14:44 | 17/01/2019 Trade
(VEN) - Vietnam achieved record export results in 2018 despite the threats to the global economy, largely due to market diversification, doubling its trade surplus compared to 2017. “Having diversified export markets helped Vietnam to sustain export gains and to mitigate economic risks from external economic fluctuations,” according to a recently issued report by the World Bank.
Diversified export markets
In 2017, Vietnam’s export-import reached a record US$425.12 billion, including US$214.02 billion in exports and US$211.1 billion in imports, putting the trade surplus at nearly US$3 billion.
At the beginning of 2018, Prime Minister Nguyen Xuan Phuc asked the Ministry of Industry and Trade to target a 10-percent export increase, higher than the goal of 7-8 percent set by the National Assembly. The task was particularly challenging given the escalating US-China trade war, and challenges posed by non-tariff barriers for imported goods.
To carry out its task, the Ministry of Industry and Trade slashed bureaucratic red tape for administrative procedures and business conditions in export-import activities, creating favorable conditions for business development. For example, Governmental Decree 107/ND-CP on rice export businesses now allows rice producers to export their products directly. Farmers, cooperatives and/or businesses with several dozen hectares of rice cultivation area can each produce and directly export high-quality rice products under their brand names to retailers in foreign markets without applying for a license or having a business registration certificate.
Businesses made great efforts to expand their export markets and make the most of opportunities provided by free trade agreements. In the first half of 2018, authorities issued 458,285 sets of certificates of origin worth US$22.7 billion, an increase of 33 percent in number and 36 percent in value compared to a year ago.
Trade promotion activities also contributed to increasing export-import in 2018. The Ministry of Industry and Trade directed the Vietnam Trade Promotion Agency to organize trade promotion activities at home and abroad, and support businesses in supplying goods to foreign distribution chains such as AEON, Lotte and Metro. At present, six Vietnamese products are included in the AEON supermarket system in Japan, with more expected to land on AEON supermarket shelves around the world.
Prior to the organization of trade fairs and exhibitions, goods were also sent directly to customers for appraisal.
Because of these efforts, the record export figure of 2017 was surpassed in 2018. Specifically, Vietnam’s exports reached US$244 billion, an increase of 13.8 percent compared to 2017, resulting in trade surplus of US$7.21 billion, according to the General Department of Vietnam Customs. There were 27 export commodity groups with turnover of US$1 billion or more. In 2018, total export-import turnover reached US$482 billion, an increase of 12.6 percent compared to 2017. The US$500 billion milestone will be reached in 2019, only two years after the US$400 billion milestone was conquered.
Vietnam’s international economic integration has become increasingly deep and wide. Vietnam has implemented 10 free trade agreements (FTAs), and is preparing to complete, sign, ratify and implement six others. These include the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). The most important task for the Ministry of Industry and Trade is to help businesses make the most of the FTA incentives.
However, the World Bank report also noted that Vietnam suffers from underdeveloped supply chains, heavy reliance on imports of raw materials and a lack of part-supplying industries. Businesses are advised to study the strict regulations of export markets, to improve product quality in order to increase competitiveness, and focus on promoting branding.
The rosy picture of export-import activities in 2018 was also reflected in the export growth of the domestic sector by
17 percent, higher than the general export growth. The FDI sector’s exports increased more than 13 percent.