Exports to US eye rosier prospects

March 21, 2024 | 17:13
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Exports to the US are leveraging the new comprehensive strategic partnership between the two countries, but local businesses need to pay due heed to latent risks to spur growth.

A rebound in export orders brought Vietnam $17.4 billion in total export value from the US in the first two months of this year, a nearly 34 per cent jump on-year.

Exports to US eye rosier prospects
Exports to US eye rosier prospects, illustration photo/ Source: freepik.com

In January, domestically made computers, electronic devices and components worth nearly $1.8 billion were exported to the US, a 74 per cent spike on-year, which were followed by machinery and equipment, handsets, and textile and clothing, valued at $1.56 billion, $1.4 billion and $1.32 billion, respectively.

Exports to the US market, with its 300 million-plus population, have been gaining rebound momentum from late last year, which was instrumental to nearly $60 billion in Vietnam’s total export value in the first two months of this year.

There have been positive signs that signify a rebound in industrial production, mirrored by the amount of newly committed foreign direct investment in the processing and manufacturing sector which approximated $2.54 billion in the first two months of this year, accounting for 59.1 per cent of total registered capital volume and up 16.8 per cent on-year.

This provides a catalyst for exports in the processing and manufacturing sector, particularly with the US which is one of Vietnam’s top export markets.

Last year, despite global economic headwinds, Vietnam still counted nearly $97 billion in total export value to the US. Compared to 2022, despite being down by nearly $13 billion, this value still made up 27.2 per cent of the country’s total export value.

Last year, 12 product groups to the US market eyed at least $1 billion each in total value, led by machinery and equipment, and spare parts, followed by computers, electronics devices, accessories, and textile and apparel.

The total export value of tech products from Vietnam to the US has been augmented, largely due to top US corporations expanding production in Vietnam.

Vietnam has become the largest footwear manufacturer for Nike, with more than half of this company’s shoe output produced in the Southeast Asian nation. The $7.1 billion value of footwear products the US imported from Vietnam last year showed that supply from Vietnam is important to US retailers.

Meanwhile, in the second half of last year, US tech giant Apple completed the transfer of 11 audio device production facilities to Vietnam. In addition, Intel had initiated phase 2 of its chip verification plant in Ho Chi Minh City, with investment value touching $4 billion.

According to Ta Hoang Linh, director general of European-American Market Department under the Ministry of Industry and Trade, the US is pushing a strategy striving to diversify supply sources and supply chains, gearing towards Asia, helping Vietnam to grow into a major production and export hub in the global value chain.

“Vietnam’s export structure to the US is undergoing radical changes. Besides traditional strong items such as textile-clothing, footwear, and seafood, manufacturing items as electronics and wood furniture have become top players,” Linh said.

At a meeting with US businesses late last year, Deputy Prime Minister Tran Luu Quang voiced expectation that the upgrade of Vietnam-US relations to a comprehensive strategic partnership and implementation of cooperation pillars across the board would lay the bedrock for the mutual trade value to soon hit $200 billion.

International trade analysts believe that the new cooperation framework will not only help strengthen Vietnam-US diplomatic relations but provide an opportunity for the US to recognise Vietnam as a market-based economy, helping the two countries to enjoy more economic benefits. As the US government has stepped up efforts to promote the Indo-Pacific Economic Framework for Prosperity, recognition of market status for Vietnam will help the country bolster trade and investment relations with it.

When the US recognises Vietnam as having a market-based economy, it will push US companies to diversify their supply chains. Additionally, lower import prices and greater market access could allow US companies to increase output and production in Vietnam.

In return, the benefits that US companies get are increased market access and export opportunities, especially in agriculture, machinery, aircraft and pharmaceuticals. All this contributes to promoting supply chains that align with US interests. Most importantly, recognising Vietnam’s market status will also contribute to reducing trade barriers, helping US businesses export goods and services to Vietnam more easily and at lower costs.

By Hai Yen

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