Workers at a garment factory owned by Singaporeans outside Hanoi
Vietnam will be among the best positioned traders in the world over the next two decades, with exports set to see double-digit annual increases, leading the whole of Asia in terms of growth, a new HSBC report says.
In contrast to most of its neighbors in emerging Asia, Vietnam maintained high export growth this year, weathering the global downturn “extremely well,” according to the bank’s Global Connections Report, released on Monday.
“Demand for clothing and footwear is less sensitive to
global market turmoil than other goods and this, combined with the rapid pace at which Vietnam is building market share in telecoms, has helped protect Vietnam from the recent weakening in global demand,” the UK-based lender said.
Vietnam’s exports rose 18.4 percent in the first 10 months to US$93.5 billion, with foreign-invested enterprises accounting for nearly 63 percent of the shipments. Strong exports helped narrow the country’s trade deficit to $357 million, from $8.9 billion of the same period last year.
Shipments of mobile phones and parts more than doubled in the first 10 months from the same period last year to $9.9 billion. Electronics and computer products saw a 69.3 percent increase to $6.1 billion, according to the General Statistics Office.
These hi-tech shipments, when combined, made up the biggest source of export revenue for Vietnam, even topping garments and crude oil.
“Being able to attract and retain foreign firms with high-value manufacturing products such as electronics, computers and phones is an advantage for Vietnam,” the report says.
Free trade pact
Vietnam, India and China are expected to lead Asia, and also the world, in terms of growth in merchandise exports in the period between 2021 and 2030. Other countries in the region are expected to post somewhat slower export growth, albeit still strong compared with most other regions in the world, the UK bank said.
The 10-member Association of Southeast Asian Nations, known as ASEAN, is scheduled to officially launch its single market with free movement of goods and services in 2015. The same year, Vietnam will also join the ASEAN-China Free Trade Area.
“Plans to expand the ASEAN Free Trade Agreement to zero tariffs on all goods by 2015 will be an additional factor supporting Vietnam’s trade with other economies in the region over the medium term,” the report says.
The bank forecasts that by 2030, China will have overtaken the US as Vietnam’s largest export partner but the US, Japan and Korea will remain key sources of demand for Vietnam.
“As well as enjoying strong export growth, Vietnam will also be an increasingly large importer, both of capital goods to meet its large infrastructure needs and of consumer goods to meet the needs of its rapidly expanding consumer market. India, China and Bangladesh will be its fastest growing import partners in the decade to 2030,” it says.
The prediction that China will become the largest buyer of Vietnam’s goods comes even as the Vietnamese government says it is aiming to reduce the trade deficit with its neighbor.
The Minister of Industry and Trade, Vu Huy Hoang, told legislators Monday that strong measures will be taken to curb smuggling and improve the trade balance with China.
Vietnam’s trade deficit with China totaled $13 billion in the first 10 months of the year, local media reported, citing government data. Its trade deficit with the world’s second largest economy nearly hit $13.5 billion in 2011.
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By Thanh Nien Staff, Thanh Nien News (The story can be found in the November 16th issue of our print edition, Vietweek)