Talking to Customs News, trade expert Pham Tat Thang said that the European Union-Vietnam Free Trade Agreement (EVFTA) will have a great impact on exports in particular and Vietnam's economy in general. However, this is a long-term  impact, so we should not expect the dramatic change of EVFTA for the exports in the second half of the year.    

Trade expert Pham Tat Thang

In the first seven months of the year, although exports are still affectedby the Covid-19 pandemic, the domestic economy continues to be a highlight with estimated export turnover of US$50.76 billion, increasing by 13.5%;  export turnover of FDI enterprises (including crude oil) of US$95.03 billion, decreasing by 5.7%. This trend has lasted for three years, how do you assess this issue?

For a long time, export turnover from FDI enterprises has helda major position. Trade surplus mainly came from FDI enterprises which accounted for a large export proportion. And trade deficit mainly came from wholly domestic-owned enterprises.

However, in the past three years, especially in the recent two years, this situation has improved. The growth rate of wholly domestic-owned enterprises has increased higher than that of FDI enterprises. In addition, the trade deficit and trade surplus between these two economic sectors has changed. This shows that the equitization policy of state-owned enterprises has been effective, especially the policy of considering private enterprises, small and medium enterprises as the driving force for economic development.

However, the export growth of wholly domestic-owned enterprises has only increased in quantity, but its quality has not been as good as FDI enterprises.  This is inevitable because in the first phase when changing to a new form, it will change in quantity and then will gradually change in quality. If technology, digital applications have been invested, export growth can be improved.

From the beginning of the year until now, despite the difficult situation, Viet Nam has an impressive trade surplus with US$6.5 billion in seven  months, higher than the trade surplus of US$1.98 billion in 2019. Some opinions say that this trade surplus is more worrying. What is your view?

- In the first seven months, Vietnam’s trade surplus surpassed previous years, which was not a goodsign. This shows that Vietnam cannot import raw materials. Until now, the raw materials are mainly imported for production. This year, Vietnam cannot import raw materials due to two reasons. The first reason is that there are no export orders, so raw materials are not imported. The second reason is that when there have export orders, the supply chain of raw materials is broken. Businesses mainly used reserved raw materials to export and do not import raw materials for the next period. This situation meansthat Vietnam only exports and does not import. In addition, many agricultural products and food are exported well. Many commodities have reasonable prices, leading to a trade surplus. This situation continues to maintain, it shows the sign of a difficult situation in the second half of the year.

In addition, the trade surplus is mainly from FDI enterprises. FDI enterprises still keep their orders and have the supply of raw materials for production. They are also affected by the Covid-19 pandemic but the level of broken supply chain is not as significant as for Vietnamese enterprises. This shows that the supply chain organization in a sustainable way is especially important.

The EVFTA took effect from August 1, opening great opportunities to boost export growth in the last months of the year. Ministries and sectors expect that the EVFTA can help offset the loss in exports from the beginning of the year until now due to the effects of the Covid-19 pandemic. Is this possible, sir?

- The EVFTA will have a great impact on exports in particular and the Vietnamese economy in general. However, this is the impact for a long time, it cannot impact immediately in the last months of the year. Because, some Vietnamese businesses have not caught up with the EU standards to export goods to the market.

For the EVFTA, Vietnam’s biggest hope is to import modern technology from the EU market to improve its export capacity, especially for wholly domestic-owned enterprises. To do this, there must bea period, it cannot be implemented in the second half of the year. I think that we should not expect the dramatic change of EVFTA for the exports in the second half of the year.

In your opinion, what is thesector that will have opportunities for export growth in the coming months? 

- From the beginning of the year to now, some of Vietnam’s export commodities have maintained relatively good growth, typically rice.

Due to the effect ofthe weather and the Covid-19 pandemic, the world will suffer from alack of food, while Vietnam can produce well. Some sectors have plentiful sources of goods such as shrimp, tra and basa fish.

Perhaps there is a need for support and coordination between the State, banks, exporters and production facilities to export the inventoried shrimp, tra and basa fish to the the world market effectively, bringing the greatest benefit.

Particularly for rice, Vietnam has kept good growth in production and export. In terms of price, Vietnam's 2% broken rice, 5% broken rice in the first half of this year has had a significant improvement compared to the same type of Thai rice, even surpassing Thai rice. However, in the long term, Vietnam needs to gradually reduce exports of "unknown" rice, instead of exporting rice with specific brand, especially fragrant rice and sticky rice according to the needs of different market. Thus, Vietnamese rice can take advantage of the benefits from FTAs.

With an export growth of 0.2% in the first seven months of the year compared with the whole year target of 7-8%, do you think there is a need to consider the plan to adjust export targets?

- To answer this question, it is still necessary to seethe ability of controlling Covid-19 aroundthe world, export markets and in Vietnam. If the pandemic is controlled, the export growth rate will go up, especially for Vietnamese essential goods. I believe that in the second half of this year, exports will still maintain good growth, but whether the export growth rate of the whole year will meet the set target, it is necessary to recalculate.