More dynamic and creative in exporting goods

Dr. Le Xuan Sang, Deputy Director of the Vietnam Institute of Economics

In the period of late 2022 and early 2023, what are the opportunities and challenges faced by exporting enterprises, sir?

In 2022, from the beginning of the year, exporters benefited greatly from the implementation of the Regional Comprehensive Economic Partnership (RCEP), opening the door for Vietnamese exports to member countries wider. Moreover, the active participation of China enables Vietnamese enterprises to have cheaper input materials in producing goods for export to major markets in Europe, America, etc. and can increase profits and market share. In addition, new-generation free trade agreements (FTAs) such as EVFTA and CPTPP have entered the period of larger tariff reductions and more preferential treatment along with the reduction of the Covid-19 epidemic situation, also promoting trade

However, opportunities go hand in hand with challenges. Inflation and recession are still uncertain, especially in Europe and the US. Moreover, with the war between Russia - Ukraine, the energy and food crisis persists, threatening the sustainability of the disposable income of consumers in developed countries, which also accumulated pressure on the consumption of imported goods from Vietnam. In particular, the difficulty depends on geopolitical fluctuations in many countries and on the correctness of monetary policy management of the US and European countries, including Vietnam.

The tightening of monetary policy may strongly affect corporate cash flows. Currently, many countries raising interest rates may soon force Vietnam to raise interest rates to control inflation, which has accumulated more challenges for businesses in accessing credit due to higher interest rates.

In Vietnam, export turnover is very dependent on foreign-invested enterprises (FDI), in your opinion, how will this issue affect the economy?

Vietnamese enterprises are generally exposed to many limitations, such as low competitiveness, weak scale and experience, low position in production and value chains, weak links with the global market, etc. Therefore, FDI enterprises are, in many cases, a bridge to help Vietnamese enterprises penetrate potential export markets, creating a "learning by doing" effect and helping domestic enterprises grow stronger in capacity and business scale, gradually deepening participation in the global supply chain and value chain.

However, depending too much on FDI enterprises, especially multinational companies, also results in disadvantages, even relatively large risks. On the other hand, amid the world's uncertainty, prolonged conflicts related to security, sovereignty, military, etc. may lead an influential multinational enterprise to change its market strategy, thus affecting its market strategy and the trade balance, the current account, the development of related industries, employment, even GDP growth, budget revenue of the whole country and localities.

Vietnamese enterprises are still lacking and weak, so what solutions do businesses need to deal with difficulties and speed up exports, sir?

Vietnamese businesses need to make more efforts to learn about issues in international trade and improve their understanding of the global and target markets. In particular, the uncertain fluctuations of the world and domestic economies need the dynamism and resilience of Vietnamese enterprises.

In addition, to increase the sustainability of export activities, businesses must carefully understand the regulations and commitments in FTAs, especially the new generation FTAs related to rules of origin and hygiene epidemiology standards, technology, tariff barriers, non-tariff barriers, geographical indications, etc. At the same time, businesses must actively update information on laws, markets, and consumer tastes and link with foreign partners to reduce costs, increase penetration, increase advantages via a larger scale, and study the supply chain to maximize production and business effectiveness.

As for the management agencies, what are the solutions that need to be taken to support enterprises in exporting?

- State agencies should play a larger role as "midwives" for enterprises in export activities by providing information on the market, international law, and issues related to trade disputes and trade defence. In addition, commercial counselors must also strengthen their role in coordinating in providing information on tastes and needs and supporting businesses to expand their markets. Finally, it is also necessary to enhance the role of overseas Vietnamese business associations and the overseas Vietnamese community.

Given the Customs, it is very necessary to improve the effectiveness of mechanisms related to trade facilitation, especially to focus on promoting the achievements in the implementation of electronic customs procedures, digitalization application, especially 4.0 technology and the one-stop-shop mechanism, a focal point in customs clearance and bonded warehouses. Furthermore, the Customs sector also needs to strengthen international cooperation, thereby updating information on trade and goods and supporting exporters to meet international requirements and handle related issues in domestic and international markets.

Thank you very much!