Merchandise exports: low growth is also a miracle

VCN – The pandemic in the world is complicated. Job loss and falling income make it difficult for consumers to improve demand for imported products soon. According to the Ministry of Industry and Trade, Vietnam's exports in the last five months of the year will still face many difficulties in the short term.

Tan Vu Terminal, Hai Phong: Photo: TKTS

Growth of only 0.2%

According to data from the Ministry of Industry and Trade, from the beginning of the year to the end of July, the country’s exports were estimated at US$145.79 billion, a year-on-year increase of 0.2. Vietnam had 23 items with export turnover of more than US$1 billion, accounting for 87% of total export turnover.

Regarding the structure of commodity groups, arepresentative of the Ministry of Industry and Trade stated most of the exports of commodity groups decreased compared to the same period last year. Notably, export turnover of the mineral fuel group saw the strongest drop ofUS$1.7 billion, down by 36%. Similarly, export turnover of export agro, forestry and fishery products was estimated at US$13.7% billion, a year-on-year decline of 5.4%. The export turnover of the processed industrial group was estimated at US$122.6 billion, up 0.8% over the same period last year. However, looking at each export item such as textiles, footwear, wooden products, exports are still facing many difficulties.

Looking at Vietnam's merchandise exports from the beginning of the year until now, trading expert Pham Tat Thang analysed that Covid-19 seriously affected the global economy, especially open economies like Vietnam. This was because the supply chain has been broken and the global demand has declined. In addition, trade activities are also seriously affected by the US-China trade war.

Looking at the data of open economies, the decline in exports and negative growth is the trend. In that condition, Vietnam's export growth is a miracle. Compared to the same period last year, export growth in the first seven months of this year saw a sharp decline, but that comparison is not scientific because the circumstances of the seven months of 2020 and the same period in 2019 and 2018 are completely different. “The decline is natural. The matter is to recognise and compare with other open economies in the first half of this year to see that such Vietnam’s export growth is also a very good achievement,” Thang said.

Consecutive difficulties

The pandemic in the world is complicated. Job loss and falling income make it difficult for consumers to improve demand for imported products soon. According to the Ministry of Industry and Trade, Vietnam's exports in the last five months of the year will still face many difficulties in the short term.

This is shown clearly in a series of Vietnam’s key export products. A typical example mentioned by the Ministry of Industry and Trade is the garment and textile industry. As of July, many textile firms have almost no orders for the last two quarters of the year for high-value products like suits and high-end shirts, while masks and protective clotheswere considered a lifeline for many enterprises in the second quarter, their prices have plummeted due to oversupply worldwide. Vietnam Textile and Garment Group (Vinatex) forecasts Vietnam's textile and garment exports in the second half of the year will continue to decrease by 14-18% over the same period last year. Total export turnover of the whole year will be about US$32.75 billion, down about 16% compared to 2019.

Vietnam's wood processing and export industry in recent years has maintained a fairly steady and stable export growth rate of about 12-15% per year, and in 2020, it will struggle due to theCovid-19 pandemic. Do Xuan Lap - Chairman of the Vietnam Timber and Forest Products Association said that, affected by the Covid-19 pandemic, the wood industry needs long-term solutions to cope with the pandemic andadapt to the new situation. This requires the industry to identify a development strategy in terms of the market, including the export market and domestic market, and products.

“Market development and strategic products need to be developed in the context of world market fluctuations due to the pandemic and international trade tensions. This strategy must be based on risk mitigation factors, including trade fraud risks, in order to avoid negative impacts on the industry,”said Lap.

Opportunity from EVFTA

Amid accumulated difficulties and unpredictable disease developments, the Ministry of Industry and Trade also gave a positive perspective for Vietnam's merchandise exports in the remainingfive months of the year on the effective Vietnam-EU Free Trade Agreement (EVFTA) on August 1. The ministry stated that, given commitments on strong market opening and abolishing import tariffs up to nearly 100% of the tariff schedule in EVFTA after a short roadmap, the opportunity to increase Vietnam's exports to the EU is considerable, especially for products such as garments, textiles, leather and footwear, agriculture, forestry, fishery products and wooden products

In particular, for the leather and footwear industry, the EU is a traditional market, accounting for nearly 30% of the export turnover, about nearly US$6 billion per year. Motivated by the EVFTA, it is expected that footwear exports in the third quarter and fourth quarter of 2020 will grow again, helping to offset the losses in the first months of the year. Phan Thi Thanh Xuan, General Secretary of the Vietnam Leather, Footwear and Handbag Association, said leather and footwear companies had preparations which are expected to meet the requirements of the EU, as well as connect with customers of the EU when the EU market is reopening.

Regarding taking advantage of opportunities to promote exports from the EVFTA, Deputy Minister of Industry and Trade Cao Quoc Hung said if the pandemic is contained in the Europe, Vietnamese companies will significantly benefit from the reduction and abolishment of tariff barriers to the EU market. The Ministry of Industry and Trade has been taking many measures to support import and export activities, especially through the application of e-commerce in the difficult period of trade exchange activities. “Companies also need to actively study carefully the content of the EVFTA and the appropriate digital transformation trends/models, and fully prepare human, financial and other necessary conditions to be able to meet the requirements not only of EVFTA but also of the EU market,” Hung noted.

The Ministry of Industry and Trade is currently continuing to promote the dissemination of rules of origin and how to take advantage of the EVFTA to promote exports; and building a scenario to exploit and develop the market according to commodity groups where Vietnam has advantages to the EU in 2020. Besides, the ministry is also determined to continue to remove difficulties and promote import-export to the Chinese market, includingworking with the Chinese side to speed up customs clearance capacity through border gates; working with the Chinese side to ensure border trade transport; and regulating the amount of goods sent to the border gate, avoiding congestion and making costs increase.

In the first seven months of 2020, import turnover of goods was estimated at US$139.33 billion, down 2.9% over the same period last year. In which, the domestic economic sector reached US$61.86 billion, up 1.5%; FDI sector reached US$77.47 billion, down 6.2%.

Regarding imported goods, accounting for 88.3% of the total import turnover of Vietnam in the first seven months of the year is the groups that need importing (raw materials for domestic production) with a turnover of US$123 billion, a year-on-year decrease of 2.4%. Import turnover of many materials for domestic production decreased sharply in the seven months such as: fabrics of all kinds decreased by 14.9%; steels of all kinds by 14.1%; garment and footwear materials and accessories 15.5%; wood and wooden products 9.5%

Sources: Haiquanonline.com.vn