Vietnam’s trade with 11 other major Asian markets could rise from 326 billion USD to 465 billion USD by 2030. (Photo courtesy of UPS) "Clearing the Runway for Intra-Asia Trade" sheds lighton trade growth drivers, potential headwinds, and multi-stakeholder actionrequired to unlock the 2030 opportunity.
Trade in just 12 key markets (Australia, China, Hong Kong,Indonesia, Japan, Malaysia, the Philippines, Singapore, the Republic of Korea,Taiwan, Thailand, and Vietnam), known as the Asia 12, accounts for 88% ofintra-Asia trade today and could more than double in value from 6.4 trillionUSD in 2020 to 13.5 trillion USD in 2030.
Vietnam has rapidly grown into an important regional manufacturinghub. The country is expected to leverage this position further in the comingdecade and trade value with the rest of the Asia 12 is forecast to rise from 326billion USD to 465 billion USD by 2030.
“Intra-Asia trade holds incredible potential over the comingdecade, built off the immense economic success that key regional economies haveaccomplished in recent years,” said Michelle Ho, President for UPS AsiaPacific, Middle East and Africa.
According to the study, four segments have driven the surge intrade among the Asia 12: retail, industrial manufacturing and automotive(IM&A), high-tech, and healthcare. In Vietnam, these segments accounted for82% of trade with the rest of Asia in 2020.
The high-tech segment, a key export industry that constitutes 43%of Vietnam’s intra-Asia trade value, will drive future growth given the rise indigitalisation across the Asia 12. The IM&A segment, meanwhile, accountsfor 21% of the country’s trade within Asia today, and this is expected todouble by 2030 thanks in part to government support to boost the manufacturingsector.
Additionally, Vietnam’s participation in trade deals such as theRegional Comprehensive Economic Cooperation (RCEP) and Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP) allows businessesto access a wider range of export markets and consumer goods with reduced tradebarriers.
The study also pointed out a number of barriers that, unlessaddressed, may stagnate trade within the Asia 12. Specifically for Vietnam,lack of progress on logistics infrastructure could constrain its ability toserve centers of demand in rapidly developing economies.
Multi-stakeholder action is required to reduce impediments to regionaltrade and harness the opportunities to steer intra-Asia trade towards take-off.
Businesses with trade interests in Vietnam and those in thelogistics sector must build resilience against potential headwinds while at thesame time be ready to capture opportunities presented by the growth inintra-Asia trade. This includes diversifying supply chains, digitalisingcompletely, and integrating micro, small and medium-sized enterprises intoregional supply chains.
“Small businesses are vital to the Vietnamese economy, and one ofthe many things this report highlights is the importance of making sure our SMBcustomers are getting the support they need so that the full potential ofintra-Asia trade can be realised over the next decade,” said Squall Wang, managingdirector UPS Vietnam.
“At UPS we are doing that by helping businesses digitalise andsimplifying the shipping process,” he said.
Export financing
Vietnam's exports contributed to 82% of its GDP, indicating howdeeply entrenched exports is within the entire nation. Particularly noteworthyis that 35% of Vietnam’s exports is dependent on SME’s who have working capitalas a key roadblock to their growth aspirations.
Sumit Dutta, founder & CEO of ASEAN Business Partners (ABP),said: “Vietnam has huge potential to grow exports in many sectors but lack ofcredit is hampering SME’s from expanding."
Dutta adds that the Vietnamese Government has taken several stepsto encourage export-oriented businesses by providing support in the form of loans,credit guarantees, and other financial services. However, there is scope foralternate options.
ABP is working with several multinational companies to bring inthe right export financing platform for the exporters. These solutions canmeaningfully meet the requirements of SME’s in growing ASEAN economy,especially in Vietnam, said Dutta who is also former CEO of HSBC Bank in Vietnam.
Le Toan Thang, Deputy Director of National Start-up Support Center(NSSC) under National Agency for Technology Entrepreneurship and CommercialisationDevelopment (NATEC) under the Ministry of Science and Technology (MOST), saidthat Vietnam innovative start-up enterprises in particular and SMEs in generalare in need of trade/export financing through innovative platforms that havebeen applied globally as well as need of professional consultancy frominternational experience./.
VNA
