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|Export figures underpin strong 2019 for Vietnam - illustration photo|
Minister of Industry and Trade Tran Tuan Anh reported at the annual review conference in Hanoi last week that Vietnam’s foreign trade for the first time reached over $500 billion in 2019, up 7.6 on-year, with a record trade surplus of $9.94 billion.
Under that, the total export turnover is estimated at $263.45 billion, up 8.1 per cent on-year, exceeding the targets set by National Assembly and the government. Meanwhile import has been well controlled at $253.5 billion. It is the fourth year in a row that Vietnam has recorded a trade surplus.
The recent efforts of the Ministry of Industry and Trade (MoIT) to negotiate and open markets through free trade agreements have helped enterprises reach positive results. Exports to the ASEAN hit $23.4 billion, up 2 per cent on-year, while those to Japan reached $18.6 billion and South Korea $18.4 billion, up 7.6 and 10 per cent, respectively.
The number of commodities joining the $1 billion export club increased from 20 in 2010 to 31 in 2019.
Prime Minister Nguyen Xuan Phuc applauded the achievements, stating, “In the context of the global downturn, even larger countries being unable to reach a growth high. We recognise objectively the comprehensive achievement of 2019 as a direct and great contribution across the whole of industry and trade.”
“The main driving force for economic growth is still the industrial sector,” the PM added. “This is especially true for processing and manufacturing and trade, reflected in the high consumption demand of the economy.”
In comparison with other countries in the region, Thailand witnessed 4 per cent of export growth, while Malaysia and Indonesia were estimated to see an export growth reduction in 2019 by 1.8 and 5.7 per cent, respectively.
Along with a bright spot in import and export activities, the production index of the whole industry is estimated to increase by 9.1 per cent, exceeding the set target of 9 per cent.
The highlight is that the manufacturing and processing industry maintained growth momentum, up 10.5 per cent on-year, creating solid motivation to achieve the overall growth plan of the whole industry.
The positive contribution to industry growth includes the part played by major projects in operation, including the Formosa Ha Tinh steel complex working at full capacity through two blast furnaces and with expected output of 6.7 million tonnes per year; and the VinFast automobile factory, which was inaugurated and officially put into operation in June, three months earlier than initially planned.
The year has also seen completion and official operation of the Vinh Tan 2 solar power plant, with expected annual supply to the national electricity system of about 68.4 million kilowatt hours.
As the leading auto manufacture, assembly, and distribution company, Truong Hai Auto Corporation, known for THACO, earned $14.5 million from exports of components and spare parts this year. “In 2020 we seek to export 1,026 cars of all types to foreign countries,” said THACO chairman Tran Ba Duong.
The group plans to expand reach further into Southeast Asian nations such as the Philippines, in an attempt to hit $21 million in exports in the upcoming year.
However, the year to come remains challenging due to the ongoing trade dispute between the United States and China, as well as trade fraud and global trade estimated to grow slowly.
In 2020, Vietnam has set a target that the country’s total import-export turnover will increase by 7-8 per cent on-year.
Ten significant events in industry and trade in 2019
- Vietnam’s total import-export turnover is again flying high, exceeding the $500 billion threshold. The impressive performance reflects the continuous efforts of the Vietnamese government, along with relevant ministries and localities, amid global trade tensions and lingering recession worries;
- Vietnam has been making spectacular strides in its international integration thanks to free trade agreements. The country is showing its strong commitment to keep an open, highly-integrated economy. Within the first year of enforcement of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the deal has ushered in an outlook for Vietnam to boost exports to a double-digit figure in various sectors and types of goods, particularly in Vietnam’s export strengths such as seafood, textiles, and machinery equipment, among others;
- Vietnamese regulators are ramping up their efforts to mitigate the phenomenon of trade fraud through labelling of the origin of goods and stabilise the market. Local authorities emphasised they have instructed provincial and municipal departments to step up inspection and verification of certificates of origin, a document that accompanies all international shipments. In 2019, the prime minister issued Decision No.824/QD-TTg approving a project which is part of the “Strengthening State Management over the Circumvention of Trade Remedies, and Fraudulent Acts of Origin” scheme;
- The Ministry of Industry and Trade is the first to connect with the National Public Service Portal;
- Vietnam has become one of the most promising markets in Southeast Asia thanks to breakthroughs in the e-commerce sector. The country has been assessed as one of the regional fastest expanding e-commerce markets with growth rate of more than 25 per cent, and will hit $13 billion in market value by 2020;
- The “Vietnamese people give priority to using Vietnamese goods” programme;
- The electricity approach index keeps improving. The Doing Business 2019 report, published by the World Bank, pointed out that Vietnam’s electricity approach index has continued to rise for the sixth year with 88.2 points, up 0.26 points on-year, and ranked fourth in the ASEAN-4 and is one of the top four best-performing members of the CPTPP;
- Vietnam succeeded in manufacturing the 500kV backed-up power transformer with capacity of 467 megavolt amperes;
- The process of restructuring market management forces has achieved positive results;
- Vietnam has achieved breakthrough development in solar energy with an installed capacity of nearly 5,000MW. The government’s incentive mechanism for developing solar power has created strong motivation to attract investors to participate in solar power production. This is a signal of the positive effects due to the government’s incentive mechanism for solar power development.
Nguyen Xuan Phuc - Prime Minister
It is said that a country cannot prosper without industrial development and cannot be dynamic without trading. Therefore, the role of industry and trade is important for the contribution to the country’s GDP. In the context that the global economy is on a downward trend, the GDP growth of more than 7 per cent this year comes from a significant contribution from industry and trade, as well as enterprises managed by and operating in the sector.
The Ministry of Industry and Trade (MoIT) covers many areas with complicated tasks, so the ministry should focus on five vital points. First, the sector should perfect a consistent legal framework and policies to create a favourable business environment, as well as improve productivity, quality, and competitiveness of the sector.
Second, productivity must be improved without depending on natural resources which should be replaced by processing and manufacturing, based on innovation, and sci-tech. Industry 4.0 should be considered a major driver to realise the aspirations of a prosperous Vietnam.
Third, businesses need to be put at the centre of innovation and development. So, the MoIT should issue mechanisms to attract innovative companies here.
Fourth, the industry should be restructured profoundly to improve productivity and strengthen the supporting industries. Moreover, it is necessary to develop strong local brands, and not lose the retail market to foreign competitors.
Fifth, the MoIT has to facilitate export and import, focusing on post-inspection and anti-corruption.
In 2020, the MoIT has to achieve four specific targets, namely raising the growth of the processing and manufacturing sector by 12 per cent, reaching an export turnover of $300 billion, a trade surplus at 2 per cent of GDP, and growth of the retail market by 12 per cent.
Tran Tuan Anh - Minister of Industry and Trade
Industry and trade have fulfilled the targets in 2019 against global and regional fluctuations.
The MoIT has done its utmost to innovate, perfect institutional processes, build mechanisms, remove business conditions, and organise the general department of market surveillance.
Numerous conferences were held in 2019, focusing on boosting exports, strengthening development of the mechanical industry, and others related to regulations and commitments of Vietnam’s many free trade agreements.
The domestic market will be further developed in 2020. It recorded a remarkable growth of 18 per cent, which confirms the potential. The MoIT will issue policies to further stabilise and develop this sustainably while protecting the rights of businesses and customers.
In the new year, the MoIT aims for significant changes in the process of improving the productivity and quality of the economy, especially by applying science and technology in production and trade.
The digital transformation of the local industry will play an important role to overcome the middle-income trap. The MoIT will also promote the digital economy to further expand local markets online and abroad.