CPD RMG Study Stitching a better future for Bangladesh
Published in Nhan Dan Online on January 06, 2018
In 2017, Vietnam’s total import-export turnover exceeded US$400 billion, reaching the highest level ever. After a long period of trade deficit, the balance of trade unexpectedly turned to a surplus, thanks to the government’s drastic reforms and enterprises’ continuous efforts.
Breakthrough policies
According to a report released at the Ministry of Industry and Trade (MoIT)’s meeting held in mid-December, Vietnam’s field of industry and trade has reached all targets set for 2017. In particular, exports were one of the highlights in 2017, as export turnover is expected to reach more than US$ 212 billion, up over 20% over the same period last year, much higher than the export turnover of over US$ 176 billion in 2016 and the highest level since 2011; meanwhile import turnover increased by approximately 21%, most of which are imported goods to serve production; additionally, Vietnam maintained a trade surplus of about over US$2 billion this year.
According to the MoIT’s analysis of export markets in 2017, overall global trade has improved as market demand has increased. In particular, some of Vietnam’s export products also had the opportunity to boost their exports due to the impact of climate change, which in turn reduced the supply in some countries, thereby increasing the demand for importing Vietnamese products, typically rice products.
In addition to making the most of opportunities to promote exports to traditional markets, many Vietnamese agricultural products have been exported to new markets in the past year.
However, the breakthrough was achieved thanks to “the push” from administrative reform. Especially, the solutions on administrative reform in the field of industry and trade have brought positive results for enterprises.
According to Truong Van Cam, Vice President and General Secretary of Vietnam Textile and Apparel Association, in 2016, when the Minister of Industry and Trade Tran Tuan Anh signed the decision to abolish Circular No. 37/2015/TT-BCT, which stipulated the content limits and testing procedures for formaldehyde and banned cleavable aromatic amines from azo dyes in textile products, as well as inspection requirements, textile companies were very excited. The abolition has helped textile businesses to save VND1.5 million for each sample test and shorten the customs clearance time from 2.4 to 3.8 days, creating opportunities for exporting textile and garment products and helping the textile and garment industry to keep its position as one of the industries with the largest export turnover.
Beside the textile and garment industry, the ministries and departments have also made efforts to remove all difficulties for businesses, despite the industry meeting many difficulties in the first months of the year. In particular, a memorandum of understanding (MoU) on rice trade between Vietnam and Bangladesh for 2017-2022 signed last May, 2017 was one of the key driving forces for export activities. Accordingly, every year, Vietnam will provide Bangladesh with one million tons of rice, depending on demand and world market prices. With the publicity of contracts on the online portal of the Ministry of Industry and Trade, the document has helped rice enterprises to acquire more trade contracts, so that the rice industry will break through and reach a higher growth rate than 2017 (24%), with the absolute figure of 5.9 to 6 million tons, an increase of 1.1 to 1.2 million tons compared to 2016.
Opportunities for 2018
Opportunities for export growth in 2018 and the coming years are relatively bright, as Vietnam’s competitive capacity is growing. Tran Thanh Hai, Deputy Director of the MoIT’s Import-Export Department, said that in the Global Competitiveness Report, the World Economic Forum (WEF)’s ranked Vietnam 55th overall, up five places from last year and 20 from five years ago. The WEF notes that Vietnam has made significant improvements in technological readiness and labour market efficiency.
Furthermore, joining Free Trade Agreements (FTAs) with commitments to reduce tariffs on Vietnamese origin also increases competitive capacity and helps Vietnamese products to expand their market share in partner markets. In the period 2018-2022, the tariff roadmap will be cut further and progressively towards 0% for many commodities, creating new opportunities to increase export turnover, boosting economic growth. In addition, the confidence of foreign investors in Vietnam’s development prospects continues to be strengthened, especially after the APEC summit and in the context of security in many countries being unstable due to terrorism.
Taking advantage of market opportunities and aiming at sustainable imports and exports, Deputy Director of the MoIT’s Import-Export Department Tran Thanh Hai said that, besides continuing to disseminate and guide the implementation of signed FTAs, it is necessary to sign FTAs that have not been signed such as the FTA between Vietnam-EU. In addition, the Ministry of Industry and Trade should renovate their trade promotion activities in the direction of not being based on the State budget, but to also encourage outside trade promotion organisations to participate, he added.
In addition, it is necessary to strengthen the use of other trade remedies such as safeguard, anti-dumping, subsidies to protect domestic goods, and to restrain imports in line with Vietnam’s context as well as international commitments. In particular, it is necessary to boost the supporting enterprises to overcome technical barriers, and meet the standards of the host country, which is an important activity for Vietnam’s export turnover to continue to grow sustainably.
In 2018, the National Assembly has targeted the domestic product (GDP) growth rate of 6.5% – 6.7%. In particular, total export turnover increased 7% – 8%; and the trade deficit was equal to 3% of total export turnover.
