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Focus on home, analysts tell embattled exporters
Exporters have favored foreign markets long enough and it is time for them to return to the domestic market to weather the global economic downturn, experts said at a conference in Ho Chi Minh City on Wednesday.
Deputy Minister of Industry and Trade Nguyen Thanh Bien said most local businesses focus on exports since they often bring quick and higher profits and neglect the domestic market.
Rice exporters, for instance, enjoy a duty waiver when shipping abroad but are charged 5 percent tax in Vietnam, he said.
Now that export orders have declined due to the economic meltdown, these businesses want to return to their home market but find it difficult to do so, Bien said, noting that a lack of distribution channels is one of the problems they face.
The country’s two giant rice exporters, for instance, lack distribution networks because they were interested solely in foreign markets.
Truong Dinh Tuyen, a member of the National Monetary Policy Advisory Council, told TBKTSG Online that local businesses should have focused on the home front earlier but that it is better late than never.
Government policies so far have encouraged local companies to export more and more, he admitted.
But as a result, many companies failed to consolidate their position at home, allowing foreign competitors to capitalize, he said.
“Local producers should realize that the domestic market is the foundation of their business. They cannot compete well in foreign markets unless they are strong at home.”
The International Monetary Fund (IMF) has forecast global trade to contract 2.8 percent this year, compared with an expansion of 4.1 percent last year, and Tuyen said this makes it crucial for exporters to turn to local consumers.
Vietnam’s exports fell 5.1 percent year on year to US$8.02 billion in the first two months.
The government has forecast export this year to slow to 13 percent, down from 29.5 percent last year, because of the economic downturn in important markets like the US, Europe and Japan.
Priority for home market
The government recently called on local businesses to give priority to the domestic market in light of falling export orders.
Vo Van Quyen, deputy head of the Domestic Market Policy Department said the Ministry of Industry and Trade would next week submit to the government a plan to assist producers and boost consumption of Vietnamese goods.
The stimulus plan is expected to be approved and implemented this month even as domestic consumption fell for the third straight month. Retail revenues were down 10 percent in February.
At the conference, Tuyen urged the government to draft new policies making it mandatory for consumers, businesses and government agencies to buy Vietnamese products as long as they are of high quality.
Such policies would not breach Word Trade Organization commitments and governments around the world are doing the same thing, Tuyen, who is also a former trade minister, explained.
The government should improve infrastructure to facilitate the distribution of domestic goods, he said.
Producers should make their prices more competitive, he said, adding that amid the economic downturn consumers would favor cheaper products.
Economist Huynh Buu Son called for campaigns to unite local producers for promoting Vietnamese goods.
The HCMC-based Business Studies and Assistance (BSA) Center has launched a campaign for companies from different industries to come together to promote their products nationwide, especially in rural regions, until year end. More than 70 percent of the nation’s population lives in rural areas.
The campaign’s first mission last weekend was to bring products made by more than 10 businesses to consumers in the Mekong Delta province of An Giang.
BSA Director Vu Kim Hanh said domestic businesses have neglected the rural markets for too long while global giants like Unilever and P&G began expanding into them a year ago.
Developing the domestic market must be considered a long-term job, she said. “Producers should not quit the domestic market once their export markets recover.”
With the world’s 13th-biggest population, Vietnam has a large domestic market with increasing purchasing power. Retail sales last year were worth $58 billion, a 35 percent growth year-on-year, according to the National Monetary Policy Advisory Council.
Minh Quang
TN, TBKTSG
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