Navigating Exports Through Tough Time

Vietnam's export value fell 11.8% year on year to US$79.3 billion in the first three months of 2023, said the General Department of Vietnam Customs. This was a pessimistic signal for exports - the economic "engine" of the country.

Vietnam exported 1.7 million tons of rice in the first quarter of 2023 worth over US$900 million, a 19% increase in quantity and 30% rise in value compared to the same period in 2022

Specifically, up to 37 out of 45 export sectors and fields of Vietnam contracted in value, with some dropping by 40-99%. Fertilizer exports shrank by over 40% in value. Coal exports plunged 98.6% in value to only US$1 million.

Iron and steel exports declined nearly 25% year on year to US$1.7 billion. Telephones, Vietnam's key billion-dollar export item, brought in just US$13.4 billion in the March quarter, a decrease of nearly US$1.4 billion from the same period of 2022.

Other key exports also witnessed a significant drop, for example seafood (down 27.3%), rubber (down 35.7%), textiles and garments (down 17%) and handicrafts (down over 30%).

In this difficult context, it is not easy to reach the target of US$394 billion of export value this year, an increase of more than US$23 billion over 2022. Currently, in the first quarter of 2023, Vietnam's export value was just over US$79 billion, nearly US$20 billion lower than the given target.

According to the Ministry of Industry and Trade, the decline in the export value was attributed to high global prices of energy and fuels that heightened the production costs of domestic enterprises. Still-high inflation, tight monetary policy, slow global economic recovery and the collapse of some banks in the world resulted in tighter spending on normal goods and luxury goods in some major markets that import clothing, footwear, wooden furniture and electronic equipment, such as the US and the EU. This gave rise to import declines.

According to Mr. Vu Ba Phu, Director of the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, the world market is forecast to remain complicated in the coming time. Some countries plan to impose more regulations on imported goods such as carbon charges and recycling content requirements for imported goods. Many new standards and new regulations will be established in connection with consumer safety, sustainable development, climate change, supply chain, clean materials, labor and environment for imported products.

In the coming time, Vietnam's exports will be affected by the economic policies of some countries, he analyzed, pointing to electronics, apparels, footwear and furniture.

Besides, Vietnamese exporters will have to face many new competitive pressures. For example, Vietnam's seafood will have to compete with two biggest rivals, Ecuador and India (which account for a dominant market share of 60% of China's shrimp imports). For other seafood products such as sea fish, shrimp, squid and octopus, they also confront competition from exporters from other countries.

Ms. Tran Thu Quynh, Vietnam's Trade Counselor in Canada, said that Vietnam's export value to Canada may be affected by many objective and subjective difficulties. Canada joins many bilateral and multilateral free trade agreements, so many competitors with the same products and tariff advantages can easily replace Vietnamese goods in this market. In particular, the "Buy local" movement designed to reduce the carbon footprint in consumption, which is strongly supported in Canada, is also becoming a new form of increased protection.

The Ministry of Industry and Trade forecast growth from China, one of the three largest seafood export markets for Vietnam, with a market size of US$23 billion a year. Therefore, with the ending of the "Zero COVID" policy, China will be a potential market for many exports of Vietnam.

Facing market difficulties, the ministry continues to implement solutions to support exporters, including support programs for businesses and industries to expand and diversify export markets as well as target programs for potential markets such as India, Africa, the Middle East, Latin America and Eastern Europe. Besides, the ministry facilitates and enhances digital transformation in issuing the preferential certificate of origin (C/O) to support exporters to utilize all commitments in free trade agreements.

Huong Ly (Vietnam Business Forum)