Export Target of US$ 377 Billion: Feasible with Concerted Efforts Needed

9:55:34 AM | 1/31/2024

In 2024, the Ministry of Industry and Trade sets targets for Vietnam's export turnover of goods to reach US$ 377 billion, an increase of about 6% compared to 2023, with an expected surplus of trade balance of about US$ 15 billion. This is an ambitious goal that requires a lot of efforts from the Government and business community.

Seafood exports are showing positive signs

In a context of the global economy forecast to have many "unpredictable" factors, experts have expressed some opinions surrounding the target export turnover of US$ 377 billion.

On a positive view, VinaCapital has just released a report expecting Vietnam's GDP growth to increase to 6.5% in 2024. After a challenging year 2023, all signs show that 2024 will be a stronger year for the Vietnamese economy, driven by a recovery in the manufacturing sector and improving consumer sentiment.

According to Mr. Cao Huu Hieu, Deputy Secretary of the Party Committee, General Director of Vinatex, forecasts for 2024 all show hopes for the world economy, especially in the US market with possible signs of 3 rounds of interest rate cuts of up to 0.75%, which is a driving force to boost consumption. Competing countries have many labor problems and armed conflicts domestically, while Vietnam is a safe destination and is also an advantage for orders that are likely to return to Vietnam. The domestic macroeconomy continues to be stable, GDP growth is forecast to be higher than 2023.

In 2024, the world context is forecast to have major and unpredictable changes with many interwoven opportunities and challenges. As a highly open economy, Vietnam cannot avoid the negative effects of external fluctuations in the context of huge risks and challenges for the world economic outlook in 2024. Therefore, there are also opinions that it is difficult for goods exports to create a breakthrough in 2024. For example, a representative of VIS Rating said that Vietnam's goods exports still depended heavily on the US and EU markets, but the economics of these two large markets are not forecast to be really positive.

According to the Ministry of Industry and Trade, in general, Vietnam's import and export activities in 2024 will depend largely on three channels. First is international trade. Many economies which are major partners of Vietnam have slow growth, leading to difficulty recovering demand, thereby affecting export results. Second is international investment channel. The world interest rates are generally still anchored at high levels, making it difficult to attract capital for investment in general and directly creating significant pressure in keeping invested capital in Vietnam as well as attracting new investment capital.

In pursuit of the 2024 export target, the Ministry of Industry and Trade is strategizing to maximize the benefits of free trade agreements

Third is the monetary financial channel with the pressure of devaluation of the domestic currency compared to the US dollar. Although it is somewhat favorable for exports, it will cause the cost of importing raw materials for production to increase.

Businesses also face many new challenges such as the minimum wage increasing by 6% from July 1, 2024, and electricity prices may continue to rise after increasing by over 7% in 2023. This causes production costs to increase, affecting revenue and profits.

Commenting further on the market in 2024, Mr. Vuong Duc Anh, Chief of the Board of Directors Office and Vinatex spokesperson, analyzed that at the beginning of 2024, the economy received bad news when Houthi forces in Yemen attacked ships passing through the Red Sea area - a major trade route connecting Asia with Europe and the US. Therefore, it increased transportation costs and prolonged delivery times, affecting trading activities of businesses. In that context, the market in the first quarter of 2024 is forecast to be no better than the fourth quarter of 2023. It is possible that from the second quarter of 2024 the market may gradually warm up.

For the seafood industry, the report of the Vietnam Association of Seafood Exporters and Producers (VASEP) shows positive signs when pangasius inventories in the US, China and EU markets are no longer a problem. Exports prices have increased again. In addition to frozen fillets, the trend of importing value-added pangasius and by-products (fish maw, pangasius patties) continues to increase.

However, VASEP also points out many challenges for businesses in the industry. In addition to inflationary pressures, the world economy is recovering slowly, and geopolitical issues are also disturbing global trade, including seafood. The consequences will increase transportation costs and increase prices of input products for aquaculture and seafood processing. It could also cause a new inflationary storm that will affect seafood consumption demand in 2024.

In addition, seafood export businesses also face competitive pressure and trade barriers. Vietnamese shrimp will continue to compete with Ecuador and India. The cost of food for aquaculture has increased. If the IUU yellow card is not removed in 2024, exports to the EU will stagnate because the procedures for confirming and certifying exploited seafood are still inadequate because resources, human resources and infrastructure do not meet the requirements. Exporting shrimp to the US will be more difficult if Countervailing duties (CVD) is imposed.

To achieve the target of total exports in 2024 increasing by about 6% compared to 2023, the Ministry of Industry and Trade said it would focus on effectively exploiting free trade agreements (FTAs) that have taken effect and signing and implementing new agreements to expand and diversify markets, import and export products, and supply chains.

According to the General Department of Customs, in 2023, export turnover of goods was estimated to reach US$ 355.5 billion, down 4.4% compared to the previous year. There are 35 items with export turnover of over US$ 1 billion, accounting for 93.6% of total export turnover (there are 7 export items with export turnover of over US$ 10 billion, accounting for 66%). Trade surplus value was US$ 28.3 billion.

Of which, export turnover of enterprises with foreign direct investment (FDI) reached more than US$ 257 billion, down 6% (corresponding to a decrease of US$ 16.40 billion) and imports reached more than US$ 209 billion, down 10.3%, equivalent to a decrease of US$ 24 billion. Export turnover of domestic enterprises remained at US$ 97.46 billion, down 0.7%.

In addition, it will strengthen the exploitation of neighboring markets with potential, shift strongly to official exports associated with brand building, promote sustainable exports, and continue to innovate and improve the efficiency of trade promotion.

The Ministry of Industry and Trade also recommends that businesses should not be negligent or subjective, but must closely monitor fluctuations in production, supply and demand, and commodity prices in the world and domestically to promptly have solutions to achieve the goals set in 2024 as well as the period 2021 - 2025.

Businesses need to continue to promote technology application, improve competitiveness, and diversify export markets. In addition, businesses also need to focus on building brands and improving product quality to meet the increasing demands of the international market.

By Huong Ly, Vietnam Business Forum