09:31 | 07/08/2019 Trade
(VEN) - The Viet Dragon Securities Corporation (VDSC) recently issued a report on prospects for trade and foreign investment flows to Vietnam, indicating that the country will meet more opportunities than challenges.
A recent Ministry of Industry and Trade report showed that total export value in the first half of 2019 grew a mere 7.1 percent compared with the same period last year, a lower growth rate compared with the first halves of 2018 and 2017.
However, this growth rate was higher than the 5.3 percent growth in the first quarter of 2019 and was especially noteworthy given the negative export growth in many other countries in the region. Moreover, Vietnam maintained a trade surplus of US$1.64 billion in the first six months, creating impetus for its efforts to fulfill its Q3 and Q4 targets because export orders generally increase towards year’s end.
The VDSC report also projected more prospects for Vietnam’s trade compared with other countries in the region. Specifically, manufacturing facilities and export orders in certain sectors are expected to move from China to Vietnam due to the Washington-Beijing trade tensions. Moreover, the recently inked EU-Vietnam Free Trade Agreement (EVFTA) will help increase the market share of Vietnamese goods in the EU.
The EVFTA is expected to help increase Vietnam’s exports to the EU by about 20 percent by 2020 and its gross domestic product (GDP) by 2.2-3.3 percent in the 2019-2023 period. In the short term, there will be opportunities for Vietnam to increase iron and steel exports to Cambodia and rice exports to the Philippines.
However, the report indicates that until the EVFTA takes effect, Vietnam needs to find its own solutions to overcome major challenges, including a slowdown in global economic growth and the “regionalization trend” of global value chains. The International Monetary Fund (IMF), the World Bank (WB) and the Asian Development Bank (ADB) all forecast slower global economic growth in 2019. Moreover, regionalization and trade protectionism keep expanding in global value chains, challenging efforts to increase the global market share of Vietnamese goods.
According to Phan Van Chinh, Director of the Ministry of Industry and Trade’s Agency of Foreign Trade, the agency is preparing to minimize origin fraud that has an adverse impact on Vietnamese exports to countries that have signed free trade agreements with Vietnam. This project will be helpful when the EVFTA takes effect.
To achieve the 8-10 percent export growth target set by the government for the industry and trade sector in 2019, i.e.
to achieve annual export value of US$263 billion, exports in the second half of the year must average US$23-23.4
billion per month.