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Vietnam’s exports sees impressive growth rate because it set low targets
Vietnamese enterprises feel happy because the export turnover in 2010 is expected to be 4.2 times higher than the targeted level. However, experts have pointed out that the growth appears impressive only because policy makers set low targets.
Government agencies have estimated that the total export revenue in 2010 would be $71.6 billion, a sharp increase of 25.5 percent over 2009. Therefore, compared to the targeted six percent growth rate, the actual export revenue would be 4.2 times higher, and compared with the GDP growth rate, the export revenue would be 3.8 times higher. The index of export revenue per capita and the ratio of export turnover on GDP would also be high, equal to that of 2008, the highest ever figures.
The high export achievements have made policy makers and enterprises happy, especially when the country witnessed the growth rate of minus 9.7 percent in 2009. The high export turnover also helps reduce the trade gap, the long lasting worry for Vietnam.
Exports increase sharply because of… wrong forecasts
At first sight, the two-digit export growth rate this year could be seen as a miraculous step forward. However, closer analysis shows that the high growth is in fact a big problem when it comes to building an export plan.
In late 2008, during the global economic crisis, Vietnam still ambitiously set a high export target of obtaining 13 percent export growth rate. However, six months later, government agencies had to lower this target to three percent. In the end, the actual export turnover in 2009 dropped by 9.7 percent.
Government agencies have learnt the lesson. And the too large gap between the targeted level and the actual export turnover in 2009 has forced them to be more cautious when setting up the targets for 2010. This explains why the agencies only dared to set up the modest targeted export growth rate of six percent. And with such a low target, the actual export achievements turn out to be “impressive”.
What are Vietnam’s key export items?
For the past many years, garment and footwear, computers, electronic products and wooden furniture have still been the main export items of Vietnam. However, the big problem is that in order to make these products, Vietnam has to import input materials from other countries in large quantities. It sometimes happens that the input material prices increase even more sharply than the prices of finished products. As Vietnam has been too reliant on input material imports, it cannot pocket much money from exports.
In 2010, Vietnam’s rice export volume reaches the record high of 6.828 million tons which brings $3.2 billion. However, this is not a big joy at all. In 2008, Vietnam only exported 4.7 million tons of rice, but it earned $2.9 billion. In 2010, though the export volume is again half the export volume from 2009, the turnover increases by 10 percent only.
Vietnam’s seafood products have been present in 160 countries, while Vietnam ranks 10th among the biggest seafood exporters in the world. However, in 2010, many processing factories only run at 40-50 percent of the designed capacity, because they lack input materials. A lot of companies incur losses because of the input material price increases.
Vietnam is among top three coffee exporters in the world, but it can only meet 14 percent of the global demand. Therefore, Vietnam still cannot control the coffee world prices. Meanwhile, Vietnamese enterprises now have to compete fiercely with foreign enterprises.
Vietnam’s rubber exports can obtain good prices this year, but for a long time, the export has relied on Chinese market. Other farm produce, including bananas, dragon fruits and water melons have been facing the same situation.
Though Vietnam ranks fifth in the world in terms of tea output, the tea export revenue remains modest. Though the average tea export price in 2010 is higher than that in 2009 and highest since 2005, itis still lower than the world’s level.
Meanwhile, experts have warned that Vietnam will face a lot of difficulties in 2011, when import countries install a lot of barriers to control imports. Japan, for example, has warned that it will examine 100 percent of Vietnamese frozen shrimp imports, while the US will continue imposing anti-dumping tax on the products.
Policy makers have many times affirmed that export decides the GDP growth. Therefore, Vietnam has been making every effort to boost export.
In order to obtain one percent GDP growth rate, it is necessary to obtain 2.5 percent growth rate in export. However, this is only true for the period prior to 2008. In 2009, the export turnover dropped by 9.7 percent, but GDP could still grow by 5.32 percent. Meanwhile, in 2010, though the export turnover soared by 25.5 percent, GDP only grows by 6.7 percent.
Nguyen Duy Nghia
vietnamnet
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