What are the challenges for exports by the end of the year?

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Export of agriculture, forestry and fishery products will find ithard to reach the target this year. Photo: N. Thanh

Many export products with values in the tens of billion USD in Vietnam are finding it difficult to meet the targets. However, for the whole of 2019, it is forecast that Vietnam will still have a trade surplus with an export growth rate of 7.9%.

Billion dollar industries face difficulties reaching the targets

Regarding economic growth, especially import-export activities in the last months of the year, the Ministry of Industry and Trade said: “In the context of a complicated international economic situation, Vietnam's economy continues to face many difficulties and challenges. Vietnam's export of agricultural and aquatic products to China has slowed down due to regulations on traceability and quality control of goods, while China's import demand is declining. There is also the risk of imposing taxes and technical barriers as trade surplus with the US increases.”

According to the Ministry of Industry and Trade, the US-China trade war will affect the import and export of goods,such as evading the origin of goods of some countries into Vietnam; changing supply chain and changing capital flows. The fourth industrial revolutionforces countries with economic development strategies based on exports and foreign investment capital like Vietnam tomake adjustments.

The overall difficulties mentioned by the Ministry of Industry and Trade are easy to recognize. However, from the perspective of each specific commodity such as the textile industry, it is clear that the difficulties have a direct impact on the export turnover of goods.

According to the Vietnam National Textile and Garment Group (Vinatex), the political and economic situation aroundthe world is unstable, especially the US-China trade war has caused bad effects onVietnam’s textile and garment enterprises, including Vinatex.

By September, most of the units did not have enough orders forthe end of the year. "Notably, most customers are not interested in long-term orders, lowering the prices compared to 2018, resulting in declines in profits. Orders from China tend to switch to other countries with preferential tax rates such as Bangladesh and Cambodia,”Vinatexsaid.

For the whole year, Vinatex forecasts that textile and apparel export will reach about US$39.6 billion, increasing by 9.8% compared to 2018. That means textile and apparel exports will not meet the target of US$40 billion.

Similar to textiles, this year, the group of agricultural, forestry and fishery products are forecast to struggle to reach the target. In the first nine months, prices of most agricultural products decreased by 10-15%; the total export turnover reached US$30.02 billion, an increase of only 2.7% compared to the same period in 2018. Based on these results, the total export value target of US$43 billion for the whole year is impossible.

At the thirdquarter press conference of the Ministry of Agriculture and Rural Development, answering questions about the possibility of exporting agricultural, forestry and fishery products to reach the target of US$43 billion, Deputy Minister of Agriculture and Rural Development PhungDuc Tien said that the whole industry will make efforts and strive to achieve the goals.

Trade surplus for the 4th consecutive year

Despite difficulties, according to the Ministry of Industry and Trade, in the last months of the year, Vietnam's export of goods is forecast to continue to maintain growth momentum with the main motivation being traditional industries such as textiles, footwear and woodenproducts.

Regarding goods exports, the Government's report on the socio-economic situation in 2019 and the socio-economic development plan in 2020 presented by Prime Minister Nguyen Xuan Phuc at the opening of the 8th session of the 14th National Assembly stated: “In 2019, in the context of declining global trade, exports still increased by 7.9%. Exports of the domestic economic sector increased sharply and Vietnam continued to achieve a trade surplus for the 4th consecutive year.”

According to economist Pham Tat Thang: “Thanks to the advantages of Vietnam's key export items, they are essential commodities for consumption, though it is more or less affected by the US-China trade war, this year Vietnam will continue to achieve a trade surplus.However, Vietnam's trade surplus is difficult to sustain. Vietnam is a market attracting investment, so the import of machinery and equipment is still high. The problem is how to avoid investment traps when foreign investors transfer old technology or take advantage of Vietnamese goods' origin."

In the future, the Ministry of Industry and Trade will focus on taking advantage of opportunities for Vietnam's exports, controlling imports into Vietnam and dealing with tax evasion and origin fraudin import and export activities with the US, China and other markets.

In addition, the ministry also focuses on handling issues related to preparing production and export promotion capacity to promote growth. Specifically, developing a plan to organize production, support domestic enterprises to improve production capacity, to anticipate and participate in the supply chain of foreign enterprises moving away from China, improve their competitiveness.

Giving solutions to promote investment to expand production and export scale, to avoid overproduction, easy to fall into passive situation when the US and China achieve an agreement.