Covid harms export prospects, but long-term outlook favorable
Covid harms export prospects, but long-term outlook favorable
While southern localities continue to apply social distancing measures, many localities in the north still face the risk of pandemic spread, affecting 2021 exports. Vietnam Economic News’ Phuong Lan spoke about this issue with Tran Thanh Hai, Deputy Director of the Agency of Foreign Trade under the Ministry of Industry and Trade (MoIT).
Tran Thanh Hai, Deputy Director of the Agency of Foreign Trade |
Southern cities and provinces are major exporters. How has social distancing affected their export results?
In the first half of 2021, 19 southern provinces and cities, which are currently applying social distancing measures according to Government Instruction 16, contributed 45 percent (US$79 billion) to Vietnam’s export value.
Instruction 16 allows businesses to maintain production if they meet the requirements of the “three-on-spot” and “one route, two destinations” models. In fact, however, the number of eligible businesses is limited and a majority of companies have stopped operations. According to the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA), only about 600 among tens of thousands of companies in the city can maintain operations. Those stopping operations are unable to fill export orders. While the global economy is recovering with a huge demand for goods, their absence in supply chains will adversely affect Vietnamese business.
Labor shortage and increased input material and logistics costs are major problems facing businesses. Land transport has also encountered numerous difficulties domestically.
In the northern provinces of Bac Ninh and Bac Giang, businesses have resumed operations following Covid-19 induced interruptions. What do you think of the possibility of export recovery in these localities?
Bac Ninh Province’s export value dropped about 19 percent in June due to Covid-19 but grew more than 65 percent in July thanks to effective pandemic control. Similarly, Bac Giang Province also faced a 31 percent decrease in export value due to Covid-19, but since the pandemic was controlled, its export value has grown 79.8 percent.
However, these localities still face the risk of Covid-19 spread in production facilities, especially due to the high transmissibility of the Delta variant of the coronavirus. Therefore, providing vaccinations for employees, transport workers and those involved in other stages of the supply chain is an urgent requirement.
Vietnamese exports grew in the first seven months of 2021 |
What has the MoIT done to help businesses overcome difficulties in production and export?
The MoIT established a steering committee for supply of essential goods and services to centrally governed provinces and cities in the south when Covid-19 broke out in the southern region. This committee is now responsible for guiding the supply of essential goods and services for cities and provinces nationwide and support production and trade.
The MoIT has also established a special working group to keep a close watch on difficulties facing businesses in the south and provide consultancy for the ministry to propose business support solutions. Special working groups have also been set up to support businesses in the north and the central region. The MoIT also organized trade promotion and business connection activities, while at the same time boosting the sale of goods on e-commerce platforms. These efforts have helped promote farm produce sales for northern provinces such as Bac Giang, Hai Duong, Son La, as well as for southern localities.
Could you share your forecast about Vietnam’s export results in 2021?
The 2021 export results will depend heavily on the actual situation of pandemic control. However, given its potential and experience, as well as favorable conditions offered by free trade agreements, I believe Vietnam will be able to regain its export growth momentum in the near future.
