Import and export to be affected for 6-8 months by Coronavirus

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Fruit is a typical commodity suffering when China-Vietnam trade was interrupted by the coronavirus. Photo: N. Thanh

According to the Ministry of Industry and Trade, China's epidemic and drastic measures to combat the disease include quarantining a city, restricting travel and immigration, limiting crowds of people, stopping export of important supplies for the anti-epidemic demand have been seriously affecting many economic sectors such as transportation (the heaviest is air transport, followed is road and rail transport across the border), travel, retail, stock market, courier, logistics.

Notably, import and export activities will also be unable to avoid negative effects in the short and medium term (possibly from 6 to 8 months).

The Ministry of Industry and Trade said that this is due to reduced demand. Specifically, the Chinese Starbucks chain closed thousands of stores, affecting coffee consumption; McDonald's chain closed hundreds of stores, influencing fillet consumption; restaurant chains are empty, leading to reduced demand for seafood.

In addition, the border market opens more slowly than usual, and it is closed until February 8, 2020, which interrupts the exchange of residents, while this is still an important exchange for some agricultural Vietnam’s products, especially fruit.

In addition, Chinese did not come to Vietnam as usual, so there weren’t new orders even though some kinds of fruit were in the season.

Official negotiations on the opening of agricultural markets (such as durian, passion fruit) under the Ministry of Agriculture and Rural Development's management are likely to be delayed as Chinese authorities couldn’t visit Vietnam.

Deputy Minister of Industry and Trade Tran Quoc Khanh said that the impact of epidemic and anti-epidemic measures on import-export activities is relatively wide, but border trade will be most affected.

Currently, import-export turnover via border gates is about 7 billion USD, of which, export by official roads is about 3.7 billion USD, and export by residents is about 1 billion USD, mainly agricultural and aquatic products.

From the 5th day of the Lunar New Year (February 28, 2020), the Ministry of Industry and Trade has requested the Foreign Trade System to organize activities to find and connect new customers to divert agricultural and aquatic consumption, especially fruit. At the same time, logistics businesses are also requested to help keep agricultural and aquatic products while they wait to be exported.

Trade affiliates in Guangdong, Guangxi and Yunnan have been actively working with border provinces to discuss with China about the time to reopen border markets. The Ministry of Industry and Trade has also mobilized shippers to change from exchanging residents to official exchange to help speed up consumption.

However, the results are not great. The reason is that exports via exchange of residentsstill takes a large proportion when imported into China, especially fruit exports due to the preferential treatment of Value Added Tax (VAT),although the Ministry of Industry and Trade has recommended businesses to change quickly to official export over the past two years.

With export products via exchanging residents, there is only way to wait for the border market to be reopened.

The Ministry of Industry and Trade said: Shippers are afraid of being asked to switch to official export because switching to official export means losing additional costs, not to mention reaching other requirements on packaging and labels, trademarks and origin.

In the future, in order to remove difficulties for exports, especially agricultural and aquatic products, the Ministry of Industry and Trade recommends that farmers adjust immediately the production schedule because the epidemic is still complicated, unpredictable and may last along time.

In addition, increasing domestic consumption through encouraging and organizing the connection of domestic distribution chains with large fruit granaries such as Binh Thuan, Long An; mobilize people to support domestic farmers.

Instruct and encourage shippers to switch export routes through channels for eligible shipments; recommending the seller to pack, label, stamp traceability to facilitate the transition to export by the official route.

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"For shipments that are not eligible for export by official route, priority is given to release goods when the border market is reopened," Deputy Minister Tran Quoc Khanh said.