Ho Chi Minh City: Challenges to exports in the second half of the year

Processing seafood for export at Camimex Company. Photo: Cong Mao

Eight items export billions of US dollars

In the first half of 2022, the import-export activities of HCMC’s enterprises recovered and grew quite well. According to statistics from the Customs Department of Ho Chi Minh City, in the first six months of 2022, import and export goods cleared through Ho Chi Minh City border gates achieved a total turnover of over US$73.15 billion, up 10.64% over the same period in 2021.

Of this, export turnover reached US$33.35 billion, up nearly 10% over the same period in 2021. There were eight key export groups with over US$1 billion. Two major export groups had a sharp increase in turnover, including aquatic products with an increase of 81.71% and coffee with an increase of more than 50%. Three commodity groups had a slight decrease in turnover compared to the same period in 2022, such as; computers, electronic products and components down 6.61%; footwear down 1.54% and rice down 3.4%.

Exports in many key commodity groups are dominated by foreign-invested enterprises (FDI). Specifically, in computers, electronic products and components, FDI enterprises account for 99.4%; footwear of all kinds, FDI enterprises account for 83%; machinery, equipment, tools and other spare parts, FDI enterprises account for 85.3%. This situation leads to unsustainability in export growth, especially when FDI enterprises face unusual events or move their investment capital to another country.

Growth momentum for imported goods is higher than that of exports. Import turnover in the first six months reached US$39.8 billion, up 12% over the same period in 2021. Nine key import groups have higher growth compared to the same period in 2021, especially as gasoline and jet fuel grew suddenly. Growth rates were 101.61% and 252.16% respectively. With the above-mentioned import-export results, the trade balance of goods in Ho Chi Minh City in the first six months of 2022 was a trade deficit of US$6.45 billion.

According to the Department of Industry and Trade of Ho Chi Minh City, export activities of Ho Chi Minh City enterprises continue to develop. The structure of exports has shifted in a positive direction, in line with the city's economic restructuring orientation. Enterprises have gradually taken advantage of and increased the use of domestic raw materials, contributing to improving added-value on products, and improving the quality of export growth. Enterprises participating in import and export are constantly expanding. Ho Chi Minh City has currently more than 20,000 enterprises operating in the field of import and export, and goods of Ho Chi Minh City enterprises have been exported to 229 countries and territories.

Supporting enterprises overcome challenges

Recently, Ho Chi Minh City has implemented many solutions to support enterprises in restoring production and export. According to Director of Ho Chi Minh City Department of Planning and Investment Le Thi Huynh Mai, HCMC had organized 48 trade and investment promotion activities through fairs and exhibitions; trade promotion activities promoted business cooperation, propagated potentials, strengths and brands of products and enterprises of the city.

For activities to support enterprises facing difficulties and damage due to Covid-19, commercial banks focused on supporting two main groups; reducing interest rates, restructuring debts and keeping debt groups. There are nearly 1.3 million customers with outstanding loans totaling VND562,787 billion. Specifically, banks have restructured repayment terms for 445,135 customers with the current outstanding loans of VND94,760 billion; interest exemption and reduction for 130,427 customers with outstanding loans of VND4,866 billion. At the same time, providing new loans to 694,739 customers with outstanding loans of VND463,162 billion. Received and directly removed difficulties account for 882/933 cases of enterprises reporting damage.

However, enterprises in Ho Chi Minh City are currently facing many difficulties in terms of increased freight rates and lack of production materials. Difficulties from the world also make it difficult for key export industries in the city, including electricity and electronics, due of a lack of input materials. Orders are high and market demand is large, but many enterprises cannot receive new orders due to lack of electronic components, finding alternative raw materials is relatively difficult.

According to the Department of Industry and Trade of Ho Chi Minh City, major export markets of Vietnam also have the risk of decreasing purchasing power because of inflation pressure. Some key export markets in Ho Chi Minh City are increasing the application of measures on preventing pandemic or requiring higher quality and standards of imported goods, also creating pressure on export enterprises. New generation FTAs ​​have created opportunities for Ho Chi Minh City's exports. Many enterprises believe that this is the time to accept low profits or break even to maintain competitiveness in the second half of the year.

To increase enterprises support, Ho Chi Minh City will more effectively implement the program to connect banks and enterprises. In the first half of 2022, more than 92,000 billion VND has been disbursed by banks through this program, empowering more than 6,800 enterprises... Along with that, departments and branches will promote reform of administrative procedures, reduce cumbersome procedures to further support production, business and export activities of the business community, maintaining export momentum in the second half of the year.