VCN- Vietnam's exports of goods recorded a sharp decline in the first month of 2020 due to the outbreak of coronavirus disrupting Vietnam-China trade. Notably, it is forecast that imports and exports will continue to face difficulties in the coming months.
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All commodity groups decreased
According to the latest data from the Ministry of Industry and Trade, Vietnam's total import and export turnover of goods in the first month of 2020 was estimated at US$38.1 billion, down 12.9% over the same period last year; in which exports are estimated at US$19 billion, down 14.3% over the same period in 2019.
In terms of product groups, the noticeable point is that the export value of all commodity groups dropped. Specifically, the export value of agriculture, forestry and fisheries is estimated at US$1.85 billion,down 18.8% over the same period in 2019, accounting for 9.7% of total export turnover.In this group, except for cassava and cassava products, other items have witnessed decreased turnover compared to the same period last year. Similarly,the export turnover of fuel and minerals is estimated at nearly US$0.294 billion,down 36.3% compared to the same period in 2019.For processed goods, the situation is not better when export turnover wasestimated at US$15.88 billionin January,down 13.8% over the same period last year, accounting for 83.6% of total export turnover.
The Ministry of Industry and Trade assessed that import-export turnover in January decreased compared to December 2019 and decreased compared to the same period in 2019, due to the Lunar New Year holiday. The actual number of working days in January is only 17, lower than the 22 working days of December 2019 and January 2019. The trade balance in January returned to a deficit, but the deficit was not large. This movement is in line with the trend that enterprises have completed export orders before and after Tet, enterprises need timeto return to achieve high productivity, stabilizing labor force.
Piling up difficulties
In the early days of this year, the most noticeable point in the "picture" of exporting goods, typically agricultural and fishery export, was the impact of the acute respiratory infection caused by the coronavirus that interrupted Vietnam-China trade.
Speaking about this, Mr. Nguyen Dinh Tung, representative of Vietnam Fruit and Vegetable Association, said that this virus immediately impacted the prices of many agricultural products, particularly fruits. For example, durian, before Tet, the price reached 70,000 VND per kg,now it is only 40,000 VND per kg. Dragon fruit is only 3,000 - 4,000 VND per kg, especially in some places, while watermelon price is only 1,000 VND per kg.
It can be said that the group of enterprises exporting fruits to China has been paralyzed due to the impact of coronavirus. The traders who bought in granary to export to China for the full moon in January also deposited well because the price was too low.
Regarding import and export in the future, the Ministry of Industry and Trade assessed that drastic measures to combat the acute respiratory infection caused by China's coronavirus, such as isolating an entire city, restricting travel, limiting immigration, restricting crowds, stopping exporting important materials for anti-epidemic have seriously affected many economic sectors such as transportation(the heaviest is air transport, followed by road and rail transport across the border), tourism, retail, stock market, express, logistics.
Notably, import and export activities inevitably have seen negative effects in the short and medium term (possibly 6-8 months) because of reduced demand.
Specifically, Starbucks closed thousands of stores in China, affecting coffee consumption; McDonald's closes hundreds of stores, influencing fillet consumption; restaurants and food chains are empty, leading to a reduction in demand for seafood. Besides, the border market opens more slowly than usual, firstly closing until February 8, 2020, causing interruption in exchange of residents, while this is still an important form of exchange for some agricultural products of Vietnam, especially fruits.
“In addition, Chinese buyers cannot come to Vietnam as usual, so there are no new orders, even though some types of fruit have entered the season. Official negotiations on the opening of agricultural markets (such as durian, passion fruit) under the Ministry of Agriculture and Rural Development's management are likely to be delayed because Chinese authorities could not visit Vietnam. The impact of the epidemic and anti-epidemic measures on import-export activities is relatively wide, but border trade will be most affected,” Deputy Minister of Industry and Trade Tran QuocKhanh said.
Diversifying the market
Analyzing removing difficulties for export, especially agricultural and aquatic products in the context of coronavirus, Dr. Dang Kim Son, former Director of the Institute of Policy and Strategy for Agriculture and Rural Development (MARD) said that the most worrying issue for Vietnam's agricultural products and farmers was still the market.
“We cannot expect much from the State's support. The support may be only temporary, such as freezing capital, reducing taxes, opening distribution channels. In the long term, it is necessary to diversify markets, build value chains from production to final consumption, shifting production to a large scale. All issues have been mentioned a lot but have not been done,” Dr. Dang Kim Son said.
From a commodity perspective, Mr. Tung also expressed his opinion: “The disease due to coronavirus is not known to end, Vietnam Fruit and Vegetable Association proposes the MARD and Ministry of Industry and Trade to continue supporting and promoting export of agricultural products into other markets; planning planting areas, doing preservation. Particularly, the Ministry of Industry and Trade will support electricity for units participating in fruit preservation to overcome difficulties in this period.”
In the future, the Ministry of Industry and Trade will closely monitor the situation of the disease caused by the coronavirus and notify new developments which are likely to affect import and export activities to localities and enterprises, so that enterprises and people have solutions to change the delivery method, export redirection or domestic consumption accordingly.
“The Ministry of Industry and Trade requests enterprises to seriously carry out export activities to the Chinese market according to international practices, improve the quality, implement regulations on traceability, declaration of planting areas and packaging facilities, as well as related requirements to meet the regulations and standards agreed with the importing country, avoiding risks and minimizing losses during production and business. In addition, Vietnamese enterprises, especially agricultural enterprises, need to anticipate the situation when Chinese enterprises cannot receive goods to have solutions to change the mode of delivery, redirect export or domestic consumption or give processing, storing accordingly," Deputy Minister Tran Quoc Khanh noted.
According to the Ministry of Industry and Trade: In January 2020, there were six export items with turnover of over US$1 billion. Among key export commodity groups, only the group of computers, electronic products and components, wood and wood products achieved a growth in turnover over the same period in 2019 with a result of 5.6% and 1.4%.
The US was Vietnam's largest export market in January 2020, with a turnover of US$4.8 billion, down 7.6% from the same period last year; China reached US$3.7 billion, up 32.8%; EU reached US$2.6 billion, down 30.8%; ASEAN reached US$1.6 billion, down 34.8%; Japan reached US$1.6 billion, down 15.8%; South Korea reached US$1.3 billion, down 29.3%.
In January 2020, the trade deficit was estimated at US$100 million, equaling 0.5% of export turnover. In which, the trade deficit of domestic enterprises is US$2.4 billion; FDI sector (including crude oil) saw a trade surplus of US$2.3 billion.
By DucQuang/Binh Minh