No change in export items

There has been no big change in the structure of Vietnam’s export items over the last one year, since Vietnam became the official member of WTO. Vietnam mainly exports raw materials and the processed products with low added value.

Though the Government of Vietnam plans to reduce the exports of raw materials and natural resources, Vietnam still exported 15mil tonnes of crude oil last year, and 32,5mil tonnes of coal. Meanwhile, the export of other raw minerals also saw the increase of 37% last year.

Industrial products account for nearly 42% of total export turnover ($20.3bil), but the real profit enterprises can pocket remains modest. In 2007, Vietnam earned $7.78bil from garment exports, up by 33.4% over the previous year. However, it had to spend $1bil on importing cotton and fibre, more than $2bil on materials and nearly $4bil on cloth.

In order to gain the export turnover of $2.3bil from wooden furniture products, Vietnamese enterprises had to spend $1bil to import wooden materials, and in order to gain $2.1bil from electronics exports, enterprises had to spend $1bil to import electronics accessories.

Exporters not flexible

Experts said that Vietnamese exporters were very slow in responding to the fluctuations in the monetary market, which showed that Vietnamese enterprises were not flexible enough in foreign trade.

To date, most Vietnamese exporters still use the greenback as the main payment currency in their trade deals, despite the sharp devaluation of the greenback in the last year. In 2007, the dollar value reduced by 10% against key foreign currencies, and 13% against the euro.

According to the Ministry of Industry and Trade, Vietnam exported $22.3bil worth of products to Asia in 2007, and $10bil to Europe. With such a high devaluation of the dollar, Vietnamese exporters missed the opportunities to earn several billions dollars from the dollar value fluctuations.

In fact, the State Bank of Vietnam has been trying to keep the VND weak against the dollar in order to encourage exports. However, the central bank’s policy could not bring the desired effects.

While the local currencies of Asian economies, which are the main export markets for Vietnam, including China, South Korea and Taiwan, are appreciating against the dollar, the VND value is stabilized. In the first 10 months of 2007, Vietnam’s trade deficit with China reached $6.8bil, while the figure was $4.4bil in trade with Taiwan, and $3.2bil with South Korea. As such, though the VND devaluates against the above economies’ currencies, the excess of imports over exports still occur in trade between Vietnam and other countries.

Source: Tuoi tre.