According to craft associations, exports to Vietnam’s major markets such as the United States, the European Union and Japan are expected to fall by between 25-30 percent compared to 2008. In particular, the US, which makes up 20 percent of Vietnam’s exports, is forecast to import 30 percent less than last year.

A recent report released by the import-export management group shows that Vietnam will face fierce competition with other exporters worldwide. At the same time, the country is likely to become a dumping market for foreign exporters, driving up the trade deficit. However, the picture is not completely gloomy.

The Deputy Governor of the State Bank of Vietnam, Nguyen Dong Tien, recalls a recent meeting with officials of the Brazilian Central Bank.

“I asked them how the US economic crisis had affected the Brazilian economy. They told me that Brazil is an exporter of farm products such as coffee and beef, which are consumed every day by people. This means opportunities can arise in all circumstances. What about Vietnamese businesses’ chances? I think we have to analyse why China, India and other developing countries still achieved high growth in 2008 and find out the answer.”

The fact is that products such as garments, footwear and seafood make up a large proportion of the country’s exports and most of these consumer goods have low economic value. However, there is a great demand for these products, even when the economy is in crisis. Therefore, for businesses to hold on to the lion’s share of the market, they need to diversify products and lower overhead costs to give themselves the competitive edge they need in the current context.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Product Association, elaborates on the three steps his association will take to ride out the economic turbulence.

“First of all, we will further penetrate Russia and the Commonwealth of Independent States (CIS) which have always been our potential markets. Second, we will explore the African market which has abundant sources of materials and cheap labour. It is not a demanding market and has a fledgling wood product processing industry. Third, we will penetrate the Middle East market which has a great demand for wood products.”

According to Mr Quyen, businesses should make full use of the bilateral and multilateral trade agreements that Vietnam has already signed with its partners. In fact, many businesses have not made full use of these pacts. For instance, although regulations regarding preferential tariffs for commodities originating from ASEAN came into effect quite some time ago, many businesses have not known how to use the Certificate of Origin (C/O), form D, to enjoy the benefits.

Most recently, Vietnam and Japan signed a bilateral economic partnership agreement. Under this pact, at least 86 percent of agro-forestry and fisheries products and 97 percent of industrial products exported to Japan will enjoy preferential tariffs this year.

Experts say in the context of the current global economic slowdown, these preferences are an effective remedy for export businesses to compete with foreign rivals and carve out a niche in the same market.

Many solutions have been proposed and put in place to assist businesses. The State will offer preferential loans and reduce interest rates for businesses, add commodities to the list of staples receiving loans to maintain production and boost exports, guarantee credits for rice and other farm products, and create favourable conditions for businesses to lower production costs and increase their competitiveness.

As the global markets are shrinking and risks are growing, businesses are advised to be cautious. Along with support solutions adopted by the Government, craft associations should improve their role in providing information and cementing businesses, say experts.

Source: VietNamNet/VOV