Vietnam’s Trade Performance: Overcoming Technical Barriers for Sustained Growth
According to statistics from the General Statistics Office, in the first ten months of 2024, Vietnam’s total import and export turnover is estimated to reach nearly $647.9 billion, a 15.8% increase compared to the same period last year. Exports reached nearly $335.6 billion, a 14.9% increase, while imports reached $312.2 billion, a 16.8% increase. The trade balance continues to maintain a surplus of $23.3 billion. Notably, seven export commodity groups achieved a turnover of over $10 billion, accounting for 66.5% of the total export value.
CHALLENGES FROM NEW “TECHNICAL BARRIERS”
At the workshop on “Promoting Import and Export – Solutions for Small and Medium-sized Enterprises”, Ms. Tran Thi Thanh Tam, Director of the Small and Medium Enterprise Support Center (Vietnam Chamber of Commerce and Industry – VCCI), said that although positive results have been achieved in export activities, exports to key markets in the last months of 2024 still face many challenges.
The unpredictable geopolitical backdrop, coupled with the slowing growth of the global economy and trade, poses significant pressure on export businesses. Major markets are tightening import standards, focusing on sustainable development, consumer safety, and environmental protection issues.
In addition, sea freight rates remain high, negatively impacting logistics costs. The effects of Super Typhoon Yagi on domestic production increase the risk of supply chain disruptions and transportation costs, making exports more challenging.
Moreover, there are quite a few risks in payment and exchange rate risks that have occurred with Vietnamese enterprises. This has led to increased demand from businesses for capital and financial support solutions from banks, but in reality, not all businesses can access capital and preferential support solutions.
Sharing insights on current trends in international trade, Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), said that trade tensions between the US and China and the Covid-19 pandemic have made many manufacturers realize the importance of not relying on a fixed production location, leading to a wave of production shifts out of China. Additionally, Chinese manufacturers are actively seeking and establishing production facilities abroad to diversify their supply chains and mitigate risks.
It is forecasted that in 2025, the world market will show signs of stability, inflation in major markets will decrease, demand and purchasing power will recover; domestic production will be stable, and there will be an abundant supply of goods; FTAs will take effect, increasing turnover in markets with FTAs, and new FTAs will be implemented… Therefore, it is expected that import and export will maintain a good growth momentum from now until Q1/2025, with balanced growth in both commodity groups and markets.
However, the challenges lie in identifying these new “technical barriers,” including standards and regulations related to quality, safety, the environment, labor, and the risk of facing trade remedy measures…
Mr. Nguyen Anh Duong, Head of the Comprehensive Research Department, Central Institute for Economic Management (CIEM), pointed out that the global economic recovery and the network of FTAs have created more opportunities for export growth, along with the recovery of the supply chain in Asia. However, there are challenges posed by the trend towards sustainable development and the increase in trade measures in many markets. Meanwhile, the green transition process of domestic enterprises is relatively slow, affecting their ability to adapt to sustainable development regulations in some major markets.
TAKING THE INITIATIVE TO INNOVATE AND INVEST IN TECHNOLOGY
Difficulties in accessing capital, especially green credit, lead to increased cost pressure and exchange rate risks. Access to finance according to the value chain is not common in Vietnam, and manufacturing enterprises still rely mainly on credit from the commercial banking system, while capital mobilization through the stock market is modest.
Enterprises find it challenging to access foreign currency loans to import inputs, auxiliary materials, and raw materials for export production, while the current legal regulations only focus on a few forms such as payment envelopes and letters of credit…
To increase exports, Mr. Nguyen Anh Duong suggested that small and medium-sized enterprises proactively study new regulations in the markets and develop response plans. They should also take the initiative to innovate and build long-term strategies. Investing in technology, human resources, and taking advantage of FTAs to expand markets are essential. In addition, enterprises need to focus on applying digital technology to enhance competitiveness and professionalism and implement backup plans to minimize risks from market fluctuations.
Furthermore, businesses should explore and implement new business models (such as circular and digital economies…) and particularly focus on sharing experiences in adapting to new trends and regulations related to green development, environmental protection, such as the Carbon Border Adjustment Mechanism (CBAM), the EU Deforestation Regulation (EUDR), and personal data protection… in major markets. At the same time, propose appropriate technical support from partners (it is challenging for government agencies to make specific support proposals from partners).
From the perspective of the state, according to Mr. Duong, it is necessary to proactively monitor and evaluate new trends and regulations to provide appropriate information to the business community. Guide enterprises to build strategies to take advantage of incentives in FTAs, provide appropriate support to enterprises, not contradict international commitments, and be permitted under international treaties.
At the same time, develop programs and initiatives to help businesses participate more deeply in global and regional value chains. Research solutions to adjust regulations to adapt to new trends (harmonization with international standards, taking into account the adaptability of domestic enterprises). Participate in establishing international rules suitable for areas such as digital transformation and green transition…
According to Mr. Lam Duc Thuan, Vice Head of the Management Board of Industrial Parks of Hung Yen Province, enterprises must seize opportunities and have innovative solutions and correct and practical directions to approach the market and improve competitiveness.
Mr. Tran Thanh Hai stated that small and medium-sized enterprises need to establish long-term business orientations and plans, focusing on competition in the context of market openness. They should promote trade promotion, take advantage of state support, explore and utilize FTAs to expand markets for export goods, invest in human resources development and digital technology application… In addition, it is crucial to have backup plans to overcome incidents, risks, and fluctuations in the market and be vigilant against fraudulent and deceptive acts in international trade.
In the field of logistics, Mr. Ngo Khac Le, Vice Secretary-General of the Vietnam Logistics Services Enterprises Association (VLA), recommended that enterprises apply flexible warehouse solutions, use bonded warehouses, and shared warehouses to reduce storage costs and increase the speed of goods processing… Optimize routes and transport modes by combining multimodal transport (sea, air, road, and rail) to optimize costs and transport time.
On the other hand, enterprises need to focus on supply chain risk management, establish backup plans to minimize risks when facing unexpected incidents such as oil price fluctuations and natural disasters… Collaborate with other enterprises in using logistics services and cooperate with partners in the supply chain to leverage the strengths of the cargo owners’ network…
At the event, delegates proposed that the state should actively develop mechanisms and policies adapted to global trends. Providing information on new technical standards, guiding enterprises to take advantage of incentives from FTAs, and developing initiatives to help businesses participate more deeply in the value chain are top priorities.
The banking sector needs to be more proactive in providing smart and flexible financial solutions to ensure capital for export activities. Priority should be given to loans for the import-export sector and the development of appropriate credit products to help enterprises optimize costs…
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