Exports Grow Cautiously

9:18:40 AM | 2/22/2022

After two years of difficulties caused by the COVID-19 pandemic, Vietnamese exporters have gradually become resilient to it. Driven by growth momentum in 2021, most exports rose sharply in January 2022 as compared to one year ago.

Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade, said that businesses have also been "vaccinated" against market fluctuations caused by the pandemic. This is the premise for further development.

Merchandise export value reached approximately US$29 billion in January 2022, representing year-on-year growth of 1.6%. In the month, seven exports brought home over US$1 billion, accounting for 63.3% of the total export value. Of the sum, telephone and parts shipments earned US$4 billion, becoming the largest export and accounting for 13. 8% of total exports.

In particular, some commodities grew outstandingly in value. Fertilizers advanced 682%; chemicals by 98.6%; animal feeds and inputs by 72.8%; plastic materials by 57%; rattan and bamboo products by 61%; and iron and steel by 43.6%.

Textile and garment was one of the strong growers as world consumer demand was forecast to increase strongly. In January, the textile and garment export value rose 24.2% year on year to US$3.3 billion. Mr. Truong Van Cam, Vice President and General Secretary of the Vietnam Textile and Apparel Association, said many textile and garment producers have already received orders for full production till May 2022.

Vietnamese rice is also trusted by partners and gradually dominates high-end markets such as the U.S., Japan, South Korea and the EU. In January, rice exports surged 45.4% to 505,741 tons. The Import-Export Department under the Ministry of Industry and Trade forecast that Vietnam's rice exports to the EU will advance further in 2022. In particular, the quality of Vietnamese rice has been improved to meet consumer tastes in Europe.

By market, the United States was the largest export market of Vietnam in January, with US$8.95 billion, up 9.7% year on year, followed by China, the EU and ASEAN.

Despite strong export performance, Mr. Hai warned against the prolonged COVID-19 pandemic and its new variants, given its complicated development. World economic growth is volatile and exposed to risks, including the pandemic. “Businesses need to actively deal with many risks like non-tariff barriers to trade in many major markets, unpredictable movements of global commodity prices, inflation risks, financial and monetary risks,” said Mr. Hai.

As for the food industry, lessons learned during the 4th outbreak made food companies more cautious. For example, although the value is on the rise, the biggest difficulty to rice production is material prices such as fertilizers and pesticides, which have soared recently. In particular, fertilizers climbed to a new price level, thus greatly affecting the income of rice growers and the revenue of exporters.

According to Ms. Ly Kim Chi, Chair of the Ho Chi Minh City Food Association, the fundamental and long-term solution for enterprises is to align agricultural production with processing and other supporting industries and make sure that agricultural production and export supply chains are strong enough, adaptive and undisrupted. At the same time, businesses need to develop a data connection and e-commerce system to meet the market needs, standards and regulations of importing countries.

Mr. Le Huynh Minh Tu, Deputy Director of the Ho Chi Minh City Department of Industry and Trade, said businesses need to actively take growth quality as the foundation, and increase export support services and intangible exports (software, digital contents). On the other hand, exporters need to promote regional connectivity, coordinate in export production to increase added value in the value chain and utilize local comparative advantages in southern localities.

Regarding logistics, Mr. Huynh Van Cuong, Vice Chairman of Ho Chi Minh City Logistics Association, pointed to difficulties that exporters are facing: High freight rates, insufficient vacant space, insufficient vessel space, port congestion, and input shortage. Therefore, they need to actively choose solutions and new delivery methods instead of traditional ones, he said, adding that it is necessary to quickly apply automation to reduce dependence on people, adopt new production technologies and prioritize Vietnamese logistics enterprises.

 BY Huong Ly, Vietnam Business Forum