Vietnam Trade Surplus Hits US$26 Bln

With the adept implementation of supportive policies by the Government and central agencies, coupled with efforts from the business community, the import and export landscape advanced in 2023, effectively overcoming challenges and laying the groundwork for growth in 2024.

Remarkable export resurgence

Amidst the complexities and uncertainties of the global economy throughout 2023, Vietnam encountered challenges exacerbated by the post-COVID-19 period, marked by contracting export markets and a gradual recovery of the global economy. Macroeconomic performance further impacted imports and exports, resulting in a total trade value of US$683 billion, marking an 8.3% year-on-year decrease. Exports contributed US$354.5 billion, while imports accounted for US$328.5 billion, reflecting a 5.9% decline.

However, a turnaround unfolded in the latter part of the year. In November, the total merchandise import and export value surged by 5.9% to an estimated US$60.88 billion. The late-year recovery substantially narrowed the annual export decline, significantly surpassing the 12% dip observed in the first half of 2023. The trade surplus continued its remarkable streak, reaching nearly US$30 billion, showcasing a remarkable increase of over 250% from 2022.

This positive outcome made a contribution to the balance of payments, fostering an augmentation of foreign exchange reserves, stabilization of exchange rates, and improvement in various macroeconomic indicators.

In the realm of key exports, the Ministry of Industry and Trade identified 33 products, each generating at least US$1 billion in export revenue during the first 11 months of 2023, constituting 93.1% of the total export value. Seven exports surpassed the US$10 billion mark, constituting 66% of the overall exports.

Remarkably, agricultural products emerged as impressive contributors to the nation's export value. Aquatic products experienced a 1.4% surge, reaching US$800 million, while vegetables and fruits soared by 65.2%. Rice experienced robust growth of 59.6%, culminating in a significant US$500 million. Both vegetables and rice secured their positions among the group of 33 billion-dollar exports in 2023.

In November alone, the export value of agricultural and aquatic products demonstrated a 26.7% year-on-year surge, standing as the sole advancing export in the first 11 months of 2023. Accumulating US$29.5 billion during this period, this sector exhibited 8.6% growth compared to the previous year.

The United States was Vietnam's largest export market, accounting for a substantial US$88 billion, while China retained its position as the leading import market with US$99.6 billion.

On the import front, inputs for production witnessed escalation in November. Machinery, equipment, tools and spare parts edged up 0.9% to US$3.6 billion, plastics experienced a 21.2% leap to US$1.1 billion, and chemical products surged by 15.9% to reach US$750 million. Despite this, the merchandise import value for the first 11 months of 2023 was projected to decrease by 10.7% year on year to US$296.67 billion. Within this context, the domestic economic sector contributed US$105.94 billion, reflecting an 8.8% decrease, while the foreign-invested sector posted US$190.73 billion, down by 11.7%.

Vietnam continued to have a trade surplus of US$25.83 billion in 11 months (versus US$10.3 billion a year earlier). Vietnam's foreign-invested sector contributed the highest share of US$45.82 billion. However, the domestic economic sector faced a trade deficit of US$19.99 billion.

Addressing challenges, mitigating bottlenecks

In the face of subdued demand from the United States and the EU, domestic enterprises encountered many obstacles, including a sharp decline in foreign orders, weakened demand in China post-reopening, soaring input costs, and constrained access to credit sources. To proactively alleviate these challenges, the Ministry of Industry and Trade will promote negotiations and the signing of agreements, commitments, and trade partnerships, including the completion and implementation of the free trade agreement (FTA) with Israel and the establishment of FTAs with promising partners such as the UAE and MERCOSUR, diversifying markets, products and supply chains.

Concurrently, the ministry will empower businesses to leverage FTA commitments, particularly those outlined in the CPTPP, EVFTA and UKVFTA. This support includes extensive awareness campaigns on rules of origin, certificates of origin, and the myriad opportunities and challenges presented by FTAs.

Collaborating closely with the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade is engaged in negotiations with China to expand export avenues for additional Vietnamese fruit and vegetable products, such as green-skinned grapefruits, fresh coconuts and star apples. Furthermore, efforts are underway to optimize and streamline customs clearance procedures at Vietnam-China border gate areas, with a particular emphasis on seasonal agricultural and aquatic products.

Anticipating the challenges of 2024, the objective is to uphold stringent green export requirements and adhere to the exacting standards of importing countries. Trade experts advocate for businesses to adopt a comprehensive approach, encompassing diversification of trading partners, risk assessment, scenario planning, development to reduce carbon emissions, participation in carbon offset projects, evaluation of carbon intensity, investment in innovation and technology, and active engagement in industrial cooperation initiatives. Only through these concerted efforts can sustainable development in export activities be realized.

By Gia Huy, Vietnam Business Forum