Vietnam’s exports set to gain momentum from FTAs
As an array of new-generation Free Trade Agreements (FTA) start to take effect in early this year, Vietnam’s export commodities can enjoy competitive advantages as a result of the removal of tariff barriers.
Last year, the country’s export turnover surged by 8 per cent to US$264 billion in comparison with 2018’s figure, enjoying an impressive trade surplus of US$10 billion and two-way trade of over VND 500 billion in the process.
Processed industrial goods made an important contribution to the export results with an estimated turnover of more than US$222 billion, accounting for approximately 84.3 per cent of the nation’s total export turnover.
Among the 34 major industrial processing commodity groups, there are 26 commodity categories that enjoy export turnover higher than US$1 billion, eight commodity groups with more than US$5 billion, and three commodity groups with over US$30 billion.
Nguyen Cam Trang, Deputy Director of the Import and Export Department under the Ministry of Industry and Trade (MoIT), attributed the impressive export figures to increasingly simplified import-export procedures.
This comes as a result of the MoIT moving to put more public administrative services online and connecting with the National Single Window in a bid to further reduce costs and save time for businesses.
Despite these positives, many economists have pointed to numerous factors that have hindered the country’s export growth, partially due to complicated developments in the trade war between global powers and difficulties when exporting goods to the Chinese market.
Assoc. Prof. Dr. Pham Tat Thang, a senior researcher from the Vietnam Trade Research Institute, said with the trade war between the United States and China showing no signs of ending, it could pose a number of unpredictable risks to the trade activities of several nations, including Vietnam.
Thang therefore advised Vietnamese firms to remain alert and try to reap the benefits from the ongoing trade war between the major world powers. Moreover, domestic enterprises should pay close attention to issues relating to origin fraud for goods, in addition to making investments in high value-added products in an attempt to create genuinely global brands.
Furthermore, many import and export barriers are poised to be abolished in the near future, according to Assoc. Pham Tat Thang.
In order to achieve a GDP growth rate of 6.8 per cent over the course of the year, the Industry and Trade sector is aiming to fulfill a target of 7 per cent to 8 per cent growth in export turnover in comparison to last year with the trade deficit rate falling below 2 per cent.
Several businesses have stated that new-generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the EU-Vietnam Free Trade Agreement (EVFTA) are considered to be "passports" for Vietnamese firms who are seeking to make further inroads into the world’s demanding markets.
In order to take full advantage of the benefits presented by these FTAs, local enterprises must make radical reforms and change their way of thinking so as to improve their competitiveness, according to business representatives.
Than Duc Viet, the General Director of May 10 Corporation said to penetrate the EU market domestic businesses must focus on improving the quality of their workforce whilst simultaneously creating the best possible working environment for their employees.
Nguyen Minh Ke, Director of Song Hong Aluminum Joint Stock Company, said that in order to meet the non-economic standards set out by the EU, there should be greater efforts put in by enterprises, with EU businesses paying heed to both the working conditions and worker salaries.
When the EVFTA comes into force, Vietnamese businesses will face stiff competition from foreign enterprises due to their weak competitiveness and limitations that they face in human resources and investment in advanced technologies, he noted.
According to Ngo Chung Khanh, Deputy Director of the MoIT’s Multilateral Trade Policy Department, after the EVFTA was signed on June 30, 2019, both sides are speeding up the process of ratifying the agreement as soon as possible.
The MoIT has also prepared documents to submit to the President for ratification of EVFTA, while drafting an action plan for the implementation of this agreement, said the representative of the Multilateral Trade Policy Department. VOV