Japan’s economic stimulus package brings high hopes to Vietnamese

VietNamNet Bridge – Vietnam’s exports to Japan have been supported not only by bilateral and multilateral trade agreements, but also by the new economic stimulus package launched by the Japanese government worth $1.4 trillion.


Vietnam, import tariff, Japanese market, monetary policy, Japanese yen

Vietnam’s food and farm produce exports have advantages

Nguyen Trung Dung, Vietnamese counselor to Japan, said that the economic stimulus package would help foster the Japanese economy, thus helping stimulate the domestic demand and production. This is really the good news for Vietnam, which considers Japan a big export market.

Japan is one of the three major export markets for Vietnam which consumed $13 billion worth of Vietnamese products in 2012, mostly footwear, seafood and farm produce.

However, according to Dung, the economic stimulus package, by the nature, is the monetary policy loosening, or the devaluation of the yen.

Since the Abe cabinet came to power, the Japanese yen has depreciated by 16 percent, which means that that imported goods have become more expensive for Japanese consumers. Vietnamese exports will have to compete fiercely with domestic products in the Japanese market.

The Japanese yen depreciation could be seen as a move of the Japanese government to boost the Japanese exports which have declined in recent years. Stimulating the domestic demand is now the top priority task for the Japanese government to recover the economy. Therefore, Vietnam would help the opportunities to import machines and equipments from Japan at lower prices.

Vu Tien Loc, Chair of the Vietnam Chamber of Commerce and Industry (VCCI), after analyzing Vietnamese and Japanese import and export items, has affirmed that Vietnam would get benefit from the Japan’s economic stimulus package.

Japan is the country which has a high demand for farm produce and consumer goods such as garments, footwear and processed food, which are all the advantageous export items of Vietnam.

“A lot of Vietnamese export items to Japan are not the advantageous products of the country, most of which cannot be made in Japan or made at very high production costs,” Loc said.

Loc also thinks that the wave of Japanese businesses making investment in Vietnam may become more obvious. Japanese investors now tend to make outward investment, set up production bases overseas which make products for export back to Japan.

However, Loc agrees that the consumption scale would determine the benefits for Japanese goods. The yen depreciation would make the imports more expensive. If the consumption scale is still big which can “offset” the goods price increases, Vietnam would benefit from the Japanese economic stimulus package.

More opportunities for garment industry

Obtaining the export turnover of $1.97 billion in 2012, equal to 6.2 percent of the Japanese imports, Vietnam’s garment industry is the second biggest exporter to Japan, just to the crude oil.

Le Tien Truong, Deputy Chair of the Vietnam Textile and Garment Group, said the export turnover to Japan in 2013 is hoped to reach $2.37 billion, up by 18 percent over 2012.

Le Quang Hung, President of Garmex Saigon, also hopes that the demand from Japan would increase as a result of the economic stimulus package.

A senior executive of the Saigon 3 Garment Company said the number of orders has increased by 10 percent in comparison with 2012, and that the figure could have been higher. However, the company had to refuse some orders because of the limited production capacity.

Saigon 3 now makes medium class kaki clothes which have the average export prices of $13-15 per product.

DNSG

Vietnam, import tariff, Japanese market, monetary policy, Japanese yen
 
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