Maintaining trade surplus in 2021

	Five-year economic development: Enterprises are the key, private economy is the backbone
	Vietnam enjoys trade surplus of US$3 billion with Mexico, Chile, and Peru
	Import-export approaches US$500 billion, trade surplus reaches US$20 billion

FDI's export value has decreased in recent years but accounts for over 64% of the country's total export value. Photo: SamSung

Many difficulties

According to information announced on January 7by the Ministry of Industry and Trade, Vietnam maintained steady growth in import-export activities with total import-export turnover for the second consecutive year reaching more than US$500 billion. The figure in 2020 was about US$543.9 billion despite the heavy influence of the Covid-19 pandemic.

The number of items with an export turnover of US$1 billion or more has increased over the years, accounting for a large proportion of the country’s total export turnover. In 2011, there were 21 items with an export turnover of more than US$1 billion, accounting for 81% of the total export turnover; in 2016, it increased to 25 items, accounting for about 88.7%. By 2020, there were 31 items, making up 92% of the total export turnover.

Minister of Industry and Trade Tran Tuan Anh said: "Balance on merchandise trade reached a surplus in the entire period of 2016-2020, in which the trade surplus of the following year increased higher than the previous year".

In 2020, the trade surplus achieved a record of nearly US$19.1 billion. The surplus in 2020 was higher than the surplus in 2019 (US$10.87 billion), higher than the surplus in 2018 (US$6.83 billion), nine times higher than surplus in 2017 (US$2.11 billion) and nearly 11 times higher than the surplus in 2016 (US$1.78 billion).

Though the results of import-export, especially export surplus, were impressive, the Ministry of Industry and Trade pointed out many shortcomings and difficulties. The market diversification level of some agricultural and aquatic products was not high. For agricultural products, Vietnam has negotiated for the importing country to cut import duties for exported goods (through FTAs). However, the negotiation to get the recognition for quality management, food safety management as well as animal and plant quarantine has been limited. As a result, though many products have been reduced to 0% by foreign countries, some Vietnamese agricultural products are not yet allowed to be imported to some markets.

One of the outstanding limitations is that exports have been heavily dependent on foreign-invested enterprises. Although the proportion of export value of the FDI sector has decreased in recent years, it still accounts for more than 64% of total export value. This is because the production and exports of this sector depend strongly on the regional and global supply chain, so whenever a fluctuation in the supply chain occurs, Vietnam's exports will be strongly affected.

Maintain pace of export surplus

In 2021, the world will face great and unpredictable changes with many intertwined opportunities and challenges, especially trade conflicts between major economies and the Covid-19 pandemic that will not end soon. Negative impacts on the world economy are likely to last into the following years, especially for global economic growth, investment and trade.

The trend of shifting FDI industrial factories from major global production hubs (such as China) to Southeast Asian countries or back to domestic production (some multinational firms of major countries such as Japan, the US, and the EU) have changed the economic structure of Vietnam. According to the Ministry of Industry and Trade, countries like Vietnam must quickly and actively adjust industrial policies, trade policies, and investment policies to catch up with the new trends. At the same time, it is necessary to develop policies to support domestic firms in direct competition with FDI enterprises and taking advantage of FDI companies to promote the internal capacity of the economy.

In addition, the leader of the Ministry of Industry and Trade stated that the protectionism trend, the trade conflict and the pandemic have changed the structure of global supply chains. Countries have strengthened trade remedies and trade protection.

For the country's GDP growth rate to increase by 6.5% in 2021, the industry and trade sector strives to increase the index of industrial production (IIP) by about 8% compared to 2020; total export turnover increases by about 4-5% compared to 2020 and the trade balance continues to maintain trade surplus.

The key solution to develop import-export in 2021 is to recover export promotion activities and export markets after the pandemic and to consolidate and expand export markets, making the most of advantages from FTAs that Vietnam has signed to grasp market information and early warn of arising problems affecting Vietnam's exports like changes in policies of importing countries, technical barriers, and payment risks.

Speaking at the conference on implementing the tasks in 2021 of the Industry and Trade sector, Deputy Minister of Foreign Affairs Le Hoai Trung said to make good use of opportunities from the FTAs in 2021, more attention should be paid to labour-related and competitive terms in the Vietnamese market.

“Remarkably, it is necessary to continuously improve the autonomy of the economy, prepare for complex developments affecting inputs for manufacturing industries and outputs for export of goods. And find the best way to promote better the commercial counselor system to perform tasks in the new situation,” said Trung.

Discussing more closely about taking advantage of opportunities from the FTAs, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said in the future, the process of integration and implementation of the FTAs must be more effective. The Ministry of Industry and Trade must play a good coordinating role. The business community wants the Ministry of Industry and Trade to play the role of conductor in the implementation of the FTAs, said Loc.