Optimistic Export Expectations in 2016
The National Assembly of Vietnam assigned the industry and trade sector in 2016 to fetch a total of US$178 billion from exports, up 10 per cent from a year earlier, and control trade deficit at 5 per cent. This is not a very difficult target as export doors will be further widened after some bilateral and multilateral free trade agreements (FTAs) to which Vietnam is a signatory will take effect.
2015 export: Slow down to leap forward
Vietnam exports missed the estimated growth of 10 per cent in 2015. Total exports were forecast at US$162 billion in 2015, up 8.1 per cent over 2014. As many as 23 groups of exported commodities brought in over US$1 billion. Trade deficit in the year was well controlled at US$3.17 billion, or 2 per cent of exports.
Mr Tran Tuan Anh, Deputy Minister of Industry and Trade, however had a relatively positive view despite missing export turnover. “Despite failing to reach the target, these results showed the great effort of the economy in relation to major economies. For instance, China experienced a negative growth in exports while Indonesia saw a drop of 13.3 per cent in exports,” he said.
In the past year, most of Vietnam’s major exports faced difficulties on imbalanced global supply and demand. Crude oil prices continued to set new lows while some agricultural commodities and minerals shrank in both price and volume.
Manufactured and processed commodities played a key role in raising overall export turnover. This group of products climbed 16.5 per cent in exports while the group of agricultural, aquatic and forest products and the group of minerals and fuels fell by 7.6 per cent and 45.4 per cent, respectively.
The FDI sector continued to enjoy a high export growth and contributed largely to the country’s export growth. Driving exports of this sector included telephones, cameras, camcorders, and accessories.
On export markets, shipments to the United States were estimated to climb 28.5 per cent and account for 20.6 per cent of the share; exports to the European Union (EU) grew 24.2 per cent and made up 18.9 per cent of the share; exports to ASEAN added 4.5 per cent and contributed 11.4 per cent of the share; exports to Japan increased 14.9 per cent and accounted for 8.6 per cent; and shipments to China rose 14 per cent and took 10.3 per cent of the share.
Although export growth was below expectations in 2015, Vietnam achieved very positive results of international economic integration since Vietnam signed free trade agreements (FTAs) with Eurasian Economic Union (EEU) and South Korea, concluded FTA negotiations with the European Union (EU) and the Trans-Pacific Partnership (TPP).
Together with deep integration with the ASEAN Economic Community (AEC), Vietnam has FTAs with 55 economies in the world, including 17 G20 countries and all seven G7 countries. These pluses will create great momentums for the country’s exports in 2016 and the next five years as well.
2016 export: Brighter outlook
Deputy Minister Tran Tuan Anh said that criteria that the National Assembly of Vietnam assigned to the industry and trade sector (export growth up 10 per cent and trade deficit controlled at 5 per cent) in 2016 are with reach. To accomplish these tasks, the Ministry of Industry and Trade has applied measures in response to market developments from the start of the year.
He added that the sustainable development strategy will continue to be prioritised, expanded and enhanced capacity to diversify and boost exports in addition to raising added values. Moreover, reforming administrative procedures, creating more favourable to businesses, and streamlining business/investment procedures will enable them to reduce time and expenses to sharpen the competitiveness of commodities.
In 2016, the agricultural sector aims to expand its scale by 3-3.5 per cent and production value by 3.5-4 per cent. The export value of agricultural, forestry and aquatic products will climb to US$31 billion.
Shrimp export in 2016 was estimated to grow further because on tax preferences in key markets like the EU and Japan while India, Thailand and Indonesia - its main rivals - did not join TPP or not have FTAs with the EU. Exports to the US may revise on its economic recovery.
According to the Vietnam Food Association (VFA), Vietnam now has 500,000 tonnes of rice delivered to customers and 200,000 tonnes of rice delivered on commercial contracts that exporters signed for the first-quarter shipment. Major importers such as the Philippines, China, Indonesia and Malaysia will soon sign import contracts to prepare rice supply and respond to drought impacts caused by El Nino. Many contracts and low inventories are positive for Vietnam’s rice export in 2016.
Footwear export growth was expected at 15-20 per cent in 2016. The signing of Vietnam-EU FTA (EVFTA), the conclusion of Trans-Pacific Partnership (TPP), and the official enforcement of AEC are key catalysts for footwear development. When EVFTA comes into force, Vietnam will no longer receive generalised scheme of preferences (GSP). With GSP since 2014, Vietnam’s footwear exports to the EU jumped 20 per cent. EVFTA is more attractive because a majority of tariff lines is 0 per cent. Footwear exports to the EU was hoped to grow 20-30 per cent.