Sterling drop will barely affect exports to UK: officials

The weakening of the UK sterling will not have much impact on Vietnamese exports since it is expected to be short-lived, an official of the Ministry of Industry and Trade said yesterday in response to public concerns.- Photo im-export.com.vn

Tran Thanh Hai, deputy director of the ministry’s Import-Export Department, said the UK was a large Vietnamese trading partner in Europe, but exports to the country only account for 3 per cent of the country’s export revenue.

"The sterling’s depreciation is temporary and once the UK and European Union complete Brexit negotiations, investors will feel secure," Hai said.

However, the ministry’s officials also warned that firms with large orders from the UK that depend on that market heavily would be hit hard. This suggests that exporters not focus too much on an individual market, and should diversify their consumption markets to minimise unexpected damages.

Dang Hoang Hai, director of the ministry’s European Market Department, said Vietnamese shipments currently go through customs at the Netherlands, Germany and Belgium, from where they are able to access the UK market.

After the UK leaves the EU, Vietnamese exporters could face more barriers in accessing the UK market this way. They would have to go through some procedures twice, like customs clearance, food safety and hygiene inspection, as well as other technical barriers, which would be costly and time-consuming for them.

It would be much more difficult for the Vietnamese exports to reach British customers directly once technical barriers with the EU are in place, Hoang Hai said. Therefore, the ministry urged exporters to study other ways to ship goods.

According to the ministry’s statistics, the UK imports 700 billion pounds worth of goods, but Vietnamese exports account for just five billion pounds, or 0.5 per cent of the import value.

Although Viet Nam’s export value to the market is not high, most of the exports are its major commodities such as seafood, farm produce, textile and garment, furniture and wood products. The UK, in fact, is one of the few single markets seeing a positive growth rate of shrimp imports from Viet Nam; regional markets like the EU and ASEAN have seen a decrease.