With local exports to both the United States and European markets facing plenty of difficulties as a result of the novel coronavirus (COVID-19) epidemic, many businesses based in Ho Chi Minh City are seeking opportunities to bolster exports to other ASEAN member states.

ASEAN represents a potential market

According to figures released by the Ministry of Industry and Trade (MoIT), 57.7% of domestic enterprises said that the current consumption market is experiencing a sharp downturn, with 47.2% of them affirming that they are unable to export manufactured goods. In an effort to solve difficulties faced when trying to export products, market expansion is considered a positive step for local businesses.

Previously, the ASEAN market had been of less interest for Vietnamese enterprises, especially those located in the southern metropolis, largely due to strong competition from rival exporters from Thailand and the Philippines, although there exists a wealth of opportunities for export market expansion.

Nguyen Phuc Nam, Deputy Director of the Asia-Africa Market Department under the MoIT, says that there are currently three ASEAN member states that lead in terms of importing Vietnamese goods, including Indonesia, Thailand, and the Philippines.

Pham Ngoc Hung, Vice Chairman of the Ho Chi Minh City Business Association, states, “At present, Vietnam's exports only increase in foreign-invested enterprises. As for small businesses, their exports are in a fix. In the context that exports to the US and European markets are difficult, if businesses promote the development of the ASEAN market, it is also a good plan for expansion without avoiding dependence on fixed markets.”

According to a survey jointly conducted by the Department of Industry and Trade and the Ho Chi Minh City Business Association, goods imported from Vietnam are still in demand among several ASEAN member states. For example, Thailand is keen to import dried fruits, while Indonesia and the Philippines are seeking to import generators, water pumps, electric appliances, and telecommunication equipment from Vietnam due to the poor state of their telecommunications infrastructure.

Most notably, rice exporting enterprises situated in Ho Chi Minh City are eyeing exports to other ASEAN countries, indeed, last year saw the country ship US$1 billion worth of rice to the regional bloc. Recently, the nation has been forced to limit rice exports due to the influence of the COVID-19 epidemic capturing the attention of ASEAN members, although the bloc in general is keen for the nation to resume rice exports.

Pham Ngoc Hung, Vice Chairman of the Ho Chi Minh City Business Association, says that the country’s vegetable exports to ASEAN enjoyed growth of 69% in 2019, therefore, local firms must continue to promote the export of similar products.

With Tra fish, also known as pangasius, and shrimp products, Thailand remains the largest importer of Vietnamese Tra fish in ASEAN, while in the Singaporean market, Vietnamese shrimp products dominate despite having to compete with shrimp from both Thailand and the Philippines, Hung notes.

Advice for businesses

Despite obtaining satisfactory results initially through exploiting the ASEAN market over the course of recent years, the Ho Chi Minh City Department of Industry and Trade has suggested that local businesses should pay greater attention to increasing the value of goods exported to the bloc.

Pham Thanh Kien, director of the Ho Chi Minh City Department of Industry and Trade, says that some Vietnamese goods entering ASEAN which use outdated technology are only suitable for export to Laos, Cambodia, and Myanmar. While in markets that boast large purchasing power such as Thailand and Singapore, Vietnamese goods have failed to truly dominate. In an effort to boost exports to the ASEAN market, local firms must strive to scrutinise the quality of goods, he notes.

Pham Binh An, director of the Center for Economic Integration in Ho Chi Minh City, says that whilst ASEAN is a densely populated region, and living conditions among the middle class are rising. This means that every business must try to redouble efforts in a bid to improve competitiveness, whilst staying active and creating initiatives to best meet demand among consumers.

"If businesses in the southern metropolis are not constantly changing to renew products to dominate the market, it also means being eliminated." Le Thi Mai Anh from the Asia-Africa Market Department affirms. “We incentivise businesses to carry out market expansion research, and to continue participating in trade promotion activities. As soon as the COVID-19 epidemic in ASEAN member states abates, the MoIT is set to dispatch trade promotion delegations to ASEAN countries to get deeper insights into the potential market.”