06:00 | 25/04/2020 Society
(VEN) -?Hanoi has acknowledged that achieving the eight percent export growth target it set for 2020 is a major challenge in the context of the expanding Covid-19 pandemic. The Hanoi Department of Industry and Trade is formulating solutions to boost exports.
With Chinese sources severely affected by the Covid-19 pandemic, businesses are being assisted to find new markets for goods and raw materials, including components and parts for domestic production
Exports hit hard by pandemic
Due to the Covid-19 pandemic, the global economy is expected to grow only 2.3 percent this year, 0.2 percent less than last year and the lowest growth since the last-century global financial crisis. The pandemic is also strongly affecting Vietnam’s foreign trade, in general, and that of the capital Hanoi in particular.
Trade with China and the Republic of Korea (RoK) is most affected, as production and supply chains have stagnated. In the first two months of this year, Vietnam’s export value only increased 2.4 percent, while the country’s imports decreased 2.4 percent compared to the same period last year. In January and February, Hanoi only earned some US$1.73 billion from exports, down 19 percent, with exports to China dropping 18 percent and those to the RoK falling 35.5 percent. The city imported goods worth only US$3.71 billion in the first two months of 2020, down 20.7 percent compared to the same period in 2019, with imports from China decreasing 20.9 percent and those from the RoK dropping 15.8 percent.
Nguyen Thanh Hai, Deputy Director of the Hanoi Department of Industry and Trade attributed the lower export value to the declining import of materials, parts and components from countries strongly affected by the pandemic, including China and the RoK. The Sunhouse Group Joint Stock Company, for example, used to export two containers of household products to the US monthly but cannot do so now since finding it impossible to import parts and components needed for export production.
With the pandemic severely curtailing supplies of goods, parts and components from China, the cost of those materials has increased. Businesses can buy materials at higher prices from other countries, including India, Indonesia, Japan, and Bangladesh, but it takes them time to negotiate deals, reducing product competitiveness, Hai said.
FTAs and other solutions
Based on the outcomes in January and February, the country’s growth scenario, and the pandemic’s projected impact on industries, the industry and trade sector helped the Hanoi People’s Committee prepare three export growth scenarios for 2020.
According to the city’s first scenario, the outbreak is controlled by the end of the first quarter and the city resumes growth from the second quarter, speeding up its pace in the final two quarters to reach the eight-percent export growth target.
According to the second scenario, the outbreak will be controlled at the end of the first quarter but still affect the following quarters, preventing acceleration of growth and resulting in 6.5 percent, 1.5 percent lower than the target.
According the third scenario, the outbreak will last until the second quarter and still affect subsequent quarters, and the city’s export growth would remain the same as the 2019 level and lower than the eight-percent target.
Hai said the Department of Industry and Trade suggested that the Hanoi People's Committee strive to reach the eight-percent export growth target as described in the first scenario. He promised his department would improve and update seminars, workshops and training programs, giving priority to providing businesses with information about potential markets as substitutes for China, about the 11 signed free trade agreements (FTAs), especially new generation FTAs including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the newly signed EU-Vietnam Free Trade Agreement (EVFTA) recently ratified by the European Parliament, and legal documents related to the origin of goods and geographical indications, among others.
The Department of Industry and Trade will be working closely with the Agency of Foreign Trade and 57 Vietnamese trade offices abroad to help businesses, especially textile and garment, leather and footwear, and electronics companies, find new sources of goods and raw materials so they can import enough materials, parts and components for domestic and export production. The goal is also to expand export markets in Russia, Latin America and Africa, and minimize dependence on the Chinese market, while providing them with guidelines on product standards, specifications, packaging, preservation and labeling in foreign markets.
The department will work with distributors to increase the presence of Vietnamese agricultural and fishery products, meeting food safety and hygiene standards, in the city-based foreign distribution systems, as well as the presence of Vietnamese products in such new markets as Cambodia and Laos, aiming to help farmers increase sales.
Enterprises should strengthen connectivity, assist each other and use each other's products to minimize dependence on external sources, Hai said.
|Deputy Director of the Hanoi Department of Industry and Trade Nguyen Thanh Hai: The Hanoi Department of Industry and Trade will work closely with related authorities in trade promotion to diversify export markets and develop Vietnamese goods distribution channels abroad.|