FTAs continue to bolster trade in 2023 despite global uncertainties Minister

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FTAs continue to bolster trade in 2023 despite global uncertainties: Minister
Minister of Industry and Trade Nguyễn Hồng Diên

Despite the impact of geopolitical conflicts and rising inflationary risks in major economies around the world, the Vietnamese economy was still growing strongly in 2022 thank to drastic measures and flexibility by the Government to the accelerate post-pandemic recovery.

The implementation of free trade agreements (FTAs) is expected to continue to bring benefits to Việt Nam.

On the eve of the New Year, Việt Nam News Agency spoke with Minister of Industry and Trade Nguyễn Hồng Diên about difficulties which hit the economy and businesses in 2022 and new directions to boost production and exports in the coming year.

In the context that major economies were hit by quickening inflation and stagnation, what were the difficulties that the industry and trade sector in general and businesses in particular had to face and overcome in 2022?

2022 saw a number of difficulties and challenges caused by the impact of the COVID-19 pandemic, the Russia – Ukraine conflict and the policy responses of major countries which led to disruptions to supply chains and a global energy crisis. As a result, prices of strategic and essential commodities such as petroleum, gas, food, production materials, coal, wood, fertilisers, titanium and aluminum skyrocketed.

Prices of some commodities hit record highs, causing inflation to rise in most economies, slowing growth and heightening risks of sending the global economy into recession.

In the domestic market, global fluctuations have put significant pressure on the production costs of enterprises while increases in oil and petrol prices also pushed up prices of goods and led to partial disruptions.

However, with the timely and effective measures of the Party and the Government, Việt Nam saw positive results in socio-economic development in 2022.

Specifically, the macro-economy was kept stable with major balances ensured, high economic growth posted, and inflation controlled. The industry and trade sector maintained high growth.

A highlight of the economy was the import and export of goods set new record highs. Việt Nam’s trade is forecast to total US$732 billion in 2022, 10 per cent higher than 2021. Of this figure, export revenue was estimated at $371.5 billion, up 10.5 per cent, which was higher than the Government target of 8 per cent. Import revenue was forecast to increase by 8.5 per cent.

Việt Nam continued to record a trade surplus for the seventh consecutive year with a surplus of nearly $11 billion, which was three times higher than 2021.

Along with this, the domestic market also saw recovery with the implementation of demand stimulus programmes and the launch of promotional months held in localities across the country to meet the consumption demand of the people. Total retail sales of goods and services were forecast to increase by 21 per cent, 2.8 times higher than the initial forecast of 8 per cent.

In addition, prices of goods in the domestic market were kept relatively stable, contributing to the goal of controlling inflation while the linkage between producers and distributors was enhanced to ensure stable supply.

Electricity production and supply also basically met the demands of production and daily life in the context of a global energy crisis.

As for oil and petrol, in the face of complicated developments in supply and prices in the global market, the ministry promptly ensured adequate supply in the domestic market through additional imports allocated to major enterprises. On the other hand, the ministry also asked producers to increase production to add supply of petroleum for the market together with enhancing inspection of petroleum business and strictly handling speculation and hoarding.

The industry and trade industry also proposed that the Ministry of Finance to review and adjust the cost of the base prices of petrol and oil, and called on the State Bank of Việt Nam and the Ministry of Finance to create conditions in term of credit and customs procedures for the import of petrol and oil. Thus, the demand for petrol and oil in the domestic market was basically met.

As it is forecasted that 2023 will be a difficult year, what are your expectations for the coming year and how will FTAs continue to bring benefits?

Việt Nam signed and implemented 15 FTAs, making the country an important link in the global supply chain. Looking from the country to the region and the world, the path of integration and participation in FTAs is right and ensures a solid foundation for Việt Nam’s development in the future.

In the context of complicated developments of the COVID-19 pandemic, the participation in new-generation FTAs, such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the EU – Việt Nam FTA (EVFTA) and the UK – Việt Nam FTA (UKVFTA), helped promote exports with impressive growth while minimizing the negative impact of the pandemic on trade and the economy.

Statistics of the General Department of Customs showed that in the first eight months of 2022, Việt Nam’s exports with CPTPP member countries reached $41 billion, up 38.7 per cent from the same period of 2021.

Exports to the EU reached more than $32 billion, up 24.2 per cent while exports to member countries of Regional Comprehensive Economic Partnership (RCEP) totalled $108 billion in the first nine months, up 16.4 per cent.

With this growth momentum, it can be said that the implementation of FTAs will continue to be effective in 2023, especially in markets with untapped potential.

For RCEP, the benefits from this agreement are expected to come in the long term thanks to the establishment of a stable export market for Vietnamese goods. At the same time, the agreement would create conditions for the development of new regional supply chains and further participation in regional and global supply chains.

However, a problem is that the opportunity to take advantage of incentives from FTAs was not really balanced between domestic and FDI enterprises. A number of key export products of Việt Nam have not yet been able to solve origin-related problems to enjoy the tax incentives of FTAs. In addition, more attention must be paid to building and positioning the brand of “Made in Việt Nam” products in highly demanding markets like the EU.

In 2023, the world will continue to see fluctuations in both community and financial markets but with what new-generation FTAs bring, difficulties are expected to be solved thanks to State management agencies and the business community joining hands. FTAs will continue to create momentum for export growth, enhance the competitiveness of enterprises and build brands for Vietnamese products in the global market.

What plans and policies will the Ministry of Industry and Trade implement to promote economic growth in 2023?

To overcome difficulties and challenges and promote socio-economic development in 2023, the ministry will focus on three tasks.

Specifically, the ministry will support enterprises to find supply sources of raw materials for production in the face of risks of supply chain disruptions. Priority would be given to ensure adequate supply, especially materials which are at risk of shortage.

In addition, the ministry will continue to promote the linkage between domestic and FDI enterprises and enable domestic enterprises to participate in the supply chains of FDI companies.

The ministry will also solve difficulties and remove obstacles for production and business while promoting the exploitation of signed FTAs to expand and persify markets, improving efficiency and facilitating trade.

The focus will also be on promoting the domestic market, ensuring adequate supply and stabilizing prices of necessary goods.

For petroleum, the ministry will keep a close watch to ensure adequate supply for the domestic market, ensure energy security and prevent shortages from occurring in all situations.

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