New-generation FTAs to provide fresh impetus for industries amid COVID-19
Despite several industries being hard hit by the negative impact of COVID-19 epidemic, the agricultural sector is anticipated to enjoy a rebound thanks to export opportunities brought about by new-generation free trade agreements (FTAs).
This prediction comes from the National Center for Socio-Economic Information and Forecasting (NCIF) who have studied the growth prospects of different sectors ahead during the remaining months of the year, factoring in the effects of a second wave of the COVID-19 pandemic.
According to the NCIF, Vietnam's garment and footwear industry can be considered to be one of the hardest hit industries by the COVID-19 epidemic due to the majority of orders to major markets such as China, the United States, and the EU being cancelled or delayed.
Textile and garment exports during the first seven months of the year suffered a decline of over 12% to US$16.18 billion, while footwear exports were also hit by a drop of 8% to US$9.53 billion against the same period from last year.
Most notably, textile and apparel exports to major Vietnamese markets, including the US, Japan, and the EU, witnessed a dramatic drop.
Coupled with a sharp decline occurring in imports of raw materials for these two industries, local firms witnessed a sharp decline in both their revenue and in terms of their worker numbers.
Overall, the garment and textile industry was hit by a 21.22% drop in terms of labourers and a 38.43% fall in turnover, whilst the leather sector declined by 28.39% in terms of labourers and 29.23% in turnover.
The NCIF notes that the textile and footwear sector is among the most labour-intensive industries, with workers in these sectors being laid off, causing the unemployment rate to increase at a faster rate due to the impact of the epidemic.
Furthermore, the NCIF predicts that the recovery of the garment, textile and footwear industries will be largely dependent on the epidemic situation globally. In the event that the COVID-19 is not brought under control in the near future, local businesses will likely face ever-increasing risks of dissolution and bankruptcy due to a plunge in export orders.
Elsewhere, the agriculture industry is also one of the sectors to be affected by the epidemic, according to the NCIF.
Data compiled by the General Statistics Office (GSO) indicates that growth occurring in the agro-forestry-fisheries sector during the first half of the year reached only 1.19%, whilst the number of labourers and revenue made by local firms endured a drop of 26.4% and 36.8%, respectively.
According to the NCIF's forecasts, there remains a positive outlook for the sector moving forward as agricultural products remain essential items, especially during the epidemic period.
Moreover, new generation FTAs such as the European Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will contribute to expanding export markets for Vietnamese farm produce.
The NCIF has therefore put forward a number of crucial solutions that can be implementing moving forward, including removing hurdles for the sector, applying scientific and technological achievements in production activities in an effort to improve productivity, whilst also enhancing quality control to ensure high standards of food safety and hygiene are maintained.
With the COVID-19 epidemic significantly hitting Vietnamese exports to major markets such as China, the US, and the EU, it has also disrupted global supply chains in many industries, including the automobile and motorcycle manufacturing sector.
The export of means of transport and parts during the first seven-month period saw a drop of 12.3% to US$4.36 billion, according to the GSO.
The first half of the year saw the Industrial Production Index of the automobile manufacturing and assembly industry decrease by 16.4% in comparison to the same period last year.
In addition, the volume of domestic automobiles suffered a decline of 26.6% to 88,100 units, while motorcycle production also fell by 6.4% to more than 1.3 million units.
Indeed, the inventory index increased by nearly 130%, resulting in the sector facing unprecedented challenges due to the impact of the epidemic.
Moving forward, the recovery of the automobile and motorcycle assembly sector is still largely reliant on what will occur in relation to the epidemic situation. If the COVID-19 continues to progress in a complicated manner, a number of automobile assemblers are likely to be forced to partially suspend their production, while other business plans will also be delayed. VOV
Vietnam must hasten the process of issuing legal documents and institutional reform to implement free trade agreements (FTAs) and take advantage of these trade deals to boost exports, officials have said.
Up to 99% of tariff lines with partner countries are poised to be eliminated over the course of the 10-year roadmap set out in new-generation trade pacts