Trade surplus 2017: Unnatural 'Sweet fruit'

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This year, the total export - import turnover of the country reaches a record number of over US$ 400 billion, of which the trade surplus is over US$ 3 billion, contributing positively to the growth of the economy. "Sweet" is the result of many factors, including efforts of the administrative procedural reform from the ministries and the branches to maximize the enterprises. 

Seafood is the leading export turnover item in agriculture, forestry and fishery products this year. Photo: Nguyen Thanh.

Harmonize many factors

Looking at the total import and export turnover of Vietnam, especially the trade surplus of over US$ 3 billion this year, Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management (CIEM) evaluated that at the moment, the trade surplus was quite positive, contributing to the growth and macroeconomic stability. Farm products was one of the groups contributing significantly to export turnover in general. Despite the world market of agricultural products being quite harsh, Vietnam was still promoting export. This was a remarkable achievement that needs to be considered.

According to the representative of the Industry and Trade Information Center (the Ministry of Industry and Trade), this year, the export results exceeded the target set at the beginning of the year, but this is not a big surprise. From October, export was seen as a good prospect, and in November, the export value began to exceed the target year. "This result is not natural, but it comes from a combination of both objective and subjective factors. On the export market in 2017, overall global trade economy has improved, the market demanded increases. In particular, some of Vietnam's export commodities have the opportunity to boost exports due to the impact of climate change decreasing supply in some countries, thereby increasing the demand for the imports, typically with rice items. In addition to making good use of opportunities to promote exports to traditional markets, many Vietnamese agricultural products have been exported to new markets…" the representative analyzed.

Many experts recognized that one of the important factors contributing to the positive export growth was the efforts of the Government as well as the ministries and the branches in administrative procedure reform to create maximum advantages for the enterprises. In addition, the FTAs have been signed. State management agencies have also been trying to negotiate and disseminate to the business community to hold the information and make the best of incentives when joining the FTAs.

How to be sustainable?

Through the whole year the trade surplus of over US$ 3 billion has had positive impacts on the economy, however, in this story, few opinions raise the concern about the sustainability of export. Speaking as Associate Professor, Dr. Pham Tat Thang, Senior Researcher, the Trade Research Institute (the Ministry of Industry and Trade), Vietnam's industry was underdeveloped. The trade surplus still expected the FDI enterprises with telephones, electronics, components and the breakthrough of the agricultural, forestry and aquatic products. Meanwhile, the agricultural, forestry and seafood exports were still good, but they expanded mainly in terms of quantity rather than quality.

Around this story, representatives of the Center for Industry and Commerce gave an example to show a different perspective. Among the agricultural, forestry and fishery products, the fruit and vegetable export was quite impressive. However, it cannot be said that increases of these items was hot and unsustainable. Because, just a few years ago, when the fruit and vegetable export reached US$ 500-600 million, the Government as well as the MARD had set a goal to increase export turnover to US$ 1 billion. On that basis, the steps of production and quantity expansion, had to promote a market opening plan that was a step by step approach. As a result, Vietnamese vegetables and fruits have penetrated more and more into difficult markets. In the coming time, with the current advantages, the agricultural, forestry and fishery products still need to be promoted more strongly.

In the same view, the export of agricultural, forestry and aquaculture products in many strict markets proved that this is Vietnam's competitive product and should be promoted. But Associate Professor, Dr. Pham Tat Thang, added: "In the long term, in order to increase the value, export of agricultural and aquatic products should be promoted in the form of processing and limited export of raw products. On the issue of reducing dependence on the FDI sector, the key solution was how the domestic enterprises link and join in the production chain of the FDI enterprises. In particular, the domestic enterprises would provide the inputs to the FDI enterprises or supply terminals for the FDI enterprises".

Around this story, the economist Nguyen Dinh Cung also said that the FDI enterprises had accounted currently for 75% of total export turnover of Vietnam. The need to discuss how to create more favorable conditions, promote the strengths and improve the competitiveness of the domestic enterprises... rather than try to "drown" the FDI enterprises.

From the aspect of export goods structure, many experts agreed on the current export structure with the key products such as telephone, electronics, textiles, footwear, agriculture, forestry and fishery… were good and needed to be boosted more. However, in the long term, for a more sustainable development, this structure needed to be shifted step by step, changed in the direction of industrial products.

By Thanh Nguyen / Binh Minh