The flip side of Vietnam’s export growth

Vietnamese exports have grown rapidly in the past several years and reached more than US$176 billion in 2016. However, the growth was attributed mostly to quantitative increases, and most products were exported not under Vietnamese brands and therefore generated very low added value.  
Photo: Can Dung

According to Vietnam Farmers’ Union President Lai Xuan Mon, Vietnam is the world’s largest pepper and cashew exporter, but it ranks sixth in export value. Reasons include a lack of appropriate policies and production plans, poor technological capability and infrastructure, low quality of human resources, inadequate investment in agriculture, and poor marketing skills.

Tran Thanh Hai, Deputy Director of the Agency of Foreign Trade under the Ministry of Industry and Trade (MoIT), attributed the low added value of Vietnamese industrial exports to underdeveloped support industries, financial limitations which hinder business investment in technology and equipment, and weak market access capabilities. Moreover, Vietnamese manufacturers have yet to handle key links of global value chains.

Exporting goods under importer brands is a major reason for the low value of Vietnamese exports.

At the 2017 Vietnam Export Promotion Forum organized by the MoIT recently, economist Vo Tri Thanh said businesses should strengthen their position in just one or two stages of the global value chains to ensure profitability, rather than participating in all stages. To do so, they need to improve management and increase labor productivity.

Great attention should also be paid to sales. Large- scale production requires the reorganization of trade to prevent losses for farmers and consumers, he said.

From the business point of view, Pham Hong Viet, Chairman of the Board at the Hanoi Rubber Joint Stock Company, said the company is aware of the need to develop its products based on market research, improve technology, build an appropriate investment strategy, enhance the quality of human resources, professionalize management, and assess factors that affect its operations. These efforts are necessary to promote long-term and sustainable development of the company.

Regarding business complaints about unfair competition between domestic and foreign-invested companies, the Vietnam Trade Promotion Agency (Vietrade) said that although they are inferior to foreign-invested companies in capital resources, Vietnamese businesses have been offered more preferences compared with the past and many domestic investment projects have been honored.

Vietrade pledged to continue supporting companies’ market development efforts and encourage them to join investment, production and trade chains to enhance effectiveness and increase the value of their export products.

Viet Nga - VEN

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