Due to impact of the global economic crisis and difficulties caused by inflation, such as a lack of capital, high interest rates, and the high cost of input materials, Vietnam’s export sector is facing a number of difficulties and is in danger of seeing growth decline in the near future.

Difficult to reach an export growth of 3 percent

Cao Sy Kiem, president of the Vietnam Association for Small-and-Medium- Sized Enterprises says that in the current situation it will be difficult to obtain an export growth of 3 percent. Many experts have forecast that exports will be minus 2 percent.

The exports of some products such as rice, coffee and rubber have increased in volume but decreased in revenue due to a sharp fall in world prices. “Maybe, this year’s export value will only equal last year’s”, said Mr Kiem.

The Ministry of Planning and Investment has forecast that this year’s export growth may be minus 2.2 to 6.4 percent. Noteworthy, over the past 4 months, export earnings have stayed at US$4.4 to 4.8 billion each month.

The Deputy Minister of Industry and Trade, Nguyen Thanh Bien, says that there have been many forecasts about exports in 2009. “Despite the current difficulties, export businesses are making a big effort,” Mr Bien says. “The ministry will also use every resource of the economy has to offer”.

Mr Bien adds that exports over the past 7 months reached nearly US$32.55 billion, down 12.8 percent compared to the same period last year. Over the four remaining months, Vietnam will try to prevent a further downturn, at least in production output compared to last year, by re-establishing traditional markets and expanding to new ones. At present, the exports of some agriculture and seafood products have actually increased in volume from a year earlier but total earnings have fallen due to the low purchasing power in the world market.

Mr Bien says that on August 27 the Ministry of Industry and Trade worked with associations and management agencies to look at ways of boosting exports during the remaining months of the year.

Over the past 7 months, more than 4.2 million tonnes of rice have been exported, up more than 50 percent. In the remaining few months, businesses will actively search for new markets in Africa, the Middle East and South America.

Mr Bien says that in the coming months, Vietnam will focus on its traditional products such as agricultural, forestry and seafood products, including shrimp, and tra and basa fish. “The ministry is working with a number of businesses and associations to reduce the impact of increasing export volumes on value,” Mr Bien adds.

He says the lesson from coffee prices is a typical example. Due to a lack of close coordination amongst businesses and between businesses and the association, coffee importers feel free to call the tune, leading to a sharp decline in price.

Businesses lack the support they need

Nguyen Ton Quyen, from the Vietnamese Association of Wood and Forestry Products, says that Vietnamese manufacturers that produce wooden goods export more than 3,000 different kinds of products. “However, 100 percent of these products have to be sold via brokers,” he says.

The global economic decline has slashed the demand for wooden products. It is estimated that the demand has dropped by 30 percent in the US and EU markets, leading to a fall in production levels of Vietnam’s wood processing businesses.

One reason is that manufacturers lack updated information on the market trend and only some major businesses have paid attention to trade promotions.

Both the Association and its members have not conducted any research into products, especially those that meet customer taste.

According to Cao Si Kiem, President of the Association of Small- and Medium-sized Enterprises, businesses always want to access financial sources and up-to-date trade information. But most trade promotion organizations are unable to provide such services due to their limited staff and budget.

Mr Kiem says that these organizations, which have poor facilities, are only capable of providing general information about trade opportunities and cannot provide detailed or tailor-made information. They have also failed to link up prospective partners before and during trade fairs.

To make matters worse, some are simply disbursing government funding without taking into account their long-term benefits.