Vietnam one of two countries increasing exports to US market

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Vietnam was one of only two of the top 50 exporters to the US to increase first-quarter shipments to the world's biggest market, taking advantage of a lower-cost product portfolio than many regional competitors.

Its shipments to its largest market rose 4 percent through March to US$2.88 billion, according to figures from the US International Trade Commission. The performance was exceeded among the 50 biggest exporters only by Bangladesh, and compares with an 11 percent decline in China's American-bound shipments and a 24 percent slump for Thailand.

"Vietnam is on its way up the value chain, but they haven't fully made the transition yet," said Ray Burghardt, a director of Indochina Capital Corp. and director of East-West seminars at the East-West Center in Honolulu. "Vietnam still largely makes basic goods that people have to buy."

Vietnam's ability to post export growth to the US suggests that its diverse range of products and focus on low costs may enable it to avoid the full impact of the global recession. Evidence of strength in exports may boost the prospects for Vietnam's currency, which Australia & New Zealand Banking Group Ltd. on Wednesday predicted would be devalued by 4 percent.

"Consumption habits in the US are changing," said Michael Michalak, the US ambassador to Vietnam. "People are going to go downscale a little bit more, and that will benefit Vietnam."

Vietnamese apparel exports to the US rose 1 percent in the first quarter to $1.2 billion.

‘Wait and see'

"A lot of what they're shipping for the first quarter is based on orders that they got last year," Michalak said. "Let's wait and see what the second or third quarter figures are like. The second quarter is going to be the toughest for Vietnam."

Footwear shipments gained 24 percent through March to $364 million. Companies such as Nike Inc., that use China, Indonesia and Vietnam for production, are now focused on selling less expensive shoes in the US market, according to Indonesian Trade Minister Mari Pangestu.

"Both Vietnam and Indonesia are probably now somewhat more competitive compared with China," Pangestu said during an April 24 interview in Ho Chi Minh City. "We've been improving, and China has been experiencing some setbacks," she said, citing a stronger Chinese currency and higher labor costs in the world's most populous nation.

Furniture shipments declined 8 percent to $304 million, while seafood exports slipped 21 percent to $130 million. The value of crude oil shipments to the US fell 11 percent to $157 million, as the average global price of crude tumbled 56 percent in 2009's first quarter compared with the same period last year.

Coffee exports to the US weakened 23 percent by value to $73 million.

A decline in domestic coffee prices since last year "has deterred farmers from being ready sellers," Fortis Bank and commodities consultant VM Group said in a report this month." As much as 40 percent of the 2008-09 harvest remains in the hands of farmers - stocks that will no doubt be sold into any significant price rally."

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