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Diversifying products for export growth

Ms. Trinh Thi Thu Hien from the Foreign Trade Agency under the Ministry of Industry and Trade said that if Vietnam takes advantage of signed Free Trade Agreements, the potential for export growth is abundant. In addition, if RCEP, EU and CPTPP agreements are approved in 2019, export turnover to key markets will hit a record high.

Mr. Huynh Van Hanh, Vice President of Handicraft and Wood Industry Association, said that export turnover from wood and wooden products reached USD9.3 billion in 2018, much higher than the target of USD9 billion and the industry earned USD7 billion worth of trade surplus.

The US and European are potential markets for Vietnam’s wood processors. But, in fact, domestic enterprises meet just 1% of the consumption demand of the markets. Other markets such as Mexico, Canada, Australia, New Zealand and Japan had smaller export value with less than 1% of the consumption demand. On the other hand, many businesses believe that the US is still the main market because, among 29 items with export turnover of over USD1 billion in 2018, 10 groups of commodities were exported to the US.

In view of economic experts, in order to define key export markets for Vietnam’s commodities, it is necessary to determine the strength of commodity groups to seek suitable markets. Specifically, on the basis of the proportion of export value, big markets of agricultural and seafood products are China, the EU, the US, ASEAN, Japan and the Republic of Korea. However, for industrial products, the position of key markets changes with the US taking the lead, followed by the EU, China, Japan and the Republic of Korea.

Vietnam has officially signed 13 free trade agreements (FTAs) with the majority being approved. This offers opportunities for Vietnamese commodities to expand export markets. Thus, beside key markets, the country should focus on tapping new markets, especially those pledging to cut tariffs in accordance to signed FTAs.

Removing barriers burdening businesses

Domestic businesses are facing many technical barriers in exporting to these markets. Ms. Vu Thi Kim Hanh, Head of the Association of High Quality Vietnamese Products, said aiming to help Vietnamese agricultural products be deeply involved in global supply chain, it is necessary to meet GlobalGAP standards which are not only clean products but also ensuring “clean” factors from input materials (for business activities) and cultivation (for farm households) to production.

Mr. Tran Dinh Thien from Vietnam Institute of Economics, said that in order to increase export capacity as well as competitiveness of Vietnamese businesses in domestic and foreign markets, it its necessary to cut internal business barriers, especially those related to administrative procedures on business conditions.

Currently, there are nearly 5,000 licenses and more than 4,000 regulations on business conditions prescribed by branch management. According to regulations of the Government, as of mid-2018, ministries must cut half of business conditions. However, many ministries have not fulfilled the above requirements. In some ministries, there is even a situation of cutting business conditions but promulgating other conditions; burdening businesses.

Therefore, together with the policy of supporting capital, technology and connecting markets; the Government should strictly handle those which do not meet the requirements of cutting procedures burdening businesses.

Relevant agencies should promote their role in assisting local business to capture new technical barriers in the world market. Thanks to that, businesses will actively convert production processes and plans to meet new requirements and minimize risks in exports. This is also a solution for them to build sustainable trademarks for Vietnamese commodities in the international market./.