In 2005, Vietnam’s economy was strongly affected by the world economy. Drought in the early months and floods in the later months of the year, the breaking out of the bird flu, the hike in crude oil prices, all caused great challenges to the economy. However, thanks to the leadership of the government, the implementation of sectors, businesses and the whole political system, Vietnam’s economy continued to maintain its high growth rate of 8.4% in GDP.

In 2005, Vietnam earned a total of US $32 billion from exports, up 20.7% against 2004. These were thanks to the efforts made to developing export scope, growth, market expansion and to the sectors taking part in export activities.

The foreign-invested sector became a key impetus in boosting total national export turnover. This sector accounted for 57% of the total figure. Export turnover growth was bigger than that of imports, contributing to narrowing the trade deficit and improving trade balance.

Export results in 2005 were of significant importance, contributing to bringing the total export turnover in the 2001-2005 period to US $110.6 billion, equivalent to an average growth of 17.3% annually during the past five years, exceeding the target set in the Resolution of the ninth National Party Congress (from 14-16%). Export turnover per capita was put at around US $390. The total export turnover in the past five years doubled that of the previous five years (US $51.8 billion in the 1996-2000 period).

In 2004 and 2005, the increase in both export quantity and prices showed that Vietnam’s export scope and quality was much improved.

Vietnam currently has seven products that have export turnover reaching US $1.3 billion to US $8 billion. These include crude oil, garments-textiles, footwear, seafood, woodworks, electronic components and rice. Vietnam is also among the world leading exporters of coffee, rice and cashews. Exports of various products increased sharply such as woodworks (43.1%), electricity cable wire (33%), computer components (36.5%), crude oil (35%), rice (39%), coal (80.6%), vegetables and fruits (36%) and rubber (25%). The export of some products, though facing great difficulties due to trade barriers, such as garments and textiles, footwear and seafood, has still increased.

In 2005, exports of processed products rose while that of raw products reduced. Exports to key markets all increased: Japan, up 43%; China, 20%, the US, 19.5% and also EU and Asian countries. Especially, export turnover to Australia increased by 70% and New Zealand, 50%. Vietnamese enterprises also have a foothold in African markets, opening up a bright prospect for exports to these markets.

Along with the achievements, there are still shortcomings in export work. These included the low awareness of exporters of trade barriers such as dumping lawsuits and quotas, thus limiting the growth in exports of certain products such as bicycles, footwear amongst others. On the other hand, Vietnamese products lack competitiveness due to weaknesses in quality, designs and prices. Activities on trade promotion, market expansion and market research and forecasting have not yet been well implemented, thus limiting exports.

Imports in 2005 have well served local production for exports and local consumption. This year, Vietnam imported goods worth US $37 billion, up 15.79% against last year. As many as 90% of the imported products were equipment, machinery, materials, fuels and spare parts for production. Only 6-7% of import turnover is for consumer goods.

The domestic market has been busy since the early period of the year. Total goods circulation and services revenue of the whole year hits record in both value (around VND 470,000 billion) and growth (by 26% over last year). In two consecutive years of 2004 and 2005, total consumer goods circulation increases by 20% annually, contributing to the average annual growth of 16% of the total retailing turnover during the past five years, from 2001 to 2005, exceeding the targeted figure of 12%.

Vietnam targets to earn US $38 billion worth of exports in 2006. Thus, next year, the government will make efforts in overcoming difficulties for businesses so as to help them boost import-export activities. Efforts will also be made to strongly develop the domestic market and increase purchasing power in urban areas, industrial and economic zones. Trade activities will also be enhanced in remote, disadvantaged and natural calamities-hit areas to help improve the local people’s living conditions .

In the context of further integration into the world economy, Vietnam’s trade sector in particular and the whole economy in general needs to make thorough preparations to cope with arising challenges in the process of opening the goods and services market. Vietnam also needs to make greater efforts concerning market inspection, the fight against smuggling and trade fraud, consumer protection, the implementation of the tax-reduction map and the finalisation of negotiations with the rest of partners in order to soon join the World Trade Organisation (WTO).

Source: Nhandan Online, 2/1/2005.