The value of Vietnam exports outpaced the GDP growth rate by threefold in the first six months of the year, up 15 percent over last year’s same period to 71 billion USD.

According to radio The Voice of Vietnam (VOV), while these statistics bode well for booming economic prospects in the short-term, leading economists caution more market diversification in exports is needed to pave the way for sustainable economic growth in the long-term.

More specifically they said a more diversification of high added value products is a prerequisite to long-term sustainability for the nation’s economy, replacing the current overemphasis on low value exports.

Agriculture commodities have comprised over 30 percent of the nation’s total export turnover and this year is no exception. In the first half of the year, agricultural exports reached nearly 15 billion USD, up nearly 13 percent over the same period last year.

However, since May, as a consequence of developments in the East Sea, farm produce has showed signs of faltering, particularly in exports to the Chinese market. Vietnam’s agriculture sector is highly dependent on Chinese exports, with rice and rubber combined exports accounting for 40 percent of total agriculture exports.

The dependence of Vietnamese agriculture is further compounded considering as the Chinese market consumes 80-90 percent of Vietnamese watermelon, dragon fruit and lychee exports, leading economists say. Therefore they argued it was urgent for the sector to expand into new markets to reduce dependence on any particular market.

Pham Quoc Thai, a Vietnam National Vegetable, Fruit and Agricultural Product Corporation (Vegetexco) representative, said that his company was tackling the issue head on by specifically targeting expanding into the Republic of Korea, Japan, the US markets with high value pineapples and frozen lychee products.

The flip side of being overly dependent on exports to any specific market is to be overly dependent on any particular market for imports, economists pointed out. Currently, the Vietnamese garment and textile sector is overly dependent on raw material imports from China, they said.

As a prime example, they pointed to the Vietnam garment and textile sector – a spearhead export industry – that fetched over 10 billion USD in export revenue in the first six months of the year. Vietnamese imports of goods and raw materials from China were 20.4 billion USD during the period which they said was exorbitantly high and should be reduced.

General Director of Dong Binh Garment and Textile Joint Stock Company Tran Van Khanh said that for his company the key issue was to localise materials and focus on increasing the added value of products. Khang added that his company moved to a FOB (Free on Board) model aimed at utilising more domestic materials and purchasing cloth from Thailand and Singapore in lieu of China.

Economists said producing all raw materials for the garment and textile sector within the borders of the c ountry is needed.
In recent times, the garment and textile sector has attracted many projects in the textile dyeing or support industries. Economic expert Le Dang Doanh said that local businesses need to produce high quality goods, reduce outsourcing activities for foreign businesses, develop trademarks and seek new outlets to improve localise rate and the added value for Vietnamese products.

According to the Ministry of Industry and Trade (MoIT), Vietnam's 13 products have earned a turnover from over 1 billion USD in the reviewed period. Two commodities (telephones and garment and textile) surpassed the benchmark of 20 billion USD. Another positive sign is that although local businesses made up a low proportion in total export turnover, these businesses’ growth rate has increased by 11.6 percent compared to previous periods.

In the context of the East Sea tensions, Minister of Industry and Trade Vu Huy Hoang affirmed that the Government would timely provide policies to support businesses to diversify their export and import markets.

In the current context, the Government aims to expand new export and import markets to avoid dependence on one partner and strengthen the development of material zones to produce raw materials for manufacturing within the country.

Additionally, the Government is committed to offering favourable policies for agricultural production, increase added value and export capability in a stable and sustainable manner, Hoang emphasised.

The MoIT in turn said that Vietnam is speeding up free trade agreements (FTAs) and Trans Pacific Partnership (TPP) agreement negotiations. These trade agreements will open up overseas markets, and provide a tremendous boost for advantageous goods such as garment and textile, footwear, and farm produce to penetrate in potential markets to ensure exports sustainably.-VNA