More exports, more domestic value added
The garment and textile industry topped other sectors with $14.02 billion in export revenues, of which $6.5 billion were locally added value, up $1 billion year on year, said Le Tien Truong, deputy chairman of the Vietnam Textile and Apparel Association (VITAS).
The proportion of domestically made parts of the industry edged up 2 percent year on year said Truong, who is also the deputy general director of the Vietnam National Textile and Garment Group (Vinatex).
Good market research and forecast, effective operations, and good relationships and confidence building with international customers were the keys for success of domestic firms in 2011, he added.
Footwear exports, though just the third runner-up after crude oil, raked in $6.52 billion 2011, of which domestic added values made up 55 percent, up 5 percent against the previous year, according to the Vietnam Leather and Footwear Association (LEFASO).
The seafood industry followed with $6 billion in export revenues, up $300 million from the target, said Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Processors and Exporters (VASEP).
Rice exports came next with over 7 million tons of rice exported and the highest-ever turnover of over $3.6 billion in 2011, in the process becoming extremely important in the context of constrained global food supply, said the Vietnam Food Association (VFA).
It also brought a profit of 50-80 percent to Vietnamese rice farmers, VFA added.
The next runner-up was Vietnamese wood-based producers, which raked in $3.9 billion in 2011.
Tough times ahead
However, the $15 billion target for the garment and textile industry this year is a “daunting task” given the current situation in Vietnam’s biggest exports markets including the US, the EU and Japan, Truong said.
In addition, the rise of electricity, water and petroleum prices, the requirement to adjust minimum salaries for laborers, and high lending costs will continue to challenge local exporters.
So, they must be determined in finding appropriate market segments and niches for specific products and build up a relationship with big suppliers to become their strategic partners, Truong said.
The footwear industry shared the same concern regarding shrinking foreign markets, especially the EU, said Diep Thanh Kiet, LEFASO’s deputy chairman.
Therefore, with a $7 billion target in exports in 2012, LEFASO has recommended that businesses avoid receiving low value contracts to avoid being sued for dumping in Vietnam’s main importing markets.
"If local footwear exporters could utilize the market’s niches, making differentiated products with higher value, I believe the exporters will overcome the difficulties in 2012," Kiet said.
There are still many opportunities for businesses to achieve the export seafood export target of $6.3-6.5 billion that the Ministry of Agriculture and Rural Development set for 2012, said Le Van Quang, general director of Minh Phu Seafood Corp, cum vice president of VASEP.
"If businesses try to maintain the quantity of export products to traditional markets like the EU, US, and Japan, and open new potential markets, such as China and Russia, it will not be a difficult goal to achieve," Quang said.
According to Quang, the seafood industry of Vietnam is at a relatively high level despite severe disadvantages in costs, so it can still be very competitive regionally.
Rice exports are also in the same position.
According to the VFA, Vietnam's rice exports currently face fiercer competition from cheap rice originating in India and Pakistan.
To increase the competitiveness of Vietnamese rice, VFA adjusted the floor price of export rice to $500 a ton for 5 percent broken rice on December 21, 2011, some $100 lower than that one month earlier.
Earlier, VFA had announced that the sector will focus on producing high-quality rice, instead of export quantity, to improve the export values. Therefore, the annual rice export volumes in the coming years will be maintained at 6-7 million tons.
The export of Vietnamese wood-based products to the EU this year will face more hurdles, with rising risk from anti-dumping and anti-subsidy lawsuits lurking in the market. Both the European market and the US have hinted at such actions for the last two years, said Tran Quoc Manh, deputy chairman of the Ho Chi Minh City Handicraft and Wood Industry Association (HAWA).
However, according to Manh, the industry still has potential if it can penetrate and gain a foothold in currently unexploited markets such as Korea, Japan and China.
To reduce dependence on imported wood materials, enterprises should turn into local supplies. Another encouraging trend is that local producers have increased the local content of their products, mainly mangrove wood.
"If the government is well-directed on the issue of growing wood for logging, the dependence on imported raw materials will be lower," he added.
FTA, trade talks to streamline export
According to economist Pham Chi Lan, 2012 will witness the acceleration of talks on free trade agreements (FTA) between Vietnam and other countries, with lower tax rates, more incentives, and increased protectionism as the result.
The impact on trade will be strong, with commitments with ASEAN, China, and Japan, which Vietnam is pushing to be finalize by 2015.
Within the context that the world economy will remain problematic in 2012, particularly the mainstream markets such as the EU and US, Vietnamese businesses should take advantage of incentives from the agreements, especially bilateral trade agreements, to review their export strategies.
Currently, South Korea is an important market with available incentives that local firms have made good use of.
In 2011, export and import turnovers to this market increased 70 percent.
South Korea also pledged to expand its FTA with the Vietnam.
Similarly, Japan is also a very good market for Vietnamese goods.
In addition, Vietnam will launch FTA negotiations with the customs departments in Russia, Belarus, and Kazakhstan in mid-2012, paving the way for the introduction Vietnamese goods to those markets.
| The country has set the export target for 2012 at $108.8 billion, up 13 percent over 2011, said Nguyen Thanh Bien, Deputy Minister of Industry and Trade. With a forecast of $121.8 billion in import revenues, up 15 percent year on year, in 2012, the trade deficit next year will be about $13 billion, equivalent to about 12 percent of total exports. The Prime Minister has issued decisions approving the import and export of strategic commodities from 2011 to 2020. Accordingly, by 2020, it is hoped that Vietnam’s export revenues will triple those of 2010, ending the chronic trade deficit that has lasted for over two decades. Regarding development orientation, the processing industry is the group that is gaining the most attention, accounting for 62.9 percent of total exports. |