According to the most updated data of Vietnam’s General Department of Customs, total export turnover of Vietnam in 2019 was USD 263.45 billion, an increase of 8.1% over 2018.
Vietnam’s major export markets are the US, Europe, China, ASEAN, Japan and South Korea. There were 6 items with an export turnover of USD 10 billion or more, including phones and components, electronic products, computers and components, textile, footwear, machinery and spare parts. In addition, there were dozens of items enjoying export turnover of USD 1 billion or more. Currently, Vietnam is the 22nd largest country in the world in terms of export turnover.
However, behind such impressive figures, there are still industries that have made efforts but have not been able to fulfill the set targets. Although it is one of the key export sectors of Vietnam for many years, in 2019, textiles and garments’ export turnover was USD 1 billion lower than expected.
Mr. Pham Xuan Hong, Chairman of Ho Chi Minh City Textile and Garment Association, said: “In 2019, there were many factors that seemed favorable but turned out to be difficulties. For example, the trade war has reduced consumer demand, and made competition among countries more intense. In addition, although Vietnam have participated in many free trade agreements (FTAs), due to the fact that textile and apparel materials still have to be imported a lot from China, advantages brought by these agreements have not been well taken advantage of”.
Similarly, the seafood industry also encountered many difficulties when the selling price of key export products such as shrimp and catfish plummeted. Shrimp prices once dropped by 25% compared to the same period in 2018, which made the export turnover of this industry reach only about USD 9 billion (1 billion USD lower than expected). In addition, seafood sector in 2019 also faced with the yellow card of IUU as well as consecutive anti-dumping lawsuits.
Meanwhile, from the beginning of 2019 when China tightened the quality of imported goods, shifting from small import to official quota, export of vegetable and fruit declined continuously. It is expected that this year the fruit and vegetable industry will not reach the set target either.
The US-China trade war, in addition to providing opportunities for a number of Vietnamese industries, also causes the country to face an explosion of trade fraud and counterfeiting of goods' origin.
Due to being highly taxed by the US, many Chinese products have been “disguised” as Vietnamese products to export to the US to enjoy lower tariffs. Specifically, Vietnam's aluminum exported to the US is only taxed at 15%, while that of Chinese origin is taxed at 374%. In October, the General Department of Customs discovered 1.8 million tons of Chinese aluminum (worth about USD 4.3 billion) were imported to Vietnam, forged origin to export to the US.
On top of that, Chinese wooden products are subject to anti-dumping duties of 183.36% by the US, and anti-subsidy duties of 22.98-194.9%, while that for Vietnamese timber is only 8%. Therefore, Vietnam's timber industry is also facing trade frauds and forging goods origin.
At the recent conference on how to limit risks of origin fraud and strengthen prevention of trade remedies, Mr. Chu Thang Trung, Deputy Director of Trade Remedy Department, emphasized that increasing fraud in origin will hinder Vietnam's exports not only to the US or the EU, but also to many other markets.
According to statistics of the Ministry of Industry and Trade, so far Vietnamese exports have faced more than 150 cases of trade remedies initiated by 19 countries and territories, which are mainly anti-dumping issues, self-defense, anti-subsidy, etc.
So far, Vietnam has participated in 16 bilateral and multilateral FTAs, of which 12 FTAs have entered into force, 1 signed yet not effective (EVFTA), and 3 under negotiation. In fact, not to mention the utilization rate of FTAs, even the understanding of FTAs is still very limited.
For example, the free trade agreement between Vietnam and the EU (EVFTA) is being talked about a lot because the EU has been a key export market of Vietnam for many years. However, a recent survey of Vietnam Chamber of Commerce and Industry (VCCI) shows that nearly 80% of enterprises have never heard about this trade agreement.
In addition, about 70% of Vietnamese businesses do not know about the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which has been in effect for nearly a year. Others that know about FTAs cannot easily take advantage of low tariffs because they are not able meet many requirements on origin as well as other regulations from importing countries. Meanwhile, foreign-invested enterprises (FDI) are actively welcoming this opportunity.
Alice Hoang Thao - VietnamCredit
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