Export picture enjoys benefits from restart

January 25, 2022 | 11:35
In defiance of massive woes, Vietnam’s export-import landscape is gaining momentum on the back of the gradual recovery in domestic manufacturing and bit-by-bit reopening of many foreign markets, promising a brighter trade picture for the country this year.
Export picture enjoys benefits from restart
Export picture enjoys benefits from restart

Fresh data from the Ministry of Industry and Trade (MoIT) showed that in 2021, up to 35 items hit an export turnover of more than $1 billion, accounting for 93.8 per cent of total export turnover. In which, the electronics and garment industries are outstanding examples.

Nguyen Van Minh, director of electronics manufacturer Tran Manh Electronics and Trade JSC in the northern province of Vinh Phuc, in early January had online meetings with four partners from Indonesia, South Korea, and China to discuss new export orders. The company has been supplying the partners with laptop spare parts and other electronics items for five years. It is expected that the new orders will be valued at about $15 million and implemented until late September.

“In 2021, we earned an export turnover of $20 million, up from $17 million in the previous year. If our other partners in China hadn’t reduced manufacturing due to COVID-19, we could have raked in another $5 million last year,” Minh said.

The company, however, has also imported electronic items for its manufacturing. The import turnover last year rose 4 per cent on-year. Total profit for 2021 climbed by about 5 per cent on-year.

Tran Manh Electronics and Trade JSC has contributed to an on-year rise in Vinh Phuc’s electronics export turnover of 10.25 per cent, at about $4 billion last year, and contributed to the Vietnamese electronics industry’s 2021 export turnover of over $51.01 billion, up 14.4 per cent on-year.

Also in 2021, Vietnam fetched $57.5 billion from exporting mobile phones and their spare parts, up 12.4 per cent on-year. South Korea’s Samsung held 60.36 per cent per cent of Vietnam’s total export turnover from electronics and mobile phones.

Choi Joo Ho, general director of Samsung Vietnam, last week told Prime Minister Pham Minh Chinh that Samsung’s total revenue in 2021 from all activities involving business, production, and exports hit over $74 billion, up 14 per cent on-year – in which its export turnover reached nearly $65.5 billion, up 15.8 per cent as compared to 2020.

In another case, Kim Huat Ooi, vice president of Manufacturing and Operations at Intel Vietnam said that by late November 2021, Intel Vietnam generated an export value of $11.8 billion. This signifies the value of Intel Products Vietnam to Intel Corporation as these Made-in-Vietnam products support Intel’s customers worldwide.

Meanwhile, as for the garment and textile, for example, over the past few weeks, Garment and Textile Materials JSC in Hanoi has been recruiting another 200 employers who will work for the company’s new factory in the city. The company is planning to boost exports to Japan, South Korea, Malaysia, and Indonesia.

“We are focusing on producing materials to make traditional attires of these markets, in addition to ordinary clothes which are exported to our traditional markets Singapore and China,” said Nguyen Viet Thang, marketing director of the company, adding the 2021’s export and import turnover hit about 5 per cent on-year.

The company’s exports and imports were boosted in the first half of 2021. However, from July to early October the exports slowed down due to the COVID-19 resurgence. “Since late October we have been resuming and beefing up production, with an expectation that with new orders we will be able to increase exports.”

According to the MoIT, in 2022 Vietnam’s garment and textile export turnover hit $39 billion, up 11.2 per cent on-year.

Vietnam National Textile and Garment Group reported that its consolidated revenue also climbed 10.7 per cent last year to a record high of $716 million, which resulted in a pre-tax profit of $52.3 million, more than double the result from 2021 and over 70 per cent compared to the pre-pandemic period.

Bouncing back

According to the MoIT, while a series of items last year witnessed a plump in export turnover, garments and textiles and electronics are among many key export items with an on-year climb in export turnovers, such as machinery and equipment ($38.34 billion, up 41 per cent), footwear ($17.6 billion, 4.9 per cent), timber and wooden products ($14.8 billion, 19.7 per cent), assorted steel ($11.75 billion, 123.4 per cent), and transport means and components ($10.69 billion, 17.6 per cent).

Last year, Vietnam’s total export turnover reached $336.25 billion, up 19 per cent over the previous year – in which domestic exporters raked in $88.71 billion, up 13.4 per cent, and foreign ones earned $247.54 billion, up 21.1 per cent.

Meanwhile, the economy’s import value reached $332.25 billion, an on-year rise of 26.5 per cent – in which Vietnamese importers spent $114.07 billion, up 21.8 per cent, and foreign enterprises forked out $218.18 billion, up 29.1 per cent.

“We have done a good job in controlling imports. Growth of the group of items needing import limitations has slowed down, while there has been a big growth in imports of items necessary for domestic production, consumption, and export-oriented manufacturing,” said an MoIT report on Vietnam’s trade in 2021 and 2022 released over a week ago. “Imports of items in service of export-oriented manufacturing and indispensable items account for nearly 90 per cent of the country’s total, while imports of items not encouraged for import often occupy only 6 per cent.”

Thus, a rise in the import turnover last year is of no worry.

Last year, Vietnam saw a trade surplus of $4 billion – meaning the economy has maintained a trade surplus for the sixth consecutive year, with domestic businesses suffering from a trade deficit of $25.36 billion and foreign ones enjoying a trade surplus of $29.36 billion – including crude oil exports.

Expectations

To contribute to materialising the country’s economic growth goal of 6-6.5 per cent this year, the MoIT has set a target of a 6-8 per cent rise in export turnover, meaning about $356.42-363.15 billion, with an expectation of a continued trade surplus.

“Free trade agreements, especially new-generation ones, have undergone their initial period of entry into force, and enterprises have gradually adapted to commitments of these deals, along with gradual cuts and reductions of tariffs. This will make it quite favourable for goods produced in Vietnam to penetrate further international markets with preferential tax rates,” said the MoIT report. “In addition, prices of export items tend to rise, especially the goods that are Vietnam’s strengths. This will act as important momentum for increasing export values.”

The Asian Development Bank (ADB) said that it remains upbeat about Vietnam’s trade picture this year, saying that the fast recovery of Vietnam’s main overseas markets, particularly the European Union, China, and the United States, will support exports, especially for textiles and garments, footwear, electronics, and mobile phones.”

“The timely shift by the government to a new strategy to safely adapt to and effectively control the pandemic has allowed businesses to resume economic activity. The impressive vaccination rates would support the bounce-back of manufacturing and services. Vietnam’s market access from multiple free trade agreements will continue to aid trade and investment,” Andrew Jeffries, ADB country director for Vietnam, told VIR.

On the same note, the World Bank also said that Vietnam’s manufacturing exports “will respond to the US, EU, and Chinese demand for Vietnamese exports. [These] markets are estimated to grow by 3.8, 4.4, and 5.1 per cent, respectively, in 2022. […] Manufacturing exports will benefit from steady demand from [these] economies, as they continue to grow, albeit at a slower pace.”

Under a General Statistics Office survey conducted in Q4/2021 with more than 5,700 manufacturing and processing and over 6,200 construction businesses, 83.2 per cent of respondents believed their new export orders in Q1/2022 will “increase and be unchangeable” as compared to the last quarter of 2021. Only 16.8 per cent of the surveyed businesses predicted that their new orders would reduce in Q1/2022.

Minh from Tran Manh Electronics and Trade JSC in Vinh Phuc also believed that from 2022 onwards his company’s exports would get brighter. “Partners told us that they are expanding production, and we are trying to maintain export orders, and expecting a rise of at least 5-7 per cent in turnover this year,” Minh told VIR. “We are also planning to increase the number of employees by 20 per cent during 2022-2023.”

Meanwhile, Thang from Garment and Textile Materials JSC, also said that in the next two years, import tariffs of some garment and textile materials will be removed in Japan, South Korea, Malaysia, and Indonesia under deals signed between Vietnam and Japan, Vietnam and South Korea, and under the ASEAN Economic Community commitments.

“This will offer big opportunities to us. With new employers at the new facility, we are expecting a rise of about 8-10 per cent in export turnover this year,” Thang said.

By Nguyen Dat

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