Foreign trade was in surplus in 2014 for the third year in succession.
Inheriting Vietnam’s 2013 trade performance, as VET goes to press 2014 is expected to be the third consecutive year a trade surplus has been recorded, at $1.5 billion compared to 2013’s $900 million, with total export revenue of $150 billion and total import revenue of $148.5 billion. The majority of key export items have seen strong growth and contributed to the solid result.
In the first eleven months of 2014 the trade surplus stood at $2.88 billion. Exports from the processing and manufacturing industries drove export performance as a whole, worth $100.1 billion and increasing 14.8 per cent against the same period of 2013. Following were agro-forestry and aquatic products (worth $20.6 billion, up 14.5 per cent) and fuel and minerals (worth $8.4 billion, up 4.2 per cent). According to the General Department of Customs (GDC), 21 export items earned more than $1 billion, with ten exceeding $3 billion and one exceeding $20 billion. Mobile phones and spare parts earned an impressive $21.98 billion, followed by textiles and garments, with $18.97 billion (up 18.2 per cent), footwear, with $9.25 billion (up 23 per cent), seafood $7.22 billion (up 20.2 per cent), crude oil $6.75 billion (down 22.9 per cent), machinery and equipment, tools and other components $6.66 billion (up 21.6 per cent), wood and wooden products $5.56 billion (up 13 per cent), coffee $3.28 billion (up 34.3 per cent), cashew nuts $1.8 billion (up 23 per cent), and pepper $1.2 billion (up 35.7 per cent).
As important contributors to the highest growth in export revenue, foreign-invested enterprises (FIEs) hold advantages in available export markets, while local exporters have struggled to expand to new markets to reduce their reliance on traditional destinations such as the US and the EU. FIEs contributed $161.93 billion, increasing 13.8 per cent over the same period in 2013. The five largest export markets - the US, the EU, ASEAN, Japan and China - remained stable despite slowing consumption. The US retained its leading position with growth of 21.3 per cent, followed by the EU with 11.4 per cent and ASEAN 2.9 per cent, while Japan and China grew 9.9 per cent and 13.1 per cent, respectively.
The US contributed $26.05 billion to Vietnam’s export turnover in the first eleven months of 2014, an increase of 21.3 per cent over the same period last year. Four main commodities exceeded $1 billion with double-digit growth: textiles and garments ($8.86 billion and 14.1 per cent), footwear ($2.97 billion and 26.3 per cent), seafood ($1.33 billion and 22.1 per cent), and mobile phones and spare parts ($1.39 billion and 200 per cent). The US continued to be the leading purchaser of Vietnamese seafood, accounting for 21.85 per cent of total export value. Wood and wooden products, machinery and equipment, computers, electronic and spare parts, and handbags recorded the highest turnover among Vietnamese goods.
The second-largest importer of Vietnamese goods, the EU, saw export value grow by 11.4 per cent, to $24.8 billion, partly attributed to key export items such as mobile phones and spare parts, footwear, textiles and garments, seafood and coffee. In the first eleven months of last year Vietnam exported $7.96 billion worth of mobile phones and spare parts to the EU, up 2.9 per cent over the same period of 2013 and accounting for 36 per cent of total export revenue. Exports of footwear to the EU grew 24.7 per cent, worth $3.24 billion, while textiles and garments grew 23 per cent, to $3 billion. Seafood exports and coffee to the EU were $1.29 billion, up 23.7 per cent, and $1.39 billion, up 38 per cent, respectively, against the first eleven months of 2013.
Among Asian markets, Japan, South Korea and China recorded estimated export turnover of $13.46 billion (up 9.9 per cent), $6.54 billion (up 10.8 per cent), and $13.53 billion (up 13.1 per cent), respectively, in the first eleven months of 2014. Among key export items, textiles and garments exported to Japan and South Korea recorded value growth of $2.38 billion (up 9.3 per cent) and $1.96 billion (up 30 per cent), respectively. China continued to be the largest consumer of Vietnam’s agriculture exports in the period, such as rice ($850.6 million), cassava and cassava products ($850.6 million), cashew nuts ($274.9 million), and rubber ($685.1 million).
Vietnam’s import turnover in the first eleven months, meanwhile, grew 12.6 per cent against the same period of 2013 as the country’s production continued to rely on raw materials from other countries. Import items used for the manufacturing industry accounted for the highest portion of total import turnover, including machinery, equipment, tools and other components ($20.5 billion, up 21.1 per cent), fabric ($8.7 billion, up 14.6 per cent), steel and iron ($7 billion, up 13.7 per cent), plastics ($5.8 billion, up 11.7 per cent), raw materials for garments and footwear ($4.3 billion, up 25.4 per cent), and plastic products ($2.9 billion, up 22.5 per cent). China was the largest exporter to Vietnam, with turnover of $39.9 billion, up 18.9 per cent, followed by ASEAN ($20.9 billion, up 7 per cent), South Korea ($19.8 billion, up 4.2 per cent), Japan ($11.6 billion, up 9.7 per cent), and the EU ($8 billion, down 4.5 per cent).
According to a recent report from HSBC, Vietnam’s manufacturing and export-oriented sectors were bright spots in emerging Asia. The report said that despite sluggish global and domestic demand, Vietnam’s comparative wage, electricity and water cost competitiveness boosted its exports. It also noted that since the global financial crisis the country has been sustaining double-digit export growth rates. Vietnam was following a traditional export-oriented growth model with the shipment composition being increasingly less raw-material dependent. Vietnam’s exports are forecast to reach $151 billion in 2014. “We believe trade, especially more diversified and increasingly capital-intensive agriculture and manufacturing exports, will help Vietnam grow out of its problems,” the report stated. The rapid expansion of exports and slower import growth helped the trade balance turn positive in the past three years. A trade surplus of $1.8 billion was anticipated for 2014 and a narrower surplus of $500 million for 2015, according to HSBC.
Such a forecast runs contrary to that of the Ministry of Industry and Trade (MoIT), which predicts a trade deficit of $6 billion in 2015. Estimated export turnover is $163 billion, up 10 per cent against 2014, with import turnover at $170 billion. Deputy Minister of Industry and Trade Do Thang Hai said that, based on current declines in export growth in the FIE sector and changes in economics and politics, in 2015 Vietnam will record a trade deficit after three consecutive years of surplus. 2015 is predicted as a year of opportunities for the development of both exports and imports. Exports need more quality to penetrate into markets that have high demand for quality and safety. This in turn means that raw materials imported from other countries need to be of higher quality and, hence, higher price. Therefore, total import revenue is expected to increase compared to previous years. In particular, as free trade agreements
(FTA) are signed, foreign investors will come to Vietnam, leading to an increase in imported machinery and equipment to implement new projects.
The American Chamber of Commerce in Vietnam (Amcham), meanwhile, said that the country’s international trade and GDP will grow strongly as the Trans-Pacific Partnership (TPP), the ASEAN Economic Community (AEC), and the Vietnam-EU FTA come into being in the coming year. Amcham also predicted that Vietnam will surpass all other ASEAN countries and become the largest exporter to the US in 2015. Vietnam’s trade surplus with the US is estimated at $22.7 billion, while bilateral trade will hit $33.6 billion. In particular, turnover in textiles and garments exported from Vietnam to the US is expected to reach $10.5 billion in 2015, $12.5 billion in 2017, $14.3 billion in 2019, $16.2 billion in 2021, $18 billion in 2023, and $19.9 billion in 2025. Vietnam currently ranks third among ASEAN countries exporting goods to the US, just behind Malaysia and Thailand.
Besides growth in the US market, the EU and Russia are also expected to contribute to growth in textile and garment exports in 2015, according to Mr. Le Tien Truong, General Director of the Vietnam National Textile and Garment Group (Vinatex). With 2014 export growth coming in at 15-16 per cent, 2015 will be a good year for the industry, he said. The Duc Giang Garment Company, for example, saw turnover in 2014 exceeding 120 per cent of the target. The company expects to earn export turnover of VND2.4 trillion ($111.6 million) in 2015, with volume growth of 20 per cent.
- Year in review