Rise of domestic strength
According to the Ministry of Industry and Trade (MOIT), Vietnam’s exports in 2019 beat the target and were estimated at US$263.45 billion, up 8.1% from a year earlier. Exports saw a notable improvement in quality with less raw products and more manufactured goods, enabling Vietnam to take a greater part in the global value and supply chains.
Only 21 types of exported goods brought in over US$1 billion each in 2011, but the figure rose to 32 in 2019, with eight earning more than US$5 billion and another six earning more than US$10 billion, which combined to account for nearly 93% of Vietnam’s export revenue last year.
Another highlight is the continued robust growth recorded by domestic companies. In the previous years, exports by foreign-invested firms usually dominated, but now they have been outperformed by Vietnamese enterprises. Specifically, domestic companies shipped US$69.7 billion worth of goods in 2018, a year-on-year growth rate of 15.9%, compared with 12.9% recorded by foreign businesses. In 2019 the export growth by domestic companies outperformed that of the foreign sector by four times, raising the share of export revenue of domestic enterprises to 31.16%, compared with 28.61% in 2018.
In addition to bolstering exports, Vietnam managed to curb imports effectively, helping the country to run a record trade surplus of nearly US$10 billion in 2019.
A new year of challenges
Despite positive changes, Vietnam’s exports are still facing numerous challenges. First, several cash cows that were previously the main drivers of export growth, such as electronics, computers, optical products and especially mobile phones, failed to maintain their impressive growth.
Agricultural exports, another growth driver, also slowed down due to difficulties in markets and prices. The concerned authorities of Vietnam have made great efforts in their negotiations to reduce tariffs on Vietnamese agricultural goods but the results concerning quality control, food safety, animal health and plant quarantine remain limited. Therefore, many Vietnamese goods have yet to be exported to certain markets although tariffs have already been reduced to zero.
In addition, Vietnam’s imports from China are growing strongly amid the risk of escalation of the US-China trade war, raising concerns that Chinese goods are transhipped to Vietnam and then re-exported to the US to avoid issues of origin. Amid Vietnam’s increased exports to the US and trade surplus with the world’s largest economy, the US may impose curbs on Vietnamese goods.
This is happening to not only with the US market. In general, Vietnamese goods are facing a great deal of difficulties as many countries are shifting to use new trade protection measures such as preventing country of origin fraud instead of using technical barriers such as anti-subsidy and anti-dumping duties. Such difficulties require Vietnam to change its approach and introduce timely solutions.
In face of both old and new challenges and in order to ensure exports will reach the US$300 billion mark in 2020, the MOIT is taking a wide range of measures. First of all, the ministry will work with the agencies concerned to remove the difficulties facing exports and unlock markets. The ministry will take measures to bolster logistic services to help enhance the competitiveness of Vietnamese goods.
The ministry will also step up trade promotion activities in key markets as well as at home so as to create opportunities for the domestic firms manufacturing equipment, machinery and raw materials to connect with those using their goods.
Furthermore, the ministry will closely monitor the global economic situation, especially the US-China trade war, so as to introduce prompt measures to boost the goods with plenty of opportunities to export, and will step up efforts to curb trade and origin fraud.
