Exports going up from within

Vietnam's exports grew rapidly in size and speed. Photo: H.P.

Competitive capacity has not yet improved

Viet Nam's export was from over US$ 5 billion in 1995, after 20 years, has risen to a new level. Exports in 2016 reached to nearly $US 177 billion, an increase of 9% over 2015 and 32 times over 1995. This is an encouraging result, according to Mr. Tran Quoc Khanh, Deputy Minister of Industry and Trade, in the context of world economic meeting lots of difficulties, the demand of importing countries decreased sharply, the export of regional countries in low growth, even being negative such as China, Singapore, and India.

According to the data released by the World Trade Organization (WTO) on March 14, global exports turnover in 2016 reached to $US 14,806 billion, dropped 2.6% from 2015. Thus, even having to face many difficulties of the export market, the decrease of some commodities’ export price, the increase of barriers to Vietnamese goods, but the export of Vietnam continues to grow both in terms of scale and speed.

Besides the growth in size and speed, the structure of export groups continues to be shifted in line with the roadmap of implementing the objectives of the Commodity export strategy in the period 2011-2020 with an orientation to 2030. Processing industry accounts for the highest proportion (about 80.3%), followed by agricultural products, seafood (about 12.6%) and fuel and minerals (about 2%).

Perhaps this is the brightest point of the import - export picture was first published by the Ministry of Industry and Trade and evaluated for the first time after many years of Vietnam's participation in export-import activities. However, behind these figures, Vietnam Exports Report 2016 published by the Ministry of Industry and Trade having issues that have been existing for many years and recognized by the administrative authorities as well as businesses. That need to be overcome to promote sustainable export growth in the direction of increasing value added for Vietnam products and at the same time create Vietnamese brand in the international arena.

Accordingly, the proportion of export of processed products started to increase, but there is still the situation of exporting raw materials in minerals and some agricultural products, or export in form of processing and being dependent a lot on imported raw materials. The quality of some export agricultural products is still uneven, monotonous in the category. Competitiveness has not improved much, the added value of products is still not high which lead to unstable export growth.

One of the reasons for this situation is lots agricultural products and seafood are produced by small, scattered households, therefore it is difficult to control the quality of inputs and outputs of the production activities. The agricultural, fishery and mineral products processing industries have not been focused on investing and developing to meet the requirements of the world market, focused on growing in width instead of depth. On the other hand, the supporting industry is still underdeveloped, therefore products could not be produced enough in terms of quality and scale to be able to participate in the supply chain of products and components of export enterprises.

Internal force - the core element

These shortcomings will have a great impact on Vietnam's exports in the short term (in 2017) and in the long turn. Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department, the MOIT, said that demand of other countries is declining, and the supply is increasing, especially in some fields such as iron and steel, cement, textiles and garment, and agriculture. Meanwhile, along with the extensive integration, the continuous fluctuation of import markets, especially the increase of technical barriers to protect domestic production of importing countries will be a huge obstacle for Vietnamese enterprises. In fact, in 2016, there were 10 cases of foreign trade remedies for Vietnamese exports, including 5 anti-dumping cases, 3 cases of tax evasion and 2 anti-subsidy cases. In addition, some markets such as the US, Australia, Japan, Korea are continuously threatening by issuing banning on the import of Vietnamese goods due to violations of food safety and hygiene.

Identifying the inherent problems will be a challenge for export activities in the coming time, Mr. Hai said that the core solution for export growth is to have good internal resources for exports, that is the capacity of enterprises. "At present, the increase in our export scale is good but we can not rely on size but in value. In the major export sectors such as telephones, textiles, footwear with huge imported raw materials, the proportion in domestic value increase is not large, including cars as well. Therefore, enterprises have to innovate in administration and technology to catch up with other countries", Mr. Hai said.

In addition, the development of the market, exploiting the optimal benefits from Free trade agreements is mainly in the trade promotion phase. However, the State can only support and orient the work of enterprises is to learn and develop their own strategy to develop their own brands.

Sharing about this issue, a lot of enterprises said that the development of how the promotion plan is known as enterprises’, but the problem of direction should be consistent by the authorities. Mr. Vu Duc Giang, Chairman of the Vietnam Textile and Garment Association, proposed that the vision of trade promotion should be in long-term, focusing on trade promotion, brand building, tissue creation. Enterprises do not need the State for money providing but they need a ventilation environment, enables businesses to develop. Policymakers should place themselves in the place of enterprises’ to build the mechanism. When developing the mechanism should consult associations/industries. If we still follow non-consulting thinking, then the mechanism and policies when issued will not be suitable and adaptable", Mr. Giang said.