Impressive Export Growth amid Tough Challenges

Vietnam’s trade value was expected to reach nearly US$530 billion in 2020, with exports exceeding imports by US$7 billion. In the difficult context of the Covid-19 pandemic, exports became a bright spot and had an important contribution to the economy’s stability in 2021.

Positive outcome

According to the Ministry of Industry and Trade, the commodity export value was forecast at US$267 billion in 2020, up about 1% from a year earlier and the import value was estimated at US$260 billion, up 2.6%.

Up to 33 exports earned more than over US$1 billion each in the first 11 months of 2020 and they accounted for 92% of the total export value. Six of them brought home over US$10 billion each, accounting for 64.3%.

By sector, except for fuels and minerals whose value slumped nearly 36% from the previous year, other sectors achieved positive growth. Notably, the recovery of world demand also led to rising export prices of most agricultural and aquatic products over the same period, with the average export coffee price growing by 12.2%, rubber price by 15% and rice price by 13% over the same period in 2019. On the world market, the asking price of 5% broken white rice from Vietnam is higher than that of other regional suppliers such as Thailand and India.

By market, the United States continued to be Vietnam's largest export market, followed by China, the European Union and ASEAN.

Vietnamese commodities continued to expand their presence in traditional markets and make inroads into new ones to take advantage of existing and blueprint FTAs. On November 15, the Regional Comprehensive Economic Partnership (RCEP) to which Vietnam is a signatory was officially signed, offering great opportunities to Vietnam when the market size of signing countries account for more than 32% of global GDP with more than 2.2 billion people. This will become the largest free trade region in the world.

The business community’s better use of FTA opportunities will be a positive factor to boost exports. In particular, coupled with continuous reforms of administrative procedures, creating an open corridor for business operations has been a great driving force to develop domestic exporters and inspire them to expand product investment and export.

Many challenges in 2021

The Covid-19 pandemic, the United States’ designation of Vietnam as currency manipulator, and challenging changes of trade promotion and marketing will affect exporters’ performance in 2021.

Recently, the United States labelled Vietnam a currency manipulator. Economic experts predict this move will most likely be a stepping stone for the U.S. to impose trade sanctions such as tariffs on exports. Some exports such as seafood, apparel and furniture are forecast to be heavily affected. In the short term, to remove the currency manipulation label, Vietnam must adjust the trade structure with many countries and increase the import of high-tech goods, energy, and scientific and technical equipment.

Mr. Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (Vitas), said that, in 2020, the textile and garment industry is heavily affected by the Covid-19 pandemic. The adverse impact of the pandemic may last for 1-2 years. In 2021, textile and garment exports are forecast to continue to face difficulties. In that context, it is very difficult for textile and garment enterprises to come up with stable solutions. Apparel exports may reach about US$37-38 billion in 2021.

In addition, sustainability criteria on exports are tended to be applied by many more countries. Mr. Nguyen Chanh Phuong, Vice President and General Secretary of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said, the wood industry is applying sustainable factors in raw materials, production and export to achieve the target export value of US$20 billion next year.

Mr. Vo Hoang An, Vice Chairman and General Secretary of the Vietnam Rubber Association, acknowledged that sustainable consumption of rubber products has appeared to be a trend on the world market in recent years. The market has given clear signals of prioritizing environmentally friendly products, which cause no harm to the community. Vietnam exported a lot of natural rubber but its export value was not high because there is no sustainable rubber certification for this item.

Regarding challenges in trade promotion, Mr. Vu Ba Phu, Director of the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, said, given the import and export value of more than US$500 billion, export promotion needs to be further boosted to better match its export value on the global market. In fact, State budget resources for trade promotion are still spread across the central, ministerial and local levels, resulting in overlapped activities.

Moreover, the application of information technology and modern innovative marketing media is still limited, so it is necessary to elevate the image and brand of Vietnamese products to international friends, he affirmed.

Agreeing that there is a need for modern innovative marketing communications, Ms. To Tuong Lan, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), emphasized the importance of changing the way of marketing products, from conventional form of B2B communication to B2C communication. For example, VASEP launched many communication programs from 2019 in the UK, Spain, the Netherlands, and Germany by various forms of connection and promotion like the website, Google, Facebook, Pinterest, Instagram and YouTube. These methods are very effective in promoting products to direct consumers.

By Huong Ly, Vietnam Business Forum