Despite uncertainties, Vietnam will have a trade surplus of about US$2 billion

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Import and export goods at Hai Phong port. Photo: N.Linh

The Ministry of Industry and Trade has just reported on the export situation and solutions to promote exports, in which the Ministry has given an analysis of the risks and challenges that Vietnam's import and export sector is facing.

Specifically, the global trade in 2021 is still bleak and difficult to predict, depending on the Covid-19 pandemic and the implementation of Covid-19 vaccination programmes. In addition, the US-China trade war is still tense, unpredictable developments will continue to have an impact on Vietnam's import and export activities.

Protectionism has reappeared and been shown more clearly since 2018. Specifically, the number of trade remedy cases against Vietnam's exports is increasing.

The representative of the Ministry of Industry and Trade said that the awareness of consumers as well as governments of other countries on consumer health protection and environmental protection is increasing, leading to the application of increasingly strict standards for food safety and environmental protection.

The typical example is that the European Commission (EC) is tightening the level of pesticide residues on imported agricultural products, applying regulations on illegal fishing (IUU) and using legal raw materials (FLEGT); many countries have issued regulations on traceability.

In terms of prices, the sharp increase in commodity prices makes imports tend to increase. In early May 2021, the iron ore futures price reached a record of US$233.1 per ton. This price is significantly higher than the average level of US$160 per ton at the beginning of the year and as twice the level in the same period last year.

In the agricultural market, prices of corn, soybeans and wheat all increased due to strong demand. The price of raw materials for animal feed in the world has increased by 20-30% compared to the same period last year.

A notable factor mentioned by the Ministry of Industry and Trade is the high increase in international shipping rates by sea, which has lasted from the fourth quarter of 2020 until now. Specifically, Asian routes increased 3-4 times, African routes increased 3-4 times, European routes increased 5-6 times, sometimes 7-8 times. Meanwhile, there is a shortage of containers.

In addition to difficulties and challenges, the Ministry of Industry and Trade said that the fact that countries are strongly implementing vaccination plans along with the easing of social distancing measures has increased demand for Vietnamese textile, footwear, leather products, and furniture. Along with that, some economies continue to deploy stimulus packages, through direct support to people, thereby promoting consumption of goods, including those imported from Vietnam.

On the basis of analysis and assessment of favorable opportunities and difficulties and challenges in 2021, the Ministry of Industry and Trade assessed that in case the impact factors are at the current level or become more favorable, the total export turnover the whole year can reach about US$308 billion, up by 9% compared to 2020.

Regarding imports, based on the progress in the first months of the year, the import turnover is likely to reach about US$306 billion, up by 16.5% compared to 2020. The trade surplus balance is about US$2 billion.

In the future, to promote exports, the Ministry of Industry and Trade will work with other ministries, branches and localities to implement programs and activities to support businesses, especially small and medium enterprises, to exploit and take advantage of preferential effects from Free Trade Agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-EU FTA (EVFTA), etc.

Regarding sustainable exports in the long-term, Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), analyzed that sustainable exports are reflected in factors such as: export scale, export growth rate and stability. The most important thing is to export but not trade the problems of labor and environment. Exports must be associated with macroeconomic stability, maintaining a stable trade balance.

"The Ministry of Industry and Trade is developing the Commodity Import-Export Strategy for the 2021-2030 period, which will be submitted to the Government for consideration and promulgation in the future. The views and orientations on sustainable export will be clearly expressed in this document," said Mr. Tran Thanh Hai.