10:23 | 16/08/2019 Trade
(VEN) - International integration has provided Vietnam with numerous opportunities to boost import, export activities but these opportunities are still largely unutilized. This was the prevailing view expressed by experts at a recent workshop held by the Thuongmai University to launch its Vietnam Annual Economic and Trade Report 2019.
Limited effectiveness of integration
The report indicates that the growth of foreign trade in 2018 has turned Vietnam into one of the leading countries in the region and worldwide in terms of economic openness, with total export value exceeding US$480 billion, almost double Vietnam’s gross domestic product (GDP). This satisfactory result reflects the success of international integration.
However, Dr. Luong Minh Huan from the Vietnam Chamber of Commerce and Industry (VCCI)’s Institute for Business Development said export activities still lack sustainability. Specifically, exports by domestic companies keep decreasing. In 2007, Vietnam joined the World Trade Organization (WTO), but the domestic sector’s contribution to Vietnam’s total export value has dropped from 51.5 percent in 2007 to 28.5 percent in 2018. Meanwhile, exports by companies with foreign direct investment (FDI) keep increasing, from 48.5 percent to 71.5 percent. In 2018, the domestic sector faced a trade deficit of US$25.6 billion, while the FDI sector recorded a surplus of US$32.8 billion.
Associate Professor, Dr. Dinh Van Thanh, former director of the Industry and Trade Strategy and Policy Research Institute, said that in 2018, Vietnam’s trade grew at the highest rate since 2013. The recently signed EU-Vietnam Free Trade Agreement and the 2018 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) promise higher export value to many markets thanks to tariff preferences.
However, for now, the opportunities are under utilized. Ministry of Industry and Trade data show that in 2018, only 39 percent of exports to markets with which Vietnam has signed free trade agreements (FTAs) used preferential certificates of origin, with value reaching US$46.2 billion.
“To take advantage of FTAs, export goods must meet strict requirements in terms of origin, technical standard and food safety. This is a major hindrance to domestic companies,” Thanh emphasized.
The report also indicates that in the past, underdeveloped countries tended to take stronger trade protection measures than developed countries in order to protect domestic manufacturers against competition with external rivals. In recent times, however, the US, a pioneer in trade liberalization, has applied various protection methods through trade wars with not only China but also allies such as the Republic of Korea, Canada, Mexico and the EU.
In this context, Vietnamese businesses are urged to continue enhancing the competitiveness of their goods by associating with each other to surmount weaknesses in terms of financial capacity and technology. State management authorities should further improve the investment and business environment, while at the same time intensifying the provision of market information to minimize the adverse consequences of trade defense and protection measures taken by importing countries.
The Vietnam Annual Economic and Trade Report 2019 consists of four major parts: Vietnam economy 2018; Vietnam
trade 2018; Trade protectionism and its impact on Vietnam’s exports; Vietnam economic and trade outlook 2019.