Promoting exports to Asia: A right direction under the pressure of Covid-19

Diversifying products and innovating market approaches are ways to help Vietnamese agricultural products penetrate deeper into Asian markets, especially ASEAN. Photo: N. Thanh

Imports and exports increase dramatically

In 1995, Vietnam joined the Association of Southeast Asian Nations (ASEAN). After 25 years in ASEAN, this region has become one of the important economic and trade partners of Vietnam. According to the Ministry of Industry and Trade, compared to before joining the ASEAN Free Trade Area (AFTA) in 1996, the total import-export turnover between Vietnam and the ASEAN region has increased by more than 9.7 times, from US$5.9 billion in 1996 to US$ 57.5 billion in 2019. In 2020, the import-export turnover of Vietnam - ASEAN fell to US$53.7 billion due to the influence of Covid-19.

In Northeast Asia, South Korea, China, and Japan are the most important partners of Vietnam in terms of investment, trade and ODA. For South Korea, Vietnam's export turnover in 1983 was only US$ 22.5 million. However, by 2015, the two countries' trade relations had grown dramatically when Vietnam - Korea FTA (VKFTA) officially came into effect. Currently, South Korea is the third largest trading partner of Vietnam with a bilateral trade turnover of about US$ 66 billion; being the fifth largest export market of Vietnam.

Similar to South Korea, two-way trade turnover between Vietnam and Japan also saw rapid growth. Two-way trade increased from US$ 8.5 billion in 2005 to US$ 13.7 billion in 2009 and this figure was nearly US$ 40 billion USD in 2019. Japan is the third largest export market of Vietnam.

Most impressive in the trade with Asia is the case of China. The scale of two-way trade was only US$30 million in 1991 has grown dramatically (nearly 4,000 times) after 30 years. In particular, after more than 10 years of implementing the ASEAN-China Trade in Goods Agreement (ACFTA), the scale of Vietnam-China trade hit US$133.1 billion by 2020.

“The growth rate of Vietnam's trade with China has increased faster than the growth rate of Vietnam's trade with the world and accounts for nearly a quarter of the total foreign trade turnover of Vietnam. China has been Vietnam's largest trading partner for the past 15 years. Vietnam has also risen to become the 6th largest trading partner of China in the world and the largest trading partner of China among ASEAN countries,” a representative of Asia and Africa Market Department (Ministry of Industry and Trade) said.

Restructuring, improving product quality

In addition to the import-export growth, referring to integration and trade with the Asian region, especially ASEAN countries, in a report sent to the National Assembly in May 2020, the Ministry of Industry and Trade assessed the competitiveness of Vietnamese enterprises was still limited and had not been significantly improved. A number of items that used to be Vietnam's strengths, such as rice and rubber, were losing market share in key markets. Vietnam's other agricultural products also lack competitiveness because production is inclined to quantity and not quality, so the market faced many risks.

The most prominent problem is that about 90% of Vietnam's agricultural products are still exported in raw form and the turnover is still low because the export value is lower than the products of many other countries. Some markets such as Singapore and Japan have strict regulations on the origin of goods, quality standards, technical standards and food hygiene and safety, so the export products of Vietnam still have difficulties.

Vice Chairman of Business Association of HCM City, Pham Ngoc Hung acknowledged that, in the context of difficulties for exports to the US and Europe, enterprises should promote the development of the ASEAN market and this was also a good plan for market export expansion, avoiding depending on a few fixed markets. However, to effectively exploit markets, enterprises should restructure categories of goods to suit the new situation and improve product quality with advanced technology. It was also necessary to apply digital technology to manage and access markets as well as transactions with customers.

According to the representative of the Asia - Africa Market Department, enterprises should actively explore and research the demand as well as specific requirements of each country to have an effective outreach strategy. Notably, to enter countries with a large Muslim population (Indonesia, Malaysia and Brunei), food products must be halal certified (permitted for use by Muslims) and the goods must comply with the rules of origin and the certification of origin procedures.

In China, Vietnam's leading export market in Asia, at the meeting between the delegation of the Ministry of Industry and Trade and the People's Committee of Lao Cai province on the border trade situation of agricultural and fishery exports of Vietnam to the Chinese market in March 2021, Deputy Minister of Industry and Trade Tran Quoc Khanh affirmed that the ministry would work closely with the ministries, branches and localities in the northern border to exchange and approach the Chinese side speed up the completion of legal and technical procedures to open the markets early for agricultural and aquatic key products of Vietnam such as durian, pomelo, passion fruit, Na, bell fruit, avocado, coconut, swallow nest, fresh seafood and dairy products.

“In addition, to exchange and mobilise the Chinese side to consider adding more border gates that can import fresh fruit on the land border routes, especially through rail transport routes. The Ministry of Industry and Trade will also work closely with the Chinese side to propagate, disseminate and direct enterprises of the two countries to take advantage of preferences from the ASEAN-China FTA and use e-commerce to promote exports” Ministry of Industry and Trade leaders said.