Onwards & upwards

Vietnam’s exports in 2017 are estimated to have grown at the highest rate seen since 2011, with its global trade activities being notably improved and certain free trade agreements taking effect. The Ministry of Industry and Trade (MoIT) forecast that the country’s exports in 2017 would stand at $212 billion, an increase of 18.9 per cent compared to 2016. 

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The export figure helped bring total trade in 2017 to $410 billion; a four-fold increase over the last decade. Vietnam recorded $100 billion in trade in 2007, the year it joined the WTO, which then rose to $200 billion in 2011 and $300 billion in 2015. “It’s a miracle,” Deputy Prime Minister Vuong Dinh Hue told a ceremony last month marking the result. “It was a great effort by the country, its enterprises, and its farmers.”

Export figures have increased the country from 50th position globally in 2007 to 26th in 2016, Deputy PM Hue emphasized, with its rankings in the WTO’s trade profile improving significantly. From such high exports, the country’s trade recorded a surplus of an estimated $3 billion in 2017. “A trade surplus is a positive result, contributing to growth and macroeconomic stability,” said Mr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management (CIEM). Vietnam’s agricultural products were a key contributor to total exports. “This is a remarkable achievement and should be boosted further,” Mr. Cung said.

Top 3 trade partners, 11m 2017

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Source: General Department of Vietnam Customs

Agriculture growth

Despite the agriculture sector having to continually grapple with various difficulties and challenges, particularly complex trade barriers and cutthroat global competition, Vietnam’s agriculture exports grew strongly in 2017. Turnover stood at $33.1 billion as at late November, an increase of 13.8 per cent year-on-year. Fruit and vegetable exports saw the highest growth in the sector, of $3.16 billion, up 43.2 per cent year-on-year, and together with seafood, rice, and rubber exhibits rich potential for further development. 

Notably, Vietnamese exporters have successfully opened up a path to a number of developed markets with high prices, contributing to diversifying markets and reducing risks. China, Japan, the US, and South Korea are the four leading importers of Vietnamese fruit and vegetables. Fresh dragon fruit was officially allowed to enter Japan in early 2017 and Australia in August, while the US approved Vietnamese star apples being imported into the country. The US, according to a representative from food distributor Global Food Importers, will welcome any high-quality products from Vietnam with open arms. “Vietnam has diverse crop cycles, which provides stable supplies throughout the year,” he said. Global Food Importers has a $100 million export deal with a partner in the Mekong Delta’s Dong Thap province, given growing demand for frozen vegetables in the US. It earlier exported Cao Lanh mangos to many overseas markets. 

South Korea was Vietnam’s fourth-largest export market in 2017, according to the General Department of Vietnam Customs. With a lack of farmland, South Korea depends greatly on vegetable imports, primarily from China and South America. Its importers are now increasingly looking towards Vietnam, according to Mr. Gi-Bog Song, Regional Director of the Korea Agro-Fisheries & Food Trade Corporation. “Vietnamese enterprises should fully prepare to ensure their products meet international food hygiene and safety standards,” he said.

To penetrate into tough markets like the EU, Vietnam’s Nafoods Group invested in building a facility processing lemon wedges and fruit and vegetables in Moc Chau district, northern Son La province. The group has recently exported its first fresh lemon wedges to France and Switzerland, in late December, and plans to expand to other countries in the years to come.

As at the end of 2017, 40 types of fruit and vegetables were being exported to 60 countries and territories. Apart from conquering traditional markets, Vietnam’s fruit and vegetables have also gained recognition in tough markets such as the US, the EU, Canada, Australia, and New Zealand. 2017 export turnover is estimated at $3.5 billion, an increase of 43 per cent year-on-year and overtaking rice and petroleum.

Meanwhile, Vietnamese rice saw greater export opportunities thanks to improved global trade and increasing consumption. Cashew nut exports reached a record in 2017, with revenue estimated at $3.5 billion. Such growth, according Mr. Nguyen Duc Thanh, Chairman of the Vietnam Cashew Association, is due to increasing demand in developed countries. “Vietnamese exporters have also made efforts to identify new markets with high prices, such as Eastern Europe, the Middle East, the UK and Germany, which have been traditional importers of Indian cashew nuts,” he told VET.

Vietnam’s cashew nut production has lower costs than India’s and its prices are more competitive. Mr. Thanh expects exports in 2018 will grow at a higher rate than in 2017 thanks to such strengths.

Seafood also contributed substantially to agriculture export turnover. Like fruit and vegetables, it faces issues relating to trade barriers but nonetheless recorded revenue growth of 18.7 per cent, reaching $7.6 billion, in the first eleven months of 2017. Growth in markets such as the EU, Japan, China, and South Korea was nearly 20 per cent, according to the Vietnam Association of Seafood Exporters and Producers (VASEP), which estimated seafood exports would reach $8.3 billion for 2017 as a whole. 

Record electronic exports

Telephones, computers, electronics, and spare parts again recorded the highest growth seen in Vietnam’s export sector, mainly attributable to foreign-invested enterprises (FIEs). Samsung, Canon, LG, Panasonic, and Nokia drove such growth, with total exports worth $64.9 billion in the first eleven months of the year, up more than 30 per cent year-on-year. 

Canon Vietnam, for example, which specializes in the production of scanners and printers, estimates 2017 growth at 12 per cent thanks to greater exports to China, the EU, and the Americas. Exports to China, in particular, grew significantly, according to Ms. Dao Thi Thu Huyen, Senior Manager of the General Director Office at Canon Vietnam, due to the development of e-commerce and a growing customer base in the country. “We will focus more on export markets, including China, the EU, India and ASEAN in 2018, as these have potential,” she told VET.

Its current export markets are the EU, Asia, and the Americas, where it holds a market share of 30 per cent in each, and other markets where it holds 10 per cent. Turnover in 2016 was $1.5 billion and growth of 12 per cent is expected in 2018 despite the company facing obstacles relating to changing policies and laws as well as recruitment.

Exports of telephones and components reached $41.3 billion in the first eleven months, up 30.6 per cent year-on-year. According to MoIT, the category is forecast to continue growing due to production at existing factories belonging to major foreign brands being stable. Meanwhile, exports of computers, electronics, and spare parts will earn significant revenue, as Samsung Display will export new products at the end of 2017 after increasing its investment capital. Enterprises have also expanded their export markets, to South Korea, ASEAN, Canada, Taiwan, and Russia, while retaining growth levels in traditional markets such as the US and Japan.  

Textiles, garments, and footwear stable

2017 turned out to a challenging year for textiles and garments, with uncertainties over global trade and the future of the TPP leaving a mark. “Orders declined in the first six months of the year,” Mr. Than Duc Viet, Deputy CEO of Garco 10, told VET. “From October, however, they recovered and we now have orders for the first quarter of 2018.” The company’s growth was only 8 per cent in 2017, compared to double digits in recent years. 

It is trying to retain a high level of growth amid uncertain markets. Turnover for 2017 is estimated at VND3 trillion ($132 million); lower than expected. The US remains its key export market, accounting for 47 per cent of total turnover, followed by the EU, with 35 per cent. South Korea contributed little to export turnover but clearly has potential given its growth of 30-50 per cent. 

For the sector as a whole, the three largest export markets - the US, the EU and Japan - saw stable growth last year, of 7.8 per cent to $10.2 billion, 5.7 per cent to $3 billion, and 6 per cent to $2.5 billion, respectively. Total exports are expected to stand at $31 billion, according to Mr. Vu Duc Giang, Chairman of the Vietnam Textile and Garment Association (Vitas), up 10.2 per cent against 2016. 

There has been a trend in recent times of orders being transferred from Vietnam to neighboring countries with more competitive production costs. According to Vitas, however, many enterprises are investing in new technology and automated equipment, reducing worker numbers in the process, in order to improve capacity. Free trade agreements (FTAs) are also being negotiated, which should make the sector more attractive in the future. As such, 2018 turnover is forecast to be higher than in 2017, at $33-34 billion. 

Similar to textiles and garments, many FIEs in footwear and handbags have focused on investing in technology and equipment and expanding their scale to seize opportunities presented by FTAs. The contribution by FIEs to export turnover has increased to 80 per cent, at the expense of their domestic counterparts. The sector also recorded positive results in 2017, with value estimated at $18 billion as assembly orders are transferred from China to Vietnam due to the advantages that will come after the Vietnam-Eurasian Economic Union FTA is signed in 2018. 

In the first eleven months of 2017, export turnover was $16 billion, including footwear $13 billion and handbags $3 billion. China is the largest export market, with $1.2 billion (excluding handbags), and footwear exports are to increase in 2018 and subsequent years. Footwear exports to Singapore grew notably (45 per cent), Poland (33 per cent), India (33.7 per cent), Hungary (34 per cent), and Portugal (31 per cent). Those to Indonesia in the first eleven months saw the highest growth among ASEAN markets, at 53 per cent, worth $37 million.

As at November, 26 out of Vietnam’s 45 export categories reached over $1 billion in exports, including five categories with more than $10 billion. Vietnam has more than 200 trade partners, including 29 exporting and 23 importing markets recording turnover of more than $1 billion in the first eleven months of 2017. Four export markets and five import destination saw turnover exceed $10 billion and are growing. 

Total trade in 2017 reached $400 billion by mid-December, rising $67.9 billion against 2016; the highest annual increase to date, according to the General Department of Vietnam Customs. The Ministry of Finance will coordinate with relevant agencies and localities to remove barriers facing the business community, with a goal of $500 billion in trade turnover in the next two years. Meanwhile, many enterprises are preparing for deep import tariff cuts, improving quality and expanding markets in order to reach targets.

VN Economic Times

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