In 2016, Vietnam’s export growth was below the expected target of 10 per cent. However, the growth of 8.6 per cent was quite high in relation to comparable countries in the region, which had lower growth or even decline like China, South Korea, Indonesia, Singapore, Taiwan (China) and India. The outcome also represented Vietnam’s efforts in market opening, consumption improvement and business support.
Agricultural exports dominate
The export growth was attributed to the recovery of agricultural products, particularly high performing fruits and vegetables, seafood, pepper and cashew nuts, and the positive growth of domestic companies (decline last year). This offset the fall in export prices. The rising export volume helped raise export value of the group by US$795 million, while the decline of export prices trimmed the value by US$266 million.
Vietnamese fruits and vegetables were officially exported to many markets, for example, longan, lychee, banana, mango, water melon, jack fruit, dragon fruit and rambutan to China, lychee and mango to Australia, lychee, longan, dragon fruit and rambutan to the United States.
The export value of manufactured industrial commodities contributed to the general export value in 2016 and transformed Vietnam’s exports to higher value items. The slight gain of export prices of these products amid the decline of other products also helped raise the export value of this group.
Vietnam effectively utilised results of free trade agreements (FTAs) and international economic commitment frameworks to boost exports. Vietnam’s shipments to South Korea jumped 29 per cent to US$11.5 billion.
Besides, Vietnam’s exports to shrinking or slightly gaining markets such as the United States and the European Union (EU) continued to rise. Despite volatilities caused by the US presidential election and Brexit in the EU, Vietnam’s exports to these two markets continued to grow over 10 per cent. These were also two biggest export markets of Vietnam.
The export growth was driven by foreign-led enterprises. The performance of this economic sector will affect Vietnam’s export result to a large extent.
Moreover, Vietnam’s key export products like apparel and footwear underperformed. The export growth rates of apparel and footwear were respectively 3.3 per cent and 7.6 per cent in 2016, while their growth rates in 2015 were 9.1 per cent and 16.3 per cent. Objectively, the import growth of these products in key markets like the US, the EU and Japan were low, while Vietnam’s competition heated up with other rivals like Cambodia, Myanmar, Mexico, China, India, Bangladesh and Indonesia. Some countries like China, India, Myanmar, Bangladesh and Indonesia introduced export support policies for garment and textile companies such as corporate income tax reduction and input import tariff cut. Specially, the depreciation of domestic currencies (China, India and Indonesia) also helped them draw more orders from international imports, thus hurting Vietnamese garment and textile companies.
Expectations for 2017
Vietnamese authorities will continue to carry out import management measures on products that Vietnam has been able to manufacture, and discourage imports by adopting technical measures like TBT, SPS, origin and trade defences, and continue to carry out export missions set for 2011 – 2020, with a direction to 2030.