Vietnam's pharmaceutical industry is entering a historic growth phase, aiming for a market size of USD 20 billion by 2026, yet it has attracted only a modest USD 1.8 billion in foreign direct investment (FDI) so far. This significant gap highlights a massive, untapped potential for pharmaceutical manufacturing. Global pharmaceutical giants like AstraZeneca, Sanofi, Roche, […]
According to the Ministry of Industry and Trade (MIT), the number of Vietnamese export orders in November, 2022 has decreased due to the global turbulence. Yet, regarding the 11 months, Vietnam recorded an estimate of USD$ 673.82 billion in the total export volume, up 11.8% over the same period last year. With the export value and growth being impressive, the total trade volume of Vietnam has reached a new peak of USD$ 700 billion in the middle of December 2022. This figure exceeded 2021’s value (USD$ 668.5 billion), signaling new potentials for both Vietnam and partners.
Behind USD$ 700 billion
Compared to 15 years ago when Vietnam was an official member of the World Trade Organization (WTO), the total value of import and export has now increased by 7 times.
As of the first 11 months of 2022, estimated export turnover was USD $ 342.21 billion, rising by 13.4% over the same period last year. The foreign-invested sectors increased by 14.6% to reach USD$ 254.75 billion, while the domestic economic ones recorded USD$ 87.5 billion, up 10.1%.
On the other hand, import of goods was estimated at USD$ 331.61 billion turnover, growing by 10.1% over the same period in 2021, of which the domestic economic sectors gained USD$ 115.4 billion (up 11.2%) compared to USD$ 216.18 billion of the foreign-invested sectors (up 9.6%).
In 2022, Vietnam’s total import-export turnover is projected to exceed USD$ 730 billion, and the trade surplus may land at over USD$ 10 billion. This marks a milestone of 7 consecutive years Vietnam maintaining a trade surplus. Thus, with remarkable achievement in international trade this year, Vietnam’s import-export ranking will be improved on a global scale.
As to the ranking of WTO, Vietnam continuously secures its name in the top 30 nations with the largest import and export value globally. In 2021, albeit the impact of Covid-19 pandemic, Vietnam still placed 23rd and 20th as the biggest exporter and importer in the world. In the ASEAN region, Vietnam came second only to Singapore.
Diverse trade partnerships and free trade agreements have contributed to great achievements of Vietnam's import and export
Vietnam has extensive trade relations with various countries around the world, with special partnerships with China, the United States, Korea, Japan, EU, ASEAN, among others.
In particular, the United States (US) has always been Vietnam’s biggest importer while China has been the most major exporter of Vietnam for years. In the first 11 months of 2022, the export volume of Vietnam to the US market achieved USD$ 101.5 billion, increasing by 18% over the same period last year and accounting for nearly 30% of the national trade turnover. Meanwhile, Vietnam’s import of Chinese products and services in 11 months was USD$ 109.46 billion, up 10.12%.
Vietnam’s export value in several large markets namely the EU, Korea, and Japan also achieved high export growth thanks to diverse FTAs in effect, thereby helping to facilitate trade and preferential tariffs. Particularly, Vietnam’s exports to the EU market in 11 months achieved USD$ 43.5 billion, witnessing a 21% increase, while the value of exports to Korea and Japan landed at USD$ 22.5 billion and USD$ 22 billion, respectively.
The MIT assessed that enterprises in Vietnam have been accustomed to FTAs, effectively applying the agreements. For example, after the 3 year implementation of the CPTPP, the export turnover to members in the bloc increased by 75-100%. Notably, telephones and components, electronics and computers, machinery, spareparts, textiles, leather and footwear, among others are the main export items to this region. In addition, with the advantages of EVFTA, numerous products exported to the EU market have experienced high growth, namely iron and steel (200%), coffee (over 75%).
Vietnam's role in the global supply chain is becoming increasingly significant.
Mr. Alex Tatsis - Head of the Economic Department of the US Consulate General in Ho Chi Minh City emphasized the important role of Vietnam in the global supply chain, especially for the US at the recent Export Forum 2022.
“Vietnam is the 10th largest trading partner of the US in the world and has become an indispensable node in the US essential goods supply chain. Vietnam has exported to the US hundreds of billions of dollars worth commodities, namely phones, computers, textiles and garments, and imported from this country computer chips, wood, cotton, and animal feed.”
This can be said that the links between Vietnam and the US in the supply chain are tense and interdependent.
As to Mr. Brian Lee Shun Rong, Vietnam’s industry has been developing strongly. The data of Maybank indicates that both FDI inflow and export turnover of Vietnam in the past 10 years have always outdone those of other counterparts in Southeast Asia. Remarkably, electronics and telephone industries have surpassed the textile and garment industry regarding the fields contributing to highest export turnover. This proves that Vietnam has enhanced its position in the global value chain.
For China, Vietnam is a significant strategic partner in various aspects. In international trade with China, despite being affected by Covid-19, Vietnam has successfully exported nearly USD$ 53 billion worth of goods after 11 months, mainly adding to the overall growth figure of 13.4%. In the context of China's zero-Covid anti-epidemic policy, trade with China was tightened. Yet, thanks to the mutual agreements between the two countries in the recent visit of the General Secretary Mr. Nguyen Phu Trong to China, the Chinese market is open to a wide range of agriculture products such as durian, passion fruit, bird’s nest, sweet potato, among others from Vietnam.
In addition, Vietnamese-produced phones and components have played a vital part in the total export value of Vietnam with USD$ 55.4 billion, up 6.6% over the same period in 2021. Plus, Vietnam recorded 8 items with export turnover of over USD$ 10 billion, which made up for 70% of the total export value after 11 months.
Challenges ahead the road
In spite of achieving impressive results, the MIT acknowledged that with the current global demand growing at a slow-moving rate, especially in the top Vietnamese’s leading markets - the US and EU, Vietnamese export and import face several perceived challenges.
To be specific, the export market is slowly narrowing down due to the decreasing global consumption demand. As a result, some of Vietnam's key export products to these markets are encountering strict investigation on trade remedy and origin fraud. At the same time, the European market is accelerating technical barriers related to the environment, sustainable development, green transformation, among others, putting many enterprises in a passive position with various limitations in market access.
Additionally, China has eased its monetary policies, leading to the depreciation of the Yuan, the price of Chinese-exported commodities gradually reduced. Consequently, Vietnamese goods have been in fierce competition with China export products in the US, EU Japan, and East Asia markets.
Vietnam are promoting international trade and expanding the market
Under such situations, the MIT suggested diversifying import and export markets, opening new opportunities for foreign investors, exporters and importers.
In particular, taking advantage of new-generation FTAs will help enterprises to reach out to new markets and reduce their reliance on the traditional ones. The MIT will also vigorously carry out tremendous initiatives to boost trade promotion, match supply and demand via different international trade routes and e-commerce platforms, and assist companies in gaining access to new policies of each market. This will lower barriers to market diversification and export promotion.
Furthermore, Decision No. 2615/QD-BCT has recently been issued to approve the list of "reputable exporters" to encourage import-export enterprises. Thus, 281 businesses were chosen, based on the recommendations of 54 agencies and selection organizations (including ministries, branches, industry associations, provincial, and municipal departments of industry and trade).
At the same time, the MIT's export turnover criteria are used to select and suggest the exporters to include in the list of reputable exporters, which is then put out for public consumption. This is a support activity for Vietnamese businesses to export and expand markets, and assist enterprises' participation in numerous bilateral and international free trade agreements.
In conclusion
Vietnam import and export are presenting various potentials to enterprises, yet how to seize the chance and harvest on the turnover? Thus, to capture the benefits, advice should be sought from top-notch experts with the right local expertise. Viettonkin is one of the leading professional firms with more than 13-year experience in diverse industries and majors. Our team of well-informed professionals in Vietnamese markets and legal systems are capable of assisting you navigate through the process of establishing a new business in Vietnam. With us by your sides, you can focus on what really matters to you. Let us be your trustworthy partner!
