New Opportunities for Export

10:51:55 AM | 1/27/2021

Commodity export has been a bright spot of national economic activity for years and contributed positively to GDP growth. In the 2021-2025 period, exports are expected to grow by 5% a year and the trade balance continued to be weighed by a surplus.

Successfully overcoming difficulties

As the COVID-19 epidemic contagion is still complicated, international trade has declined and importing countries are increasingly tightening protection barriers, Vietnam’s trade value still rose 5.1% year on year to US$543.9 billion in 2020, for the second year ending at above US$ 500 billion.

Vietnam thus ranked 22nd in the world by export value and capacity and 26th by international trade scale. 31 Commodities had an export value of US$1 billion or more in the year and accounted for 92% of the country’s total exports.

Minister of Industry and Trade Tran Tuan Anh said, the trade surplus rose year after year in 2016 - 2020. In 2020, the trade surplus reached a record of nearly US$19.1 billion, higher than in 2019 (US$10.87 billion USD), much higher than in 2018 (US$6.83 billion), 9 times higher than in 2017 (US$2.11 billion) and nearly 11 times higher than in 2016 (US$1.78 billion).

This result is largely attributed to strong manufacturing and export of large corporations. In addition, the enforcement of FTAs ​​has significantly helped market expansion. According to the Ministry of Industry and Trade, Vietnam has grasped the opportunity to fill in the market gap in the face of the US-China trade war, with sharply increased exports to the US for a number of advantageous Vietnamese goods in place of Chinese goods.

In 2016 - 2019, the commodity export structure matched the Export and Import Strategy in 2011-2020, with a vision to 2030, where industrial goods account for 80% of the share; agriculture and seafood, over 10%; and fuels and minerals, just over 1%. Vietnamese goods expanded the presence in traditional markets and sought to develop new markets. Vietnam has exported goods to more than 200 countries and territories in the world, including many high-demanding markets like the EU, Japan and the United States.

5% annual growth target in 2021 - 2025

In 2021, the world market is forecasted to face unpredictable developments, but the industry and trade sector still targets merchandise export growth of about 4-5% and to extend the trade surplus trend.

The industry and trade development plan for the 2021 - 2025 period developed by the Ministry of Industry and Trade and submitted to the Government to contribute to the national socioeconomic development plan in 2021 - 2025 sets the target growth of merchandise export at 5% a year in this period.

Given this growth pace, the targeted export value will reach US$340 billion by 2025. Shipments to Europe and the United States will grow by 7-10% a year on average.

Manufactured industrial goods are considered to be a driving force of the merchandise export growth, estimated to account for 85.3% by 2025. The share of fuels and minerals will decrease to 1.15% by 2025.

Important solutions

The Minister of Industry and Trade noted that, to achieve that export goal, the Ministry of Industry and Trade defined institutions as an important breakthrough stage, paid attention to improving the institutional system to handle and respond to trade protectionism, trade defense and COVID-19 epidemic effects on supply chain structure.

“Vietnam has changed its role from a country under pressure to open for integration to a country that plays a leading role in integration, reflected in many bilateral and multilateral agreements signed in the past time,” said Minister Tran Tuan Anh.

To date, Vietnam has signed 14 bilateral and regional FTAs ​​(of which 13 are effective), concluded one agreement negotiation, and is conducting negotiations on two others. Taking FTA advantages will open up opportunities for exports, especially apparel, footwear, agricultural and seafood products.

Ms. Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association (Lefaso), said, Vietnamese leather and footwear products and their manufacturers are working stably thanks to competitive advantages in traditional markets such as Europe, the United States, Japan and South Korea. In the US market, the removal of preferential policies for footwear exported from China and India is offering better competitiveness for Vietnam's export footwear. Meanwhile, China continues to advocate reducing investment incentives in the leather and footwear sector to focus on high-tech industries, so footwear and bags orders will continue to be shifted from China to Vietnam. The opportunity to expand exports to emerging markets is also great as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into effect in early 2019, opened up many potential markets.

Le Tien Truong, President of the Board of Directors of Vietnam National Textile and Garment Group (Vinatex), also said that, in 2021, the textile and garment industry set an export target of US$38- 39 billion. “Although trade agreements, especially the EU - Vietnam Free Trade Agreement (EVFTA), have not been able to offset the decline in turnover, they have also improved order decline.

Some typical solutions aimed to boost import and export in 2021 include capturing market information and early warning of emerging issues affecting Vietnam's exports such as policy changes, technical barriers and payment risks in importing countries. Exports will give priority to export promotion activities and export markets that will soon recover after the epidemic. Exporters must consolidate and expand export markets and make the most of advantages from FTAs ​​that Vietnam signed.

By Huong Ly, Vietnam Business Forum