Vietnam’s export might surpass 10 per cent in 2021

Do Thang Hai, Deputy Minister of Industry and Trade

Vietnam’s exports were down in August due to the application of social distancing measures in many localities. How do you perceive the decline?

The fourth wave of COVID-19 since late April has left detrimental impacts across the board. The General Statistics Office’s latest figures show that the country’s GDP contracted 6.17 per cent in the third quarter compared to a year ago.

This took place amid a complex pandemic fight both globally and in Vietnam. COVID-19 came back even in countries that believed they managed to contain it, like Singapore. In Vietnam, diverse localities have to exercise social distancing measures.

Despite these unfavourable conditions, the industry and trade sector has posted several achievements. The industrial sector’s added value dropped 3.5 per cent in the third quarter but it still jumped 4.45 per cent on-year in the first nine months, higher than the 1.42 per cent GDP growth. The processing and manufacturing sector continued to drive the economy, surging 6.05 per cent on-year and contributing 1.53 percentage points to the whole economy’s added value during the period.

Exports were down 6 per cent on-month in August, but in September it slid only 0.8 per cent compared to August. In the first nine months, Vietnam’s exports rose 18.8 per cent on-year, bringing in $240.5 billion in total value. In the face of pandemic complexities, this outcome attests to the great efforts by the sectors and localities, and especially by the business community.

After months of trade deficit, Vietnam has reported a trade surplus in September. In the first nine months, Vietnam still saw a more than 30 per cent jump in trade deficit compared to the same period in 2020. Is this cause for concern?

Imports have gone down in two recent months. They dropped 3.1 per cent in September over August, and slid 5.5 per cent in August compared to July. Meanwhile, Vietnam's trade surplus reached $500 million in September, but still incurring $2.13 billion in trade deficit in the first nine months.

In our view, increasing imports are not a concern as they serve the production of essential goods and we have imported a huge volume of materials for export production.

A rebound in the global economy has resulted in surging demand, and local firms have raised imports of materials to feed production.

In addition, higher imports came on the back of the higher price of goods in the world market, leading to rising material import value, paired with surging logistics costs.

The fourth quarter is a crucial time in reaching Vietnam's export targets. What export results do you forecast for 2021?

Based on production and export performance in the first nine months and the reopening of the economy, particularly in southern localities, industrial production is expected to rise 5-6 per cent this year. Despite the target of 8-9 per cent hike in the country’s industrial production for 2021, if we could reach 5-6 per cent rise in the current pandemic situation, it will already be an achievements, a testament of concerted efforts by the industry and trade sector, and businesses.

We expect more than 10 per cent hike in total export value. Early this year, the industry and trade sector was tasked to reach 4-5 per cent export growth but we are more optimistic. The premier also directed the country to focus on the sectors and areas with a strong potential for growth after receiving decent support, including export activities.

What measures has the ministry (MoIT) taken to help firms and localities resume production and promote export in the late months of 2021?

We focus on supporting firms, particularly those based in industrial zones and clusters, to reboot business and maintain the production and supply value, particularly taking advantage of the year-end period when the demand for products often soar to push up production, thus making up for the shortfall caught in the previous months.

In addition, the MoIT will keep tabs on the supply and demand of essential goods to be able to take timely measures for moderation, ensuring the rational distribution of products between regions, particularly serving people in pandemic-hit areas.

The MoIT will further work on reforming and supporting firms in organising trade promotion programmes for supply and demand connections both at home and abroad, leveraging digital platforms to boost consumption.