In fact, although some export markets are new and strange, they have a lot of room and opportunities for Vietnamese enterprises to take advantage of them.
|It is necessary to promote trade facilitation, support information to expand new markets. Photo: TL
Opening many “doors” of opportunities
The President of the Republic of Uganda, Yoweri Kaguta Museveni, and his wife recently paid an official visit to Vietnam at the end of November 2022. During their visit, enterprises from both countries had the opportunity to learn from and exchange information with each other. As a central country in East Africa, Uganda’s Ministry of Industry and Trade stated that the country’s agricultural production currently only meets 30% of domestic demand. This means that there is a high demand for imports of agricultural products, including those from Vietnam, due to its strong agricultural sector. The representative emphasized that Vietnamese enterprises that are able to penetrate the Ugandan market will have the opportunity to open doors to the African market, which is an important common market with a population of over 1.3 billion people.
The Ministry of Industry and Trade of Vietnam reported that within just five years, two-way trade turnover between Vietnam and Latin America nearly doubled, from $11.6 billion in 2016 to $21.4 billion in 2021. Vietnam’s exports to Latin America reached $12.5 billion, an increase of 46.4% compared to 2020, while imports from Latin America to Vietnam reached $8.9 billion, up 20.2%. This presents a great opportunity for Vietnamese enterprises to export to many emerging markets, such as Panama, Colombia, and Peru, as well as traditional markets.
According to enterprises, Vietnam and Latin American partners have many advantages that can help promote trade between the two regions. For example, both Vietnam and Mexico, Chile, and Peru are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Additionally, Vietnam has a Free Trade Agreement with Chile (VCFTA) and a Trade Agreement with Cuba. Vietnam is also currently discussing the possibility of negotiating a Free Trade Agreement with the South American Common Market (Mercosur).
In the last days of November, the Southern Food Corporation (Vinafood II) was selected by the government of Bangladesh to be the focal point for supplying rice under a memorandum of understanding (MOU). Nguyen Huy Hung, the Chairman of Vinafood II, stated that the company has a strong advantage in supplying rice in large quantities, especially for centralized contracts and government contracts. In 2022, the economic situation experienced many fluctuations, but Vinafood II worked to overcome these challenges by maintaining relationships with old customers and expanding to find new customers in order to complete its plan. The company’s main markets are in ASEAN, America, and Europe, and it has been the focal point for supplying rice under MOU for the Bangladesh market since 2017.
Removing barriers to new markets
According to data from the General Statistics Office, Vietnam’s estimated export turnover of goods in the 11 months of 2022 was $342.21 billion, an increase of 13.4% over the same period the previous year. Import turnover of goods was estimated at $331.61 billion, an increase of 10.1% over the same period the previous year. This resulted in Vietnam continuing to have a trade surplus of $10.6 billion, compared to only having a trade surplus of $0.6 billion in the same period the previous year. The United States, the European Union, Japan, and South Korea remain the major import-export markets for Vietnam. However, these markets are being greatly affected by high inflation, weak consumer purchasing power, and large inventories. As a result, it is urgent for Vietnamese exporters to penetrate new markets.
In the face of the current difficult economic situation, the government has recommended that traditional markets be strengthened and new potential markets be explored in order to diversify export markets and supply chains. This includes taking advantage of new-generation Free Trade Agreements (FTAs) of which Vietnam is currently a member. Some recommended new markets include Eastern Europe, the Middle East, South America, South Asia, and Africa.
Therefore, in order to take advantage of opportunities in new markets, many enterprises said that they are focusing on trade promotion and the application of e-commerce, as well as incorporating technology into their production processes in order to optimize productivity, improve efficiency, and enhance the quality of their products. This will help them to compete more effectively in these new markets. According to a representative of the Vietnam Fruit and Vegetable Association, enterprises also need support from the authorities in promoting their products and brands, which will make it easier for them to find partners in these new markets.
In addition to the opportunities provided by new markets, there are also risks that enterprises need to be aware of, such as issues with payment, customer search, and trade remedies. Many countries have also set higher standards for imports in order to protect their domestic production and the health of their consumers. In light of these challenges, the Director of the Center for WTO and Integration at the Vietnam Confederation of Trade and Industry (VCCI) suggested that management agencies should improve their trade promotion activities and strengthen the role of overseas trade affairs.
The Ministry of Industry and Trade has said that it will continue to support exports, manage imports, and promote the role of the system of overseas Vietnamese trade affairs in order to expand and diversify markets, as well as promoting trade facilitation and providing market information. The ministry will also work to remove barriers to entering new markets and provide early warning of the risk of trade remedy lawsuits for enterprises.