Officials warn of choppy waters ahead for exporters

09:02 | 16/09/2019 Trade

(VEN) - At a recent meeting with the Agency of Foreign Trade on the orientation for import, export activities towards the end of 2019, Minister of Industry and Trade Tran Tuan Anh said businesses should get ready to cope with market changes.

officials warn of choppy waters ahead for exporters
Minister of Industry and Trade Tran Tuan Anh

Difficulties ahead

The results of foreign trade in the early months of 2019 were said to be satisfactory in the context of numerous difficulties facing the economy. Phan Van Chinh, Director of the Agency of Foreign Trade, said that in the first seven months of 2019, the export value was estimated at US$145.13 billion, up 7.5 percent compared with the same period last year.

Although this export growth was lower compared with the result of the first seven months of 2018 (16 percent), the annual target set by the National Assembly, 7-8 percent, is forecast to be achievable.

Notably, the seven-month export value of domestic businesses reached US$44 billion, up 12.2 percent compared with the same period last year, while the export value of businesses with foreign direct investment (FDI) grew 5.6 percent. Industrial products such as wood, textiles, garments and plastics played a major role in the export growth of domestic businesses, but not farm produce and seafood as in the past. In the first seven months, Vietnam recorded a trade surplus of US$1.79 billion.

Despite these positive results, export activities are facing numerous difficulties during the coming months. Le Trieu Dung, Director of the Trade Remedies Authority of Vietnam, said that protectionism is rising across the world. Trade protection measures have increased in sectors such as steel, aluminum, agriculture and fisheries. Vietnam will have to cope with trade defense measures given its lacking efforts to build supply chains.

To Ngoc Son, Deputy Director of the Asian and African Markets Department, said that China recently devalued the Chinese yuan and its trade conflict with the US may become a monetary conflict with a greater impact. There have also been signs of tensions between Japan and the Republic of Korea. Both are Vietnam’s major trading partners, and a conflict between them may affect Vietnam’s exports.

Deputy Minister of Industry and Trade Tran Quoc Khanh said Vietnam should make greater efforts to boost exports in the second half of 2019 because the situation in the global market is getting more complicated, especially since the US recently determined that China is a currency manipulator. The US-China trade conflict has become a technological conflict and now a monetary conflict, making it impossible to forecast its outcome.

officials warn of choppy waters ahead for exporters

Pro-active responses

Under these difficult circumstances, in order to achieve its annual target, Vietnam must export US$23.2-23.4 billion worth of goods per month from now to year’s end. This is not an easy task.

Deputy Minister Tran Quoc Khanh said a decline in the export value of agricultural products in the recent period requires Vietnam to concentrate on this group of export goods.

In the first half of 2019, fruit and vegetable exports to China reached nearly US$1.5 billion, down 1.7 percent compared with the same period last year. The decrease is attributed to a decline in Chinese consumer demand and China’s policy shift from people-to-people exchanges to official trade with Vietnam. “The Ministry of Agriculture and Rural Development and localities should coordinate with the Ministry of Industry and Trade (MoIT) to increase the range of fruit and vegetable exports to China via official trade channels, rather than focusing on eight products at present,” Deputy Minister Tran Quoc Khanh said.

Minister of Industry and Trade Tran Tuan Anh requested agencies and departments under the MoIT to cope with market changes in an active and flexible manner. He said import, export activities should be focused on the following major tasks:

First, it is necessary to create a growth scenario for each quarter to ensure the feasibility of the annual target. Second, the Agency of Foreign Trade needs to coordinate with the Trade Remedies Authority of Vietnam to reassess and identify groups of goods at risk of involvement in trade disputes, including with Vietnam’s major partners, so that they can take necessary action to ensure compliance with regulations. Third, conferences should be organized to disseminate government policies and major projects, including the strategy to promote sustainable exports. Localities and economic sectors are encouraged to organize seminars on imports and exports. Fourth, market departments should coordinate with the Agency of Foreign Trade to reassess all markets, especially those facing a decline in export value due to subjective reasons. Clear objectives should be set for each market. An additional goal is to change the way trade promotion events are organized.

Despite stable growth and a trade surplus, export activities are forecast to face numerous difficulties during the

months ahead.

Phuong Lan