Transcript Domestic trade

VIETNAM’S TRADE PERFORMANCE
IN 2007-2011
Nguyen Anh Duong
Central Institute for Economic Management
Hanoi, April 2013
Outline
 Introduction
 Trade
commitments under WTO and FTAs;
 Foreign
trade performance;
 Domestic
trade performance;
 Lessons;
 Context
and Policy recommendations.
Introduction

“Open-door policy” and international economic integration are
indispensable and interrelated with domestic reforms.

Alongside international economic integration, trade (including
both import-export and domestic trade) has significantly
contributed to VN’s socio-economic development, esp. since 2000.

International economic integration creates both opportunities and
challenges for VN in improving export competitiveness and
transforming imports into domestic production capacity.

Trade activities considerably affected by volatility in the global
economy since 2007 (financial crisis, economic recession, public
debt crisis in Europe, etc.) as well as difficulties of domestic
economy.
Trade commitments under the WTO and FTAs
VN’s roadmaps for tariff reduction under selected FTAs

WTO commitments on services: 11 service sectors with 110/155 subsectors (broader than other signed FTAs).

Commitments on other areas: Business rights, investments, etc.

FTAs bring about huge opportunities for market access, exports and
investment attraction (especially when trade partners tend to
liberalize more rapidly or provide more preferential treatments) 
utilization capability? (trade facilitation; ROO and TBT
requirements; distribution network linkages as well as improvement
of enterprises’ competitiveness)

Competition will become more and more intense to VN enterprises,
especially beyond 2015 (When ERP is significantly reduced) 
responses of enterprises and the Government’s facilitating roles?
Trade performance

Imports and exports increased in 2007-2008, only decreased in 2009
before going up again since 2010.

Exports: 2006: $39.6 bil. 2011: $96.9 bil. (average: 19.5% p.a.); as
percentage of GDP: grew from 65.2% to 79.0%;

Export growth mainly driven by global trade expansion; and
liberalization and competitiveness improvement, while the WTO
accession has insignificant impacts. Nominal devaluation did not
help increase export.

Export increasingly concentrated on relatively new markets
(China+Korea, due to regional FTAs), together with traditional
markets (ASEAN, US, EU, Japan)  better meet needs and
requirements of partners, though export markets not diversified.

Export structure is quite similar to those of China and ASEAN.

Shares of consumer goods and intermediate goods increased,
while that of crude oil decreased. However, agricultural, naturalresource-intensive and/or labour-intensive products still have
comparative advantages
Kim ngạch xuất, nhập khẩu và nhập siêu giai đoạn 2005-2011
Đơn vị tính: triệu USD
110,000
0
90,000
-5,000
70,000
-10,000
50,000
-15,000
30,000
-20,000
2005
2006
Xuất khẩu
2007
2008
Nhập khẩu
2009
2010
Cán cân thương mại
2011

Imports: 2006: $44.9 bil.; 2011: $106.7 bil. (average: 18.9% p.a.); as
percentage of GDP: 87.1% in 2011;

Imports expanded rapidly immediately after joining the WTO,
albeit slowing down recently (due to domestic economic hardship
+ capability to control imports). Other factors: nominal exchange
rate + FDI.

Imports mainly came from several key markets (accounted for
about 72-77%). Imports from China grew most considerably, and
accounted for the largest share of VN’s import value.

Share intermediate goods is largest, despite slight decrease (2006:
62.4%; 2011: 58.7%). The proportions of capital goods and
consumer goods recovered.
Trade deficit: continuously widened until 2008, and narrowed
since 2009 (mostly because of domestic economic downturn).
 At the expense of trade deficit, export-oriented production
capacity of VN improved very insignificantly in 2007-2008, but
has showed improvement recently.
 Trade deficit, especially since 2007, was closely related to
considerable domestic savings-investment gape, macroeconomic
(fiscal, monetary, exchange rate) and trade policies


29.2
30.0
28.8
25.3
22.5
20.7
7.9
20.0
17.3
12.9
10.0
20.0
18.2
20.0
13.3
12.1
8.7
13.8
12.7
8.2
8.3
2005
2006
12.0
10.4
8.2
3.6
0.0
2001
2002
2003
2004
Nhập siêu/GDP
2007
2008
Nhập siêu/Xuất khẩu
2009
2010
2011
REER
trade
deficit in
VN,
Tỷ giá REER
vàand
thâm
hụt thương
mại
của1990-2010
nước ta, 1990-2010
135.0
20,000
130.0
18,000
125.0
16,000
120.0
14,000
115.0
12,000
110.0
10,000
105.0
8,000
100.0
6,000
95.0
4,000
90.0
2,000
85.0
0
80.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trade
deficitmại
Thâm
hụt thương
REER
-2,000
Trade deficit of FDI sector (excluding crude oil)
150.00
4,500
100.00
3,000
50.00
1,500
0.00
2000
2001
Trade
deficit of
Nhập
siêu
FDI
2002
2003
2004
2005
2006
deficit/exports of FDI
Tỷ lệTrade
so với xuất
khẩu của khu vực FDI
2007
2008
2009
2011
2010
2011
of FDI / total trade
Tỷ Trade
lệ so vớideficit
tổng thâm
hụt thương mại
deficit
0
Domestic trade

Retail sales of goods and services increased continuously (even
excluding price increase).

Including price increase: change insignificantly compared to preWTO accession, though still higher than inflation.

Excluding price increase: on average, increased 12.8% p.a. in
2008-2011;

Domestic trade boosted even in 2009  foundation to maintain
and foster production.

Few structural changes: mostly contributed by non-state sector;
by industry: focused on trading (77-79.4%).

Attractiveness of domestic retail market was undermined recently
(because of slow economic development + difficulty in
expanding retailing scale)
Lessons

To maintain a favourable, effective and low cost investment
environment is among key factors for trade promotion. Foreign
enterprises constitute an important substance for a more competitive
market for exports, imports and domestic trade.

Positive effects from trade will rise in long-term if supporting
industries are developed accordingly, thereby creating foundation
for developing key industries and/or export-oriented ones.

Trade policy innovation is necessary to meet new contextual
requirements, but trade policy need to be transparent and predictable
while insufficiencies of trade policy development and
implementation should be solved.

Trade is no longer a purely economic issue, but increasingly
affected by geo-political factors. Thus, relation among nations and
partners should be more adequately identified.

Import and export activities need to be closely linked with domestic
trade through reorganizing enterprises and markets of services
sectors that link imports-exports and domestic trade.

Assessing impacts of international trade agreements should be
carried out with multi-dimensional perspective, and through an
adequate period of time to appropriately identify how management
capability has changed.
Context and Policy recommendations
Context and prospects
 Global economy expected to recover (slightly), and unpredictable.
Economic and export-import expansion mainly occurs in developing
countries (especially in Asia). Commodity prices are still high, but
may decrease in the coming years.
 VN economy predicted to encounter many difficulties. Growth
relatively low, at least until 2013. Imports and exports continue to
rise, while economic restructure is initiated. FTA negotiation and
implementation are under way. ODA will be less preferential.
 International economic integration (including FTAs) may create
both negative and positive impacts, but net impacts on VN economy
will be positive. Benefits will be greater if international economic
integration is coupled with domestic reform. Financial risk and
macroeconomic instability should be taken into consideration.
Principles
 Trade policy has to be harmonized and consistent with other
policies;
 Amend scope and concept of trade policy (market, industry, value
chain);
 Strengthen regulatory capacity in order to sufficiently, precisely and
scientifically design and implement necessary protection measures
within the framework of VN’s commitments;
 Targeting consumers and strengthening consumers’ confidence;
 Review import and export tariff structure on inputs and outputs
(inter-sectoral thinking);
 Establish alliance among strategic industries.
Policy orientation on import-export

Improve import-export management mechanism;

Increase added value of exports, reduce export of raw materials;

Promote linkages between material suppliers with export
enterprises, improve preservation and processing facilities;

Ensure stable production and consumption capacity of key aquaagricultural products;

Improve capacity to forecast supply-demand and prices in the
international market;

Strengthen cooperation with important export partners;

Facilitate trade activities.
Policy orientation on import-export (cont.)

Implement effective and rational investment policy in order to
improve export and control import;

Exchange rate policy should help maintain competitiveness of VN’s
goods in international market (and also to stabilize the
macroeconomy);

Guiding and controlling import.
Policy orientation on domestic trade

Strengthen
confidence
of
households
and
individuals
(macroeconomic stablization + supervision of goods’ quality).

Restructure domestic retail market, especially in industries with
SOE participation toward a more competitive and effective market.

Quickly finalize master plan on developing domestic distribution
system.
Policy orientation on domestic trade (cont.)

Support economic entities of all ownership types to improve
distribution system, facilitate the establishment of large distribution
enterprises
of
VN
that
have
modern
facilities,
sufficient
competitiveness and are able to lead the market.

Encourage the establishment of enterprises jointly owned by
material producers, manufacturers with distributors.

Pay attention to develop market in rural areas.

Develop e-commerce and logistics services.
Thank you!