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Exports Have Increased, But Not Enough
18 | 07 | 2007
Though export revenue for the first six months of 2007 was higher than it was in the first half of 2006, it was below the expectations. There are reasons for this. Some products face trade barriers. Less was exported and prices fell. And an important reason is that both businesses and the State’s management agencies remain inactive in making use of the opportunities that Vietnamese WTO (World Trade Organization) membership offers.
Ministry of Trade statistics show that in the first six months of 2007 Vietnam exported US$22.46 billion worth of goods, 19.4 percent more than in the first half of 2006. But that equaled only 48 percent of the plan that was assigned by the Government and 47 percent of the target set by the Ministry of Trade. The one standout was June, when exports were at US$4.1 billion, 17 percent higher than in June 2006.

During the first six months of 2007, average exports were US$3.74 billion per month, US$620 million better than the monthly average of the first half of 2006 (US$3.12 billion). Yet, this was US$160 million less than the US$3.9 billion target.

Crude oil has been the biggest export product this year, as expected, bringing in US$3.76 billion. However, it's not going up - it's going down, in both volume (6.7 percent) and price (3.6 percent). Sales of exported crude oil was off 10.1 percent compared with the first half of 2006. In the first six months of 2007, PetroVietnam extracted 8.04 million tonnes of crude oil, four percent short of their six-month projection. They claim that the fields would just not yield more. The company has been trying to buy an oil field in Kazakhstan but things have not progressed as hoped and the one million tonnes of crude oil the company hoped to extract from Kazakhstani oil fields in 2007 have not materialized. The slide in crude oil exports alone could be said to have caused total export revenue to come in short of the target.

The second most important export product was textiles and garments, which brought in revenue of US$3.43 billion in the first six months of 2007, 25.9 percent more than in the first half of 2006. And yet, this was 1.1 percent less than the plan. The US is still Vietnam's largest export market for textiles and garments, providing 58.5 percent of textile-garment export revenue, 34 percent more than in the first six months of 2006. The EU imported US$480 million worth of Vietnamese textile-garments, climbing 17.6 percent, and Japan imported US$271 million worth, up 13.4 percent. It is still the case that most of Vietnam's textile and garment exports (70 percent) are processed/assembled products. The US Department of Commerce has now put in place a new mechanism under which it will be looking closely at Vietnamese textiles and garments. Fears of future problems has meant a reticence on the part of many American importers to sign contracts to buy Vietnamese goods in the third quarter of 2007. Businesses are waking up to the fact that Vietnamese companies need to find new markets for their textiles and garments and reduce their reliance on the US market.

Vietnamese seafood exports brought in revenue of nearly US$1.65 billion, an increase of 15.6 percent over the first six months of 2006. Here again it's a case of being six percent short of the six-month target. Seafood exports to the EU market were up 26.8 percent, the EU absorbing 25 percent of Vietnam's exported seafood. Seafood exports to the Republic of Korea rose 23.2 percent, buying seven percent of Vietnamese seafood exports. Seafood exports to the US climbed 10.4 percent, buying 18 percent of Vietnam's seafood exports. Meanwhile, seafood exports to Japan dropped 9.9 percent, although this was still 18 percent of the total. The Ministry of Trade believes that seafood exports may still reach the 2007 target. However, competition between domestic seafood processors is increasing and many countries are unhappy about the chemical residue that is being found in Vietnamese seafood and the inaccurate product labeling. This is bound to have an impact on Vietnamese seafood exports in the future.

Revenue obtained from other kinds of products also failed to reach set targets. For example, rice exports fell 5.6 percent, footwear exports were up but up only 10.7 percent (the target was 21 percent), electronic product and computer component exports rose 23 percent but the target was 50 percent.

There were also cases in the first half of 2007 where export revenue obtained for key products exceeded the plan. For example, coffee exports were 109 percent higher than in the first six months of 2006 at nearly US$1.22 billion. In terms of volume, this is 92 percent of the target for the year. Pepper exports are at US$146 million, a 32 percent increase (a 10.5 percent increased was targeted). The experts are predicting that both coffee and pepper exports will exceed the 2007 targets.

In terms of volume, rubber exports fell 3.4 percent. Earnings came to US$527 million, 1.5 percent higher than the first six months of 2006 while seven percent was targeted.

Unrealistic expectations?

Export revenue for Vietnamese products averaged US$3.74 billion per month, not quite reaching the target that was set at the National Trade Conference held earlier in the year.

Crude oil still makes up a large piece of Vietnamese exports. The 6.7 percent drop in crude oil export volume and the concurrent 10 percent drop in crude oil earnings weighed Vietnamese export earnings down.

Some other kinds of exports brought in higher earnings but not enough was sold to change the picture as a whole.

While exports to ASEAN (Association of South East Asian Nations) countries, the EU and the US have been climbing rapidly, exports to other important markets have climbed little or even decreased. Examples are exports to China (up only 4.9 percent), to Japan (down 0.4 percent) and to Australia (down 11 percent).

The Ministry of Trade is saying that Vietnamese companies are not making use of the opportunities that Vietnamese WTO membership offers.

State management agencies have not presented any new policies that would encourage companies to export while at the same time the old policies are inappropriate in the world of mid-2007.

Some say that a very limited range of export-quality products are being produced in Vietnam, and some of the country's main exports face existing trade barriers and possible new ones in the near future.

However, analysts appear optimistic about the export situation of Vietnam in 2007. They explained that in June alone, Vietnamese exports came to US$4.1 billion. And if things continue as they have in June, Vietnamese exports will be able to reach the 2007 target.     

Vietnam Economics News Online
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