The trade sector: An important engine reviving economic development

16:34 | 08/02/2017 Trade

(VEN) - The trade sector has experienced an annual growth of 10 percent or higher in recent years, making a profound change in the country’s trade value. In the 2016-2025 period, the sector will continue to play an important role in promoting and connecting domestic and foreign economic operations, greatly contributing to the country’s economic development.  

Market mechanism

According to the Director of the Ministry of Industry and Trade’s Vietnam Institute for Trade (VIT), Pham Nguyen Minh, over the past 30 years of renovation (doi moi) and international economic integration, the Vietnamese trade sector has been playing an increasingly important role in domestic and foreign economic activities, contributing to improving national competitiveness and the country’s economic growth.

This is reflected in improved import and export activities that have been continuously expanded and diversified in terms of outlets and ranges of goods and services. The trade in goods and services keeps growing rapidly, while import and export structures, as well as quality, have also been improved with the goal of increasing the proportion of processed and high-value products in the overall trade.

Domestic trade has drastically changed in accordance with market mechanism, with total retail sales of goods and service revenues growing 10 percent or higher annually, while the trade in goods of different kinds has increased significantly, Minh said.

Exports grew from US$39.8 billion in 2006 to US$162 billion in 2015, an average increase of 17.5 percent per year, with the highest growths - 29.1 percent and 34.2 percent - seen in 2008 and 2011, respectively. “Vietnam’s import and export activities have been growing steadily for years, with exports and imports reaching US$178 billion and US$176 billion in 2016, up about eight percent from the previous year. This is a huge growth in the context of the world market’s falling demand,” said the Deputy Director of the Ministry of Industry and Trade’s Import and Export Department, Tran Thanh Hai.

Many exports, including fruit and vegetables, pepper, cashews, coffee, rice, tea and others, yielded more than US$1 billion and successfully conquered discerning markets. Fruit and vegetable exports alone have approached almost US$2 billion in value.

Total retail sales of goods and service revenues increased more than 22-fold, from almost VND146 trillion in 1996 to more than VND3,242 trillion in 2015, an average growth of 17.9 percent per year.

Prioritizing farm produce exports

Vietnam has become a world leading exporter of farm produce, including rice, cashews, coffee and seafood. Hai said farm produce exports have yielded special benefits and should be prioritized in the 2016-2025 period. “In 2017 and the following years, the relevant state authorities, associations and businesses should take medium and long-term measures to boost and make farm produce exports more sustainable and not to rely too much on nature and external factors,” Hai said.

Associate Professor Dr. Ha Van Su from the University of Trade said that in the 2016-2025 period, it is necessary to focus on developing the country’s agricultural products with an comparative advantage. Vietnam should work to maintain its top ranking in the world in cashew exports, while businesses should develop deep processing, he added.

In 2016, rice exports fell due to supply exceeding demand in foreign markets. However, the potential is there with higher demand for imported rice expected in the future in Vietnam’s major trade partner countries, including Indonesia, the Philippines, China and Malaysia.

Fruit and vegetables have become the highlight of the farm produce export picture, with potential and rapid growth presaging further development. The Vietnam Fruit and Vegetables Association proposed that relevant authorities review the fruit and vegetable production and export development strategy to build proper plans and find appropriate development measures. The association suggested export of fresh fruit instead of frozen and processed fruit to increase export value. Discerning markets such as the US, Japan, the Republic of Korea (RoK) and Australia have a very high demand for fresh fruit and vegetables.

Su said that in 2017, it is important to improve the capacity of associations, which play an important role in connecting farm produce businesses, in order to increase the competitiveness of Vietnamese farm produce in foreign markets. It is also important to improve the administration of value chains of products with a comprehensive advantage, strengthen goods branding and exploit geographical indications of farm produce exports, Su added.

The Director of the Ministry of Industry and Trade’s Vietnam Trade Promotion Agency (VIETRADE) and Director of the

EU-MUTRAP Project, Bui Huy Son, said that in the 2016-2025 period, Vietnam will integrate further into international

economic communities and participate in more and more regional and international cooperation programs, of which trade is

a key area with enterprises playing a vital role.

Lan Anh