What stands behind the export-import record of USD 475 billion
Vietnam’s export-import turnover in the first 10 months of 2018 nearly reached $400 billion, and the figure is expected to exceed $475 billion by the end of the year, which means it is going to set a new record for trade in goods in Vietnam.
2018’s economic highlights
The buzzing export-import activities were one of the most notable features of the Vietnamese economy in the past 10 months as well as the whole year.
As reported by the General Statistics Office of Vietnam, in the first 10 months, the country earned USD 394 billion from export-import transactions, as much as 2017’s full-year turnover. Specifically, total export revenue reached USD 200.27 billion and import revenue accounts for $193.84 billion, showing respective growths of 14.2 and 11.8% on-year.
There are two months left of 2018, hence, the Ministry of Planning and Investment has forecast that the figure of USD 475 billion is well within reach. In addition to the high export-import turnover, Vietnam might hit a record in trade surplus this year.
Currently, exports have exceeded imports by USD 6.4 billion. Due to the usual increase of imports at the end of the year due to the shopping season for the Lunar New Year, exports usually slow down and there might be a possibility of trade deficit. However, according to the Central Institute for Economic Management (CIEM), Vietnam’s trade surplus might widen to USD 5 billion this year, which is the largest value so far.
In October 2017, Vietnam was forecast to reach USD 400 billion in export-import for the whole year. In mid-December 2017, the General Department of Vietnam Customs organized a ceremony to celebrate the revenue officially hitting USD 400 billion. At the end of 2017, the total trade balance was USD 425 billion. This year, the turnover is estimated to be USD 475 billion. If Vietnam can maintain this speed, the number will pass USD 500 billion by quite a large margin next year.
Alarms behind record figures
As the global commodity markets are wrestling with the impact of the US-China trade war and protectionism, it is particularly impressive that Vietnam could reach $475 billion in total export-import revenue, the MPI emphasized in its Report on 2018 Socio-Economic Situation.
According to the MPI, Vietnam’s exports are posting positive improvements by lowering the value of raw material exports while increasing processed and industrial products export value, following the strategy on exports and imports for 2011-2020, with the vision to 2030, paving the way for Vietnam to penetrate global production and supply chains.
On the other hand, head of the Petition Committee Nguyen Thanh Hai expressed concerns over the country’s export growth relying on global demand, while the majority of materials used to respond to this demand are imported from other countries.
“This is one of the reasons behind the low added-value, which means the country’s actual earnings are far lower,” she added.
Hai proposed the government and related authorities to work towards “more innovative solutions.”
According to Hoang Quang Ham, the congressman from Phu Tho province, the inflated value of export-import brings about two issues.
First, Vietnam is generally posting a trade surplus, yet most of the gains are attributed to the FDI sector, while the domestic sector is still running a trade deficit.
“Foreign-invested companies make trade surplus, therefore, they own much of the added-value. We only take a humble part in export manufacturing, and as a result, we earn less.”
Second, as export-import value surges, the Vietnamese economy is becoming more and more open, which also means that it can easily be hurt by global economic fluctuations. Currently, the total export-import revenue in Vietnam is double the country’s GDP.
In fact, this is not the first time these concerns have been raised. Vietnam is admitted to be frail in commodity trade, due to the heavy dependence on raw materials for importation, largely relying on the FDI sector and easily wrecked by global economic fluctuations.
One of the main concerns currently is the escalating US-China trade war. According to Ha Si Quang, the congressman from Quang Tri, the trade war is an external factor that may strongly affect Vietnam because both parties are top export-import markets for Vietnam.
Thus Vietnam needs to prepare comprehensive solutions to tackle potential negative impacts and solidify its economic base to enjoy the strong growth of trade activities in the future.