Solutions to Facilitate Exports

Importers and exporters are facing numerous difficulties due to global economic uncertainties, fewer orders and declining value.

Vietnam earned US$1.85 billion from exporting seafood in the first quarter of 2023, a year-on-year decline of 27%

Many industries face difficulties

According to the Ministry of Industry and Trade, Vietnam's merchandise import and export value was estimated at US53.57 billion in April, down 7.7% month on month and down 18.8% year on year, bringing the total import and export value to US$210.79 billion in the first four months of 2023, down 13.6% year on year.

According to Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), seafood exports plummeted 27.5% in the first quarter, as much as the drop in the worst-time COVID-19 pandemic outbreak. Seafood exports are forecast to face many difficulties this year because main export markets such as the US, Europe and Japan have all declined sharply.

Textile and garment - Vietnam's key export industry - is confronting unprecedented challenges from the decline in orders from traditional markets such as the EU and the US, high fuel costs and logistics costs. In the first three months of 2023, textile and garment shipments were estimated to shrink 18.36% year on year to US$8.701 billion.

The leather and footwear industry also could not avoid the spiral due to the sharp decline in orders. Even, many companies saw 50-70% drops in production orders while domestic demand also showed signs of decline, leading to a sharp slump in revenue. According to a representative of the Vietnam Leather and Footwear Association (Lefaso), hundreds of companies started to cut their working time to only 4-5 days a week and scale down production. Some even laid off their workers and slashed their salaries and rewards.

Struggling to overcome difficulties

Exporters in other industries are also meeting with difficulties. Before this tough reality, many experts, central authorities and businesses have come up with quick response solutions.

Minister of Industry and Trade Nguyen Hong Dien requested agencies under his ministry to provide market information, especially in potential markets by organizing monthly briefings between the Vietnam Trade Offices with sector associations, major domestic manufacturers and exporters. In addition, they should reform and enhance the effect of trade promotion, e-commerce development, especially cross-border e-commerce, to boost supply chains, expand markets and increase exports while necessarily keeping a close watch on global economic developments, especially new policies and policy moves of major countries and influential countries to advise on appropriate response policies.

Mr. Tran Nhu Tung, Vice Chairman of the Vietnam Textile and Apparel Association (VITAS), suggested that there should be a zero-interest preferential loan package for companies to pay wages to employees in addition to strengthening trade promotion to open export markets with the support of commercial counselors. Key markets are members of CPTPP and the EU where Vietnam already has trade agreements.

Mr. Nguyen Anh Duong, Director of the Hanoi Center for Investment, Trade and Tourism Promotion, also recommended that businesses actively research and update market information from relevant ministries and sectors to capture trade promotion activities as well as development orientations.

To take back more orders and increase exports, the solution proposed by many experts is opening up new, potential markets such as Northern Europe, Eastern Europe, Western Asia, South Asia, Africa and Latin America. Vietnam needs to urgently complete the necessary procedures to sign an FTA with Israel, speed up negotiations with the UAE to enter the Middle East market, and turn these FTAs into a driving force to enter the Latin American market (including Brazil, Argentina, Paraguay and Uruguay).

To effectively exploit free trade agreements (FTAs), the Ministry of Industry and Trade will facilitate and strengthen digital transformation in granting preferential C/O certificates, thereby helping businesses take advantage of FTA commitments. At the same time, it will bolster export and import development through cross-border e-commerce.

Ministries and central agencies need to focus on coordinating and supporting localities (with farming areas) or small and medium-sized enterprises to seek an official way to reach export markets, build up brand names and foster sustainable export, launching the "Buy Vietnamese" Campaign to encourage Vietnamese people to give priority to using Vietnamese goods on their shopping list to consolidate and develop the domestic market with 100 million consumers.

By Huong Ly, Vietnam Business Forum