In the first two months of this year, Vietnam maintained a huge trade surplus from 2020 with the contribution of most manufacturing industries, especially industrial sectors. In the future, more comprehensive implementation of the new-generation FTAs, and better utilization of opportunities from the FTAs are important factors to strongly promote Vietnam’s commodity exports.

Vietnam's merchandise exports have had a good start to most
commodity groups, especially industrial ones. Photo: N.Linh

Trade surplus reaches US$1.29 billion

According to the General Statistics Office (Ministry of Planning and Investment), for the first two months of 2021, export turnover reached US$48.55 billion, up 23.2% over the same period last year. At the same time, there were nine items with an export turnover of more than US$1 billion, accounting for 73.8% of the total export turnover.

Notably, the merchandise trade balance had a trade surplus of US$1.29 billion in the past two months (it was US$1.8 billion in the same period last year). In which, the domestic sector saw a trade deficit of US$4.14 billion; and the foreign investment sector (including crude oil) saw an export surplus of US$5.43 billion.

Tran Thanh Hai, Deputy Director of the Import and Export Department (Ministry of Industry and Trade) said the import-export results were thanks to the contribution of all manufacturing sectors, especially industrial sectors. While items such as textiles and garments, leather and footwear were greatly affected, leading to a deep decline of 10% in 2020, in the beginning of this year, they achieved good growth.

“Other products such as telephones, machinery, spare parts, and electronic components achieved very high growth, reflecting the world's demand in the context of social isolation. Due to the pandemic, some production centers of similar products in other regions of the world have limited production, so the supply from Vietnam has also increased. Besides, although the turnover of agricultural products is not large compared to industrial products, the export of these products achieved good growth,” said Hai.

Regarding the export of goods earlier this year, Assoc. Prof. Dr. Dinh Trong Thinh (Academy of Finance) said the increase in exports of industrial products, electronics, and telephones proved a shift in the structure of domestic goods production in a better direction for Vietnam. Accordingly, processing and manufacturing will be strongly concentrated, which is a good sign for Vietnam’s industry.

Motivation from FTAs

In addition to the good signs in exporting goods, the leader of the Import and Export Department mentioned that since the end of 2020, the outstanding difficulty is logistics - the connection between supply and demand. Specifically, increasing costs of empty containers or a shortage of ships, especially to European and American markets, has made transportation costs significantly increase.

“The Covid-19 pandemic broke out in some localities in the country, so the application of preventive measures has had certain impacts on the transportation and circulation stage, affecting the delivery of goods to the export port,” said Hai.

In 2021, the Ministry of Industry and Trade set a modest import-export growth target compared to that of many previous years, at 4-5%. The more comprehensive and full implementation of the new-generation FTAs, like the EU-Vietnam FTA (EVFTA), will be an important driving force to promote production and exports in the future.

According to Hai, there were three FTAs that have been put into effect and signed in 2020, namely the EVFTA, the Regional Comprehensive Economic Partnership (RCEP) and the UK-Vietnam FTA (UKVFTA). In particular, the EVFTA and the RCEP are large-scale agreements, which are expected to help Vietnamese enterprises' import-export activities change drastically. As soon as the EVFTA took effect on August 1, 2020, the number of C/O form EUR.1 for export to the EU increased dramatically. This showed that businesses have immediately grasped and exploited the advantages from this agreement.

“In the future, when the FTAs are fully and comprehensively implemented, the pandemic is controlled, and the vaccine is widely used, it is expected that the impact of the FTAs will push Vietnam's production and export activities up faster,” said Hai.

Some economists said businesses must reorganize to make good use of the advantages from the FTAs. The impact of the pandemic, even if it can be controlled in the future, will persist for the next few years. Therefore, businesses need to pay attention to this factor, and continuously use helpful tools in 2020, such as marketing channels in digital environment.

Regarding the structure of export goods, in the first two months of 2021, heavy industrial goods and minerals were estimated at US$26.6 billion, up 27.8% over the same period last year; light industry and handicraft products were estimated at US$17.3 billion, up 18.6%; agricultural and forestry products reached US$3.6 billion, up 22.2%; and seafood products reached US$1 billion, up 0.7%.

The US was Vietnam's largest export market in the first two months of this year with a turnover of US$14.2 billion, an increase of 38.2% over the same period last year; followed by China with US$8.5 billion, up 54.3%; EU reached US$6.3 billion, up 22.7%; ASEAN reached US$4.2 billion, up 6.2%; South Korea reached US$3.4 billion, up 16.8%; and Japan reached US$3.2 billion, up 3%.