The Ministry of Industry and Trade has evaluated that with the close geographical distance and similar consumer culture, the Philippines is a market with great potential for Vietnamese export goods. This market has a large population, with an estimated 113 million people by 2023, ranking 13th in the world, 7th in Asia, and second in ASEAN. The annual GDP of the Philippines is about 400 billion USD, with a per capita GDP of over 3,500 USD.
Continuous Trade Surplus
The Philippine market does not have excessively high or strict requirements for the consumption of goods and services. Domestic consumption demand for goods and services is high but relies heavily on imported products.
The major exporting countries to the Philippines include China, South Korea, Japan, Indonesia, and the United States. Vietnam ranks last among the top 10 largest trading partners of the Philippines.
Currently, Vietnam exports about 35 types of goods to the Philippines, including agricultural products, seafood, cakes, animal feed, cement, iron and steel, construction materials, textile products, machinery, and equipment. Among them, agricultural products, especially rice, always account for a large proportion of Vietnam’s exports to the Philippines.
In recent years, Vietnam has had a trade surplus with the Philippine market. The total import-export turnover between Vietnam and the Philippines in 2023 reached 7.8 billion USD, equivalent to 2022, of which exports reached 5.15 billion USD, an increase of 1% compared to 2022, and imports reached 2.65 billion USD, a decrease of 2% compared to 2022. The trade surplus into the Philippine market in 2023 reached 2.5 billion USD, an increase of 4.2% compared to 2022.
The specific export products include 1.75 billion USD of rice; 358.3 million USD of clinker and cement; 352 million USD of machinery, equipment, tools, and spare parts; 221 million USD of transport vehicles and spare parts; 193.7 million USD of computers, electronic products, and components; 133.8 million USD of seafood; 152.8 million USD of coffee; 125.9 million USD of textile products; 111.4 million USD of various types of iron and steel; and 153.2 million USD of various types of phones.
It is worth noting that rice is the main export item of Vietnam to the Philippine market. In 2023, the export turnover of Vietnamese rice to the Philippines reached 1.75 billion USD, an increase of 17.6% compared to 2022, with an export volume of 3.1 million tons, a decrease of 2% compared to 2022 (over 3.2 million tons). However, Vietnamese rice still accounts for over 80% of the total rice imported by the Philippines.
Continued Promotion and Boost in Export
In the coming time, Vietnam identifies the Philippines as a potential market for businesses. Therefore, according to Mr. Phung Van Thanh, Commercial Counselor at the Embassy of Vietnam in the Philippines, the objectives and direction for the future are as follows:
First: Continue to consolidate and maintain the number one position in exporting rice from Vietnam to the Philippine market.
According to Mr. Thanh, the Philippines is an agricultural country that produces rice, but domestic production has not been able to meet the consumption demand. Annually, depending on cultivation conditions, domestic production in the Philippines reaches about 19 to 20 million tons of paddy rice, equivalent to over 12.5 million tons of rice.
Meanwhile, the annual demand for rice consumption is about 14.5 million tons, and the minimum reserve to ensure food security for 30 days is about 1 million tons, so the total annual demand for rice is about 15.5 million tons. Therefore, the Philippines has to import over 2.5 to 3.5 million tons of rice each year.
In previous years, the Philippines purchased rice through government-to-government negotiations (GTG). Vietnam and Thailand competed as the two major rice exporting partners to the Philippines. However, since 2019, when the Philippines issued and enforced a law allowing free rice importation and trade, removing quotas and restrictions on rice importation, Vietnam has surpassed Thailand to become the most important supplier, occupying the number one position in rice exports to the Philippine market.
Currently, the Philippines is an important market for Vietnamese rice exports, as by 2022, the volume and value of Vietnamese rice exports to the Philippines account for nearly 45% in terms of volume and 43% in terms of value in the total volume and value of Vietnamese rice exports.
Regarding the Philippines, Mr. Thanh believes that Vietnamese rice is not just an ordinary imported commodity, but also an important item to ensure food security. Currently, rice imported from Vietnam accounts for over 80% (in 2022, it was over 83%) of the total rice imported by the Philippines.
In the Philippine market, Vietnamese rice has advantages in terms of grade, good quality, and affordable price, making it competitive, suitable for the taste and diverse needs of consumers, especially the large population with average and low incomes. It also has stable supply, geographical proximity, cost and convenience in transportation, trust, and long-standing customer relationships.
Second: Expand the product structure and increase export turnover and value. With a promising market like the Philippines, the structure of Vietnamese export products is still imbalanced. The number of exported goods is limited, with only about 35 types of goods/sectors, while there are still many potential goods and sectors of Vietnam that can be exploited in the Philippine market.
Additionally, in the structure of Vietnamese exports to the Philippines, a large proportion is agricultural products, while other sectors are small and insignificant, with few diverse products. There are no fresh agricultural products (fruits, meat) that can enter the Philippine market, although there is a high demand for consumption.
Therefore, the goal is to expand the product structure, increase export turnover and value of Vietnamese goods to the Philippine market.
Third: Promote marketing activities and enhance awareness of domestic businesses about the potential of the Philippine market.
“The Philippines is a market with great potential, but in recent years, Vietnamese businesses have paid little attention to this market, mainly small businesses. Therefore, it is necessary to step up marketing activities and enhance awareness of Vietnamese businesses about the potential of the Philippine market, thereby promoting exports to the Philippine market,” emphasized Mr. Thanh.