Applying Efforts for H2 Exports

8:36:43 AM | 7/21/2021

Vietnam's import and export value grew well in the first six months of 2021. The second-half export is forecast to be adversely affected by the COVID-19 pandemic. All sectors and enterprises are now supposed to prepare to respond to the pandemic and seize opportunities in the new context.

Key exports

Merchandise export value was estimated at US$26.5 billion in June 2021, up 1.2% over May and 17.3% from June 2020. In the first six months of 2021, the value amounted to US$157.63 billion, up 28.4% year on year. Export growth was far better than expected.

According to the Ministry of Industry and Trade, 25 exports individually brought home at least US$1 billion from January to June of 2021, accounting for 88.9% of total export value, with five, individually earning at least US$10 billion, making up for 58% of the value. The biggest exports include telephones and components; electronics, computers and components; machinery, equipment, tools and spare parts; textile and garment; and leather and footwear.

Some agricultural exports grew strongly thanks to price gains. Pepper shipments declined 6.7% in volume but the value soared 40.5% year on year. Rubber was the fastest-growing export in the first half of 2021, staging an export growth of 41.3%. in volume and 80% in value over the same period in 2020. Seafood and vegetables were the two biggest exports, seeing respective growth of 12.5% ​​and 17.7% over the same period in 2020.

In general, domestic companies are effectively utilizing advantages from bilateral and multilateral free trade agreements (FTAs), including the EU-Vietnam Free Trade Agreement (EVFTA), which offers numerous advantages for Vietnamese exports to the European Union (EU). Notably, in June, the first batch of Thanh Ha litchi, grown in Hai Duong province, was exported to Europe under the EVFTA Agreement. With the EU being the fourth largest export market of Vietnamese agricultural products plus exemption and reduction of import duties under the EVFTA, Vietnamese exports are increasing their competitiveness and affirming their position on the international market.

Mr. Vu Ba Phu, Director of the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, said, thanks to online trade promotion and e-commerce on digital platforms, despite negative impacts caused by the COVID-19 pandemic, litchi produced by Bac Giang and Hai Duong provinces is sold well. E-commerce has provided another distribution channel for local potential products, particularly in the time of the COVID-19 pandemic.

In addition, the export value of processed industrial products, agricultural and aquatic products increased sharply over the same period last year. Meanwhile, mineral and fuel exports continued their downward trend.

Vietnam’s key export markets - from ASEAN to the United States and Europe - are still increasing their imports from Vietnam. The country’s shipments to these markets are growing at a double-digit rate. The United States is Vietnam's largest export market with US$45.1 billion, up 43.3% year on year, followed by China with US$24.6 billion, up 25.1%; the EU with US$19.3 billion, up 17.4%; ASEAN with US$13.8 billion, up 26.3%; South Korea with US$10.5 billion, up 15.2%; and Japan with US$9.9 billion, up 6.9%.

Careful focus on exportation

Imports and exports are forecast to expand in the coming time when free trade agreements (FTAs) are enforced in a more comprehensive and effective manner. In particular, such trade pacts as CPTPP, EVFTA and UKFTA will help Vietnamese commodities to penetrate into partner markets where preferential tariffs are being offered. Export prices are also tending to look up, especially Vietnam's strong commodities, which will be an important driving force to boost the export value. Besides, in the U.S. and Europe, which are gradually or completely lifting lockdowns thanks to high vaccination rates, the global demand for goods is recovering and this is an opportunity for Vietnam to boost industrial consumer exports.

However, importing and exporting activities may be negatively affected by the 4th COVID-19 pandemic outbreak in many provinces and cities, especially major export-oriented manufacturing localities like Bac Giang, Bac Ninh, Hanoi and Ho Chi Minh City. Asia continued to witness a sharp rise in new COVID-19 infections, hurting India, Japan, Taiwan (China), Indonesia, Thailand or many other countries. Therefore, enterprises themselves must strive to improve their competitiveness as well as adaptability to overcome hardships and change directions to effectively seize opportunities from the new context.

Besides, although Vietnam obtained high export growth, its importing and exporting activities still posed certain limitations like poor market diversification and heavy reliance on some major markets for agricultural and seafood products, according to the Ministry of Industry and Trade. Foreign-invested enterprises are still the biggest exporters, generating US$97.8 billion in the period, accounting for 74% of total exports. On the other hand, high input prices and high sea freight rates, plus the impacts of COVID-19 in some key production areas, have posed great challenges.

According to Ms. Hoang Ngoc Anh, General Secretary of the Vietnam Textile and Apparel Association (Vitas), textile and garment exports are likely to fulfill the target of US$39 billion in 2021. However, the biggest difficulty for textile and garment companies for the time being is the lack of high-quality labor plus pressures from local and company lockdowns to prevent COVID-19 pandemic contagion.

The Ministry of Industry and Trade recommended that businesses closely follow instructions of the Ministry of Health on prevention and control of the COVID-19 pandemic to ensure stable production. They need to keep export market information updated to work out active business plans and capture market opportunities. They also need to carefully study provisions of new-generation free trade agreements to make the most of opportunities, promote their strengths, expand new markets, and boost exports.

By Huong Giang, Vietnam Business Forum