Vietnamese Enterprises Set for Year-End Recovery

The General Department of Vietnam Customs reported that Vietnam's total export turnover in the first half of September 2024 was US$14 billion, down US$6.73 billion from the latter half of August. Despite slight declines in some key sectors, many businesses are optimistic about growth in the coming months, supported by improved logistics and lower shipping costs.

Trade surplus exceeds US$18 billion

Typhoon Yagi likely contributed to the decline in exports in early September by disrupting supply chains and delaying sea freight in northern provinces. Affected factories may have reduced production, impacting key sectors like computers and electronics. However, agricultural exports such as fruits, seafood and coffee remained strong. As of September 15, total export turnover reached US$279.38 billion.

In the first half of September, import turnover was US$14.55 billion, down nearly US$3 billion from the second half of August. By September 15, total imports reached US$261.34 billion.

Thus, total export-import turnover as of this period stands at US$540.72 billion, with FDI enterprises contributing nearly US$367 billion, and the trade balance showing a surplus of US$18.04 billion.

Despite the decline in exports and imports due to Typhoon Yagi, many businesses remain optimistic about growth prospects in the remaining months of the year. One positive factor is the reduction in international shipping costs across all routes, particularly on the Asia–West Coast of the U.S. and Europe routes, where rates have decreased by 20-30%. Tran Tri Dung, General Secretary of the Vietnam Logistics Business Association, shared: "Some shipping lines have introduced direct routes from Vietnam to the U.S. West Coast, reducing transit times to just 20 days, saving businesses significant costs."

Other shipping routes have seen a 15-25% drop in costs, benefiting exporters. Lower freight rates have allowed some companies to boost their structural steel exports by over 20% to the U.S., Europe, Canada and Japan, with expectations of an additional 10% increase in orders. More ships and increased shipping frequency have improved delivery speed and efficiency, helping businesses expand their markets and attract new customers.

The Vietnam Maritime Administration said that in the first seven months of the year, nearly 500 million tons of goods passed through ports nationwide, up 15% from 2023. This demonstrates significant improvements in Vietnam's seaport capacity to meet rising international freight demands. Notably, the Cai Mep-Thi Vai port area saw container throughput reach 3.329 million TEUs, a 38.4% increase, affirming the port’s important role in connecting Vietnam to global markets.

Enhancing business support

In the upcoming fourth quarter, regulatory authorities have advised businesses to closely monitor global shipping freight rates to implement timely responses to potential market disruptions. This is an important factor in maintaining competitiveness and ensuring the efficiency of trade activities, especially as the global market remains highly unpredictable.

Mr. Tran Thanh Hai, Deputy Director of the Export-Import Department (Ministry of Industry and Trade - MoIT), remarked that the global economy continues to face significant uncertainties, including escalating international conflicts such as the Russia-Ukraine war and the recent Israel-Hamas conflict. These tensions threaten to spread to neighboring countries, posing risks to the global supply chain. Additionally, the ongoing inflation in many countries remains a major challenge, particularly as major economies like the U.S. and EU implement tight monetary policies, making the economic outlook more uncertain.

Hai also cautioned about excess production capacity in China, which could increase competitive pressures in the international market. As global consumer demand declines, low-cost Chinese goods may be aggressively exported to other countries, potentially threatening Vietnam's export markets.

However, Hai remained optimistic that Vietnam’s exports will surpass the initial growth target of over 6% set at the beginning of the year.  If favorable conditions continue, annual export growth could even reach double digits, driven by businesses' efforts to diversify markets and capitalize on opportunities from free trade agreements (FTAs).

To boost export growth, MoIT will implement many measures to support businesses. This includes continuously updating industry associations on export market trends, enabling companies to adjust production plans and identify new opportunities. MoIT will also hold trade promotion conferences with Vietnam's overseas trade offices to help businesses access new opportunities more quickly. MoIT will direct overseas trade offices to regularly share information on international market regulations, standards, and conditions affecting export-import activities. This information will be recommended to local authorities, associations, and businesses so they can prepare suitable business strategies.

Additionally, MoIT will continue negotiating and signing FTAs with potential trade partners, opening up opportunities for Vietnamese businesses to penetrate international markets. To maximize the benefits of the implemented FTAs, MoIT will carry out various promotional activities, both online and offline, to introduce the advantages and incentives from the FTAs to the business community, helping them fully capitalize on export growth opportunities.

By Huong Ly, Vietnam Business Forum