and diversifying exports in the five biggest markets, namely the EU, the US, ASEAN, Japan and China. Remarking on export expansion to signatories of the Trans-Pacific Partnership (TPP) Agreement, the Government needs consistent solutions to help businesses reach markets this high potential region, he proposed. Mr Le An Hai, Deputy Director of Asia - Pacific Markets Department under the Ministry of Industry and Trade, said Japan is a market with legal framework is favourable for Vietnam. The company is generating maximum supports for trade activities. Richly potential exports to this market are agricultural and aquatic products. Japan is imposing very strict requirements on quality, food safety and hygiene of imports. Mr Tran Duy Dong, Deputy Director of America Market Department under the Ministry of Industry and Trade, said, to enhance export efficiency to the US, Vietnam needs to focus on improving the competitiveness of key exports such as apparel, footwear, furniture and seafood, promote new exports like electrical cables, plastic toys and tropical food crops that Vietnam has advantages, amend the legal system relating to import, export, investment and intellectual property in order to attract more foreign investment and facilitate trade; work with US authorities to seek Generalised System of Preferences (GSP) treatment for Vietnamese companies, and have strategies to build input supply production facilities for key industries. My Chau