Shrinking markets and falling prices

According to the Export Import Department under the Ministry of Industry and Trade (MoIT), the country’s trade turnover is estimated to have reached US$41.7 billion in the first 9 months, 14 percent lower than the same period last year. Agricultural, forest and aquatic products fell by 11.8 percent to earn only US$9.2 billion.

Dr. Nguyen Thi Nhieu from the MoIT’s Trade Research Institute, said the drop was attributed to a fall in the orders, a decrease in prices and an increase in protection measures taken by importing countries.

“Exports to markets such as America, Japan and the EU makes up 60 percent of our export turnover. Our exports, therefore, will be negatively affected, even if there is a slight decline of between one to five percent in these markets”, Nhieu added.

She also emphasised that although competitiveness has become more and more difficult as we the country integrates further into the global economy, there haven’t been any significant changes in the structure of exports. Our major exported products are now raw materials and products with a low value.

Agricultural, forest and aquatic products plus minerals and coal make up 40 percent of the export turnover. Gemstones and precious metals, with a remarkable increase of 300 percent compared to 2008, have become two of the country’s major exports taking seven percent of total export turnover.

There were many problems with exports in the past nine months. For example, although the volume of products exported increased considerably, the value of the products didn’t rise correspondingly. As a result of declining exports from FDI businesses, their contribution to total exports revenue dropped to under 50 percent for the first time since 2003.

According to statistics released by the MoIT, the export turnover of major agricultural products fell though the amount of the products exported increased. For example, nearly five million tonnes of rice has been exported (up 33 percent), but the turnover has only reached US$2.2 billion (down 8.2 percent). It is estimated that agricultural products can only earn about US$3.05 billion this year, bringing the turnover for 2009 to US$12.4 billion, 5.9 percent lower than 2008.

Many specialists have said that there are advantages for Vietnam’s exports in the last three months of 2009: a rising demand in the American, Japanese and EU markets has increased as the economic downturn has bottomed out, there is an improvement in the balance of supply-demand in the domestic market, and the last three months of the year is usually a good time for rising sales.

However, the low price of goods is one of the drawbacks for the export sector.

Negative effects

Vu Dinh Anh said that this is the first time exports have experienced a slow growth since Vietnam introduced open policies. He even suspected the “six percent” figure given by the MoIT.

He added that while exports hit snags, the trade deficit still remains high. It may have a negative impact on the balance of current accounts and the balance of payments, and it may put pressure on the exchange rate.

“The gap between exports and imports in the economy may cause a fall in the country’s GDP”, said Dr. Anh.