Ho Chi Minh City: Difficult to keep the growth momentum of import and export

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Raw materials imported through Ho Chi Minh City port. Photo: Thu Hoa

Many export commodity groups fell deeply

After a sharp decline in August 2021, the export of goods in September of Ho Chi Minh City’s enterprises at border gates across the country continued to decrease, reaching more than US$2.37 billion, down 5.7% compared to the previous month.

Notably, while enterprises in the state-owned and foreign-invested economic sector had a decrease in export turnover, enterprises in the non-state economic sector gained better export results, reaching US$816.3 million, up 13.7%. Generally, in the first nine months of 2021, the city's export turnover of goods through border gates across the country reached more than US$31.5 billion, down 3.4% over the same period last year. Exports through Ho Chi Minh City border gates alone reached over US$28.58 billion, down 4.3% over the same period last year.

In the structure of the group of goods exported through the city port, many key export groups decreased sharply. Accounting for 70% of Ho Chi Minh City's total export turnover, industrial products have an export value of over US$19.2 billion, down 13.9% over the same period.

In which, notably, the group of computers, electronic products and components with export value reached over US$11.38 billion, down 12.7%; textile, garment with export value reached over US$2.49 billion, down 25.7%; footwear with export value reached US$1.29 billion, down 20.1% over the same period in 2020.

While agricultural products with export value reached over US$2.88 billion, up 8.5%; the group of forest products had an export value of US$503.5 million, up 20.6% over the same period, seafood products had a decrease of 32.2% in export value, reaching only US$574.8 million are unpredictable developments for export goods of enterprises in Ho Chi Minh City.

Although export turnover is on the decline, Ho Chi Minh City still maintains its key export markets. Particularly, China is the largest export market with export turnover of over US$6.65 billion. However, this market with export turnover accounting for 23.3% of the city's export proportion decreased to nearly 16% year on year. Followed by the US market with over US$4.63 billion, down 7.4% over the same period, accounting for 16.2% of the export proportion.

It is worth noting that amid the implementation of social distancing in Ho Chi Minh City and the southern provinces to prevent the Covid-19 pandemic, import and export goods through Ho Chi Minh City border gates decreased deeply, especially imported goods. Analysis by the Ho Chi Minh City Customs Department shows that the total import-export turnover of goods in the first 6 months of 2021 reached US$70.6 billion, a sharp increase of 28.1% over the same period in 2020. Budget revenue in 6 months reached more than VND62,300 billion, reaching 58% of the ordinance estimate and a sharp increase of 29% over the same period in 2020.

However, in the third quarter of 2021, import and export turnover collapsed sharply compared to the second quarter, with a decrease of nearly US$10 billion, leading to a decrease in budget revenue during this time by about VND9,800 billion. Especially, starting from August 2021, both export turnover and import turnover of goods through Ho Chi Minh City border gates began to decrease deeply which hinder Ho Chi Minh city to obtain this year’s set export and import target especially amid the present difficult conditions.

Recover in the 4th quarter

The declines in export goods are resulted from the fact that many businesses halted production to prevent the pandemic, the import volume of enterprises in September decreased sharply, reaching only US$4.13 billion, down 8% compared to the previous month.

However, in the first 9 month, this number is only down by more than 4%. Positively, the group of raw materials and materials for production of enterprises maintained a good growth rate, reaching US$12.81 billion, up 25.7% year on year; machinery, equipment and spare parts reached over US$20.6 billion, up 22.5%.

According to the analysis of the People's Committee of Ho Chi Minh City, due to the decrease in production and consumption of goods, the inventory level of enterprises also skyrocketed. The inventory index of the processing and manufacturing industry in September 2021 was estimated to increase by 14.9% over the same period last year, of which a number of industries had higher inventories than the general increase of the whole industry such as: leather and related products, print, copy records of all kinds, other means of transport, chemicals and chemical products, electrical equipment production increased by 462.7%, 397.1%, 85.4%, 79.7% and 54.6%, respectively. This situation accumulates more obstacles for businesses.

To support businesses to restore production, with a series of supporting measures such as giving priority to workers in essential industries; removing the "sub-license" for the circulation of goods between localities; facilitating the import of equipment and experts with "green cards" to work.

The People's Committee of Ho Chi Minh City has just proposed to the Government and the Ministry of Finance to allow the delay of paying Value Added Tax on raw materials and imported goods for 3 months; refund of export value-added tax to enterprises 1 month after enterprises complete tax refund procedures; apply the 30 day tax grace period excluding late payment 0.03%/day from the date of customs clearance, provided that there is a guarantee from a commercial bank, regardless of whether domestic enterprises or foreign-invested capital ones with imported goods are raw materials and supplies for the production of goods for domestic consumption.

In the last months of the year, Ho Chi Minh City focuses on promoting import and export activities of goods and services. The city also develops the basic agricultural products of the city to ensure both domestic consumption and export; support enterprises to use trade remedies; promote export diversification on the basis of proactive research, timely grasp the market, the ability to meet and access important FTAs to take advantage of the recovery of commodity exports in the last months of the year. Ho Chi Minh City is making great efforts to achieve the set target of over US$49 billion by year-end.