The October trade deficit was estimated at US$100 million, equal to 0.7 percent of exports, bringing the 10-month deficit to US$4.13 billion, or 3.1 percent of exports. Domestic companies ran a trade deficit of US$17.1 billion while foreign-led firms took a surplus of nearly US$13 billion. To achieve export value target of US$165 billion for this year it must get nearly US$15.2 billion a month till the end of the year. More efforts to adjust the current unreasonable structure of export products, which focusing on lower added valueare required.
Export products range focuses now on textiles, garments, leather, and footwear, in addition to processed seafood and wooden products, which are heavily dependent on increasing volumes, leading to unsustainable export growth. Vietnam saw a drop of US$5.47 billion from exporting agricultural products and minerals in the first 10 months, compared with the same period last year 2014. According to experts, Viet Nam should diversify its export products, and seek out other goods with a potential to increase export value in a bid to avoid dependence on some key products.
Vietnam structure of export is also unbalanced between domestic and foreign direct investment (FDI) enterprises, which account for two-thirds of the total export volume.The foreign direct investment (FDI) sector continued with a high growth and contributed largely to export growth. Export turnover expanded by 13.4 percent year on year in the first 10 months, or added nearly US$14.5 billion, of which the FDI sector contributed US$9.5 billion (or 65.5 percent of the share). The high growth of this sector was driven by telephones and parts.
In term of destinations, exports to the United States rose 18 percent and accounted for 20.6 percent of Vietnam’s total export, but and exports to China grew also 12 percent and accounted for 10.3 percent. The higher dependence on US market and China may lead to some risks that Vietnamese exports should be aware of. The first one is risk of anti-dumping measures and the last one is lower prices, demand interruption and payment frauds.
To promote export growth and reduce imports, competent agencies need to address problems in exportunbalaced structure. It is necessary to support companies to move from low price production to higher added value production, intensify efforts to combat fake or counterfeit products and boost domestic production.
New efforts to develop supporting industries are expected to improvedomestic supply for the garment and textile, footwear and machinery sectors. Indeed, the Government has recently issued Decree No. 111/2015/ND-CP on the development of support industries in the country. The government will also cover up to 75 per cent of the cost of technology transfer for projects using more than 85 per cent of raw materials from domestic minerals processing, including metallic ores, non-metallic ores, and petroleum products. Products on the priority list will also have priority in appearing in trade promotion programs. The government will partially cover the costs of registering trademarks, attending domestic and foreign exhibitions, and accessing market information, as well as other costs.
