Exports set for a challenging run into year’s end

Looking at the export situation in the first half of this year, Duong Duy Hung, head of the Planning Department under the Ministry of Industry and Trade, pointed to positive signs behind the domestic sector’s higher growth than the foreign direct investment (FDI) sector.

Substantial external pressures hinder growth

Mr Hung said that from now to the end of the year exports will continue to encounter numerous obstacles and challenges as countries have stepped up the application of safeguard measures and stringent regulations on food hygiene and safety and environmental protection criteria.

The EU’s issuance of a yellow card warning on Vietnam’s seafood, the US’ anti-dumping duties on tra fish, and issuance of new regulations on certificates of origin are a typical case in point. There is also the case of some countries using smear campaigns to cast Vietnamese export products in a bad light, such as with tra fish in the EU and cashew nuts in India.

Monthly exports reached US$19.5 billion during the first half of 2018. To achieve the set target for the year, the second half export value is required to rise to US$20.45 billion, posing a great challenge to Vietnam, especially in the context of unpredictable fluctuations in the world market, said Mr Hung.

Vietnam Textile and Apparel Association (VITAS) Vice President and Secretary General Truong Van Cam said the garment and textile sector is already facing a lot of challenges from both inside and outside the industry. One challenge from within the industry is that Vietnam still has to imports a huge amount of fibre while its annual fibre output hit more than 1.4 million tons of fibre. In addition, more than 80% of imported fabric is used to produce garments for export.

Most of external challenges presented by free trade agreements (FTAs), are requirements for certificates of origin, which is problematic when Vietnamese garment manufacturers have to import 80% of their materials, Cam noted.

In other industries, seafood has also encountered certain difficulties in its processing and export. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), factors which have had a negative impact on seafood exports this year include the US inspection of tra fish and their levying of anti-dumping duties on shrimp and tra fish, and the EC’s issuance of a “yellow card” warning on seafood. Meanwhile, some internal problems are still being resolved, such as material shortages, residual antibiotics, and production costs.

Truong Dinh Hoe, VASEP Vice President cum Secretary General , said if appropriate solutions to these problems are not found, all efforts to implement the bilateral and multilateral FTAs, build reputation and quality of products, promote trade, develop added value products and improve the business environment will be in vain.

Tran Thanh Hai, Deputy Head of the Import-Export Department under the Ministry of Industry and Trade, said there have not been necessary improvements to the food hygiene and safety of agricultural products and seafood, resulting in rejected export products such as seafood, pepper and rice, which has adversely affected the image and brand name of Vietnamese goods.

Regarding its market development work, import tariffs have been cut as a result of negotiating, signing and implementing bilateral and multilateral FTAs, however, negotiations on mutual recognition of quality management system and food hygiene and safety are limited. Consequently, many agricultural and aquatic products with highly advantageous import duties of zero have been unable to access overseas markets as they fail to meet the required standards.

Towards advantageous products

In order to boost exports in later months of the year, Phan Van Chinh, Head of the MOIT’s Import-Export Department, proposed three key tasks of developing products, ensuring supplies for export, developing markets and organizing exports for efficient performance.

At a time when ever more jobs are being handed over to more sophisticated robotic machinery, it is increasingly necessary to improve the quality of workforce, said Vu Duc Giang, Vitas President, adding that in the robot era, there will be no place for low cost labour force but now is time for smart labour.

Additionally, businesses need to restructure their production based on domestic material sources, and develop their own design so as to take full advantage of FTAs. It is imperative for enterprises to establish cooperative networks, effectively implement projects and adopt advanced technologies in order to meet the strict requirements of demanding markets.

According to Le Quoc Phuong, former director of the MOIT’s Industry and Trade Information Centre, industrial products have been the dominant export products over recent years. With its products making up roughly 80% of the country’s total export value, the processing and manufacturing sector represent a dramatic shift to industry. Following this trend, the current export structure is likely to remain stable from now to the end of the year, he said.