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MINISTRY OF EDUCATION
AND TRAINING
MINISTRY OF PLANNING
AND INVESTMENT
DEVELOPMENT STRATEGY INSTITUTE
______________
RESEARCH TO IMPROVE THE EFFICIENCY OF
VIETNAM’S COMMODITIES EXPORT TOWARD 2030
Major: Development Economic
Code: 9310105
SUMMARY OF DOCTORAL THESIS ON DEVELOPMENT ECONOMIC
HA NOI - 2018
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This thesis is completed at:
Development Strategy Institute, Ministry of Planning and Investment
Supervisor: Asso. Prof Le Xuan Ba
Reviewer 1: Asso. Prof Nguyen Hoang Long, Thuongmai University (Trade
University)
Reviewer 2: Asso. Prof Trinh Thi Thanh Thuy, Institute for Industrial and
Commercial Strategy and Policy Research, Ministry of Industry and Trade
Reviewer 3: Asso. Prof Dan Duc Hiep, Hai Phong University
This thesis will be examined at the Thesis Examination Board
at Development Strategy Institute in .…… am/pm on
…………………………………………………..
This thesis can be found in libraries as following: ………………….
……………………………………………………………………….
(Listing the libraries submitting the thesis)
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INTRODUCTION
The necessity of the research
Exported has an important role in Vietnam's economic growth during the long period since
the opened economy. The remarkable achievements of Vietnam's exports over the past years are:
(i) the scale and growth rate have been maintained at high levels in compared with other countries
in the region and around the world; (ii) the structure of exported has shifted positively toward
increasing the proportion of processed or refined products; and (iii) Vietnam has promoted its
comparative advantage in exporting some key commodities to developed partners/markets such as
the US, Japan and the EU.
However, behind the impressive figures of exports turnover and growth rate, exported
activities are now facing with some issues, namely: (i) dependence on imported materials; exported
goods are mainly in raw or semi-processed form with low value added; (ii) the structure of
exported is shifted widenly, based on the available resources (labor, resources) and the quantity;
(iii) export growth has more dependent on FDI enterprises; and (iv) the ability to proactively grasp
the favorable opportunities from the economy opening process, international economic integration
to penetrate, exploit and consolidate export markets is limited.
The fact that although exports still has an important role in GDP growth in Vietnam, the
exports growth had the sign of reducing, many main exported goods reach the "threshold" of
quantity rising and begin to decline; exported goods has facing more and more with the technical
barries of imported countries; the process of expanding market share in traditional markets and
exploiting new markets is difficult; the dependence on FDI enterprises has rising. At present, when
we mentioned to exported goods, we are pay attention to indicators reflecting the value and
quantity instead of the efficiency of exports, while it is the final target of exports. Domestic
researches are focus on in some prominent aspects of exported such as contributing to GDP,
exports restructuring, jobs creation. We do not have a comprehensive research on the export
performance of goods at the country level.
After nearly 20 years of promoting international economic integration, the world is facing
the much opportunity of strong growth under the 4th Industrial Revolution, also known as the 4.0
Revolution. In that context, the analysis and evaluation of Vietnam's export on the efficiency factor
becomes very necessary and important. Based on above reasons, the researcher selected the topic
"Research to improve the efficiency of Vietnam's commodities export toward 2030" for the
purpose to assessing the current status of Vietnam's exported commodities during the period of
2006 - 2017 under defined indicators, propose and recommend some possible solutions to improve
the efficiency of Vietnam's commodities export toward 2030.
The research purposes
- Systemizing and deepening the theoretical issues on the efficiency of goods export,
identify the assessment criteria as well as the factors affecting the exported performance to the
country.
- Studying the experiences of some countries in the region that have the similar economic
conditions and geographic locations near Vietnam in boosting and raising the efficiency of goods
export in order to get the lesson learned to Vietnam
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- Analyzing and evaluating the efficiency of Vietnam's commodities export in the period of
2006-2017 according to the defined criteria in the theoretical part, withdraw the lesson learned for
its Vietnam in the next period.
- Propose and recommend some possible solutions to improve the efficiency of Vietnam's
commodities export toward 2030.
Research subjects and scope of study
- Research subjects and scope of study of the thesis is the efficiency of Vietnam's
commodities export.
- Scope of study:
+ Scope of time: The thesis studies the efficiency of Vietnam's commodities export during
the period of 2006-2017
+ Scope of spatial: The thesis studies the efficiency of Vietnam's commodities export at the
country level only.
+ Scope of content: The efficiency of Vietnam's commodities export is studying based on 3
main criteria, as following: economic, social and environmental.
Research questions
(1) What is the efficiency of commoditis export at the country level? What criteria/group of
criteria is used to evaluate the efficiency of commoditis export of each country? In each criterion,
what index will be selected for review and evaluation? Which factors impact/influence to the
efficiency of exported goods?
(2) How neighbouring countries had done to improve the efficiency of export of goods?
And what can Vietnam learn from international experience to improve the efficiency of its
exported?
(3) What are an objective and subjective reasons leading to the exported activities in
Vietnam in the past time is not efficiency?
(4) What are the viewpoints and directions for Vietnam's commodity exports in the coming
period? What are the main solutions to improve the efficiency of commoditis export for Vietnam in
the next period?
Research methodologies
To solve the tasks set out, the thesis uses some common methods in economic research
including the dialectical materialist and historical materialist methods, the modern economic
theories concerned, statistical methods, comparative methods, methods of analysis and synthesis, ...
Contributions of the thesis
- The theoretical contributions of the thesis:
+ Clarify the concept of the efficiency of exports of goods as well as the factors affecting
the performance of goods export at the national level.
+ Introduce a set of criteria for assessing the efficiency of the export of goods at the
national level and corresponding indicators, of which consideration on social and environmental
indicators.
- The practical contributions of the thesis:
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+ From empirical studies of some countries have advantages in exporting goods withdraw
lessons learned for Vietnam.
+ From analyzing the current status of Vietnam's exported goods in the period of 2006 2017, the thesis points out the causes made exported activities was not efficient and affected
factors.
+ Propose the viewpoints, directions and solutions to improve the efficiency of Vietnam's
exported goods toward 2030.
+ The results of the thesis can be considered by policy makers; universities refer in
teaching and research.
Structure of the thesis
In addition to the introduction, conclusion, cover page and sub-cover page, list of
abstracts, list of works published by the author related to the thesis and reference document, the
thesis is divided into 4 chapters.
Chapter 1: Overview of researches related to the efficiency of commodities export
Chapter 2: Theoretical foundation and international experience on the efficiency of
commodities export
Chapter 3: Current status of the efficiency of Vietnam’s commodities export in the period
of 2006 - 2017
Chapter 4: The main solutions to improve the efficiency of Vietnam’s commodities export
toward 2030
CHAPTER 1: OVERVIEW OF RESEARCHES RELATED TO THE EFFICIENCY OF
COMMODITIES EXPORT
1.1. Overview of researches related to the efficiency of commodities export
1.1.1. Oversea researches
The efficiency of commodities export is often studied in terms of impact, play a key role in
economic growth and restructuring domestic production. Studies may be conducted for a range of
countries in similar circumstances or for individual countries, through a methodology and method
of selection, to draw conclusions.
Experimental researches on the impact of exports on economic growth are mainly based on
traditional international trade theories, new trade theories and new growth theories. Typical studies
are: Michalopoulos và Jay (1973); Balassa (1985); Kavoussi (1984); Hendrik Van Den Berg
(1997); Mishra (2011); Lin and Li (2003).
Considering the shift in exported goods structure, experimental researches are based on the
arguments that emphasize the role of exported goods shifting and the diversification from raw
products to processed products, the role of endogenous growth models emphasizes the importance
of the manufaturing sector to sustainable economic growth. Typical studies are: Peter C.Y. Chow
(1987); Herzer and Nowak-Lehmann (2006); M.A. Arip and associate (2010); Jansen (2004);
Jansen and associate (2007); Imbs and Wacziarg (2003); Herzer and Nowak-Lehmann (2006).
The impact of the natural resources element on exports is studied in terms of the
dependence between export growth and increased natural resources exploitation. Typical studies
are: T. Gylfason and G. Zoega (2001); Thanwa Jitsanguan (1988).
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It can be seen that overse researches on export efficiency is focus on the impact of
increased export on economic growth, the impact of commodities export structure shiffting,
diversification of export and the role of available natural resources to exports that affect economic
growth. The researches results are suggested for the thesis to consider and determine the set of
scientific and appropriate indicators so that building the criteria set to evaluate the efficiency of
commodities export in accordance with the reality of Vietnam.
1.1.2. Domestic researches
In Vietnam, increasing export turnover as well as maintaining high and continuous export
growth rate for a long time leading to significant positive impacts on economic growth. The
efficiency of commodity exports is mainly studied in relation to economic growth and participation
in exported goods restructuring.
Research by Ho Trung Thanh (2009) introduced the concept of "sustainable export" based
on criterias for sustainable development such as the pace and quality of export growth, the
contribution of exports to growth and stable economic. Dao Ngoc Tien’s research (2010) has
shown that the structure of exported market structure has not been actively shifting but only the
transition from each market to another one when the world market fluctuates. While Nguyen Thi
Thuy Hong (2014) reinforces the perception on the importance of active domestic raw materials for
improving export efficiency. Nguyen Thi Thu Thuy (2014) points out that Vietnam's export growth
is currently broad-based, it has suitable in the initial stage of industrialization, if we maintain its in
a long time, exports will hardly maintained its important role in economic growth. Nguyen Quang
Hiep (2016) affirms that growth exports has active support in improving the related factors such as
creating more jobs, mobilizing more capital to the economy and increasing total factor
productivity, thereby boosting economic growth.
As a result, Vietnam's GDP has been reached high in the region in recent years, the openess
of the economy and the exports/GDP ratio are increased accordingly.
In general, current studies on efficiency of Vietnam’s commodities export are mainly
considered in terms of total turnover, growth rate, economic growth, job creation, economic
structure. Those researches have been well-done, based on theoretical and science empirical
models, trust, usefulness in researching and making policy, and also openning the appropriate blank
space for author continuning to study on the exported goods of Vietnam.
1.2. Research gaps and the issues need to be further researched and resolved
1.2.1. Research gaps
Over the past time, domestic and international economists have studied the relationship
between exports and economic growth, exports and economic restructuring, the impact of exports
diversification and the role of natural resources to economic growth and exports. The results of
these studies are very important and are inherited in the research process when considering related
issues and it also suggested research gaps on efficiency of commodities export at the national level.
At the national level, the identification, analysis and evaluation of exports performance
from general macroeconomic indicators is very difficult and there are not unified indicators at the
moment.
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Requirement of exports efficiency at the national level is not the same with ones at the
enterprise level, therefore the considered and evaluated criteria the country's exports performance
will not be the same as the enterprise. Current, the domesstic researches on exports efficiency is
focused at the level enterprises, performance indicators are considered at the micro level, reflecting
business results enterprises such as turnover, profit... There is no study on indicators of export
performance at the national level now, the impact of exports on economy, society and environment,
not paying attention to the "quality" of exported goods; internal studies have focused heavily on the
assessment of the relationship between exports and economic growth.
In the early period of an opening and export-oriented economy, the quantity of exports and
the value of earned foreign exchange is a top priority and important to the nation, the amount of
earned foreign currency is a top priority and important to the nation. However, considering in the
long term and in associated with sustainable development, increasing volume of export goods will
not be effective in the long term.
It also makes exports ineffective, negatively impacting on the economy due to decreasing
and depleting of resources, increasing the dependence on foreign partners, waste of human
resources and environmental pollution.
Selecting criteria for overall assessment of export performance of the country is a difficult
problem, it has not been researched, current researches focus on assessing export performance
based on individual indicators such as turnover, goods/group of goods, market/major markets;
restructuring; the relationship between commodites exports and economic growth; policies to
promote the exports of goods to main markets; exports diversity polices.
If considering in large scale, quantitative indicators show that Vietnam's export
performance is very effective and there is no need for adjustment, the increasing of the contribution
of FDI firms in the proportion of exports shows that we have a dynamic and attractive investment
environment in the world. However, in the context of reducing in exports growth, many main
exported goods reach the "threshold" of quantity rising and begin to decline; exported goods has
facing more and more with the technical barries of imported countries; the process of expanding
market share in traditional markets and exploiting new markets is difficult; the dependence on FDI
enterprises has rising…, we recognize the importance of studying the development of a set of
indicators for assessing the efficiency of exports of goods as a basis for identifying the issues that
Vietnamesse exported goods faced and having solutions timely. The thesis will focus on sloving
the analyzed "research gaps".
1.2.2. The contents of the thesis focus on solving
On the basis of theoretical and empirical studies on the efficiency of goods export and the
analyzed "research gaps", the thesis focuses on researching and solving the following major isues:
(i) The definition of commodities exports efficiency and the factors affecting the exports
performance at country level; (ii) from overview of researches related to the efficiency of goods
export, proposing criterias for assessing the efficiency of the exports at national level; (iii) studying
the factors affecting the efficiency of goods export; (iv) analyzing current status of the efficiency of
Vietnam’s commodities export in 2006 - 2017 period, pointing out the main reasons that some
contents of export performance in Vietnam is not high enough; and (v) international and domestic
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contexts, proposing viewpoints orientations and solutions for improving the efficiency of
Vietnam’s commodities export by 2030.
The research questions and the raised isues will be answered through the results of each
chapter. Based on the selected criteria for the efficiency of the export of goods, the thesis analyzes
the role of exports for socio-economic development in Vietnam in the past period; from the factors
affecting the export performance, the thesis proposes the main solutions to improve the efficiency
of Vietnam’s commodities export in coming period, in which focusing on vigorously reforming and
furthering the participation of domestic firms in export activities, participating more actively in the
global value chain, strengthenning the application of the 4.0 revolution to improve exports
efficiency, towards sustainable and friendly environmental exports.
CHAPTER 2: THEORETICAL FOUNDATION AND INTERNATIONAL ON THE
EFFICIENCY OF COMMODITIES EXPORT
2.1. Some definitions and theories related to the commodities export
2.1.1. The definition of the commodities export
Commodities export means that the country sells goods to another country on the basis of
using its currency as a means of payment, with the goal of profit. Currency can be foreign currency
for a country or for both countries.
According to the Law on Trade 2005, "Export is an act of taking goods out of the territory
of the Socialist Republic of Vietnam or bringing goods into a special zone locating in the territory
of Vietnam which is considered an exclusive customs area as stipulated by law"
In this thesis, commodities export is understood as activities of selling goods abroad, using
currency as a mean of payment.
2.1.2. The roles of exports of goods to economic development
2.1.2.1. Exports play an important role in economic growth
2.1.2.2. Exports create the main capital for industrialization and modernization of the country
2.1.2.3. Exports contribute to economic restructuring, boosting production
2.1.2.4. Exports positively impact on employment issues and social security
2.1.2.5. Exports support the expansion and promotion of external economic relations
2.2. The definition and criteria to evaluate the efficiency of commodities export
2.2.1. The definition
On the basis of the analysis of efficiency, in this thesis, the efficiency of goods exports is
the set of criteria including economic, social and environmental indicators, reflects the aggregate
results of the qualitative and quantitative export of goods of nationwide, in a given period, usually
one year.
2.2.2. The criteria to evaluate the efficiency of exports of goods
Based on overview of researches related to the efficiency of commodities export, research
gaps and the contents of the thesis focus on solving, the thesis proposes group of 3 criteria using to
evaluating exports efficiency at countries level including: (1) Criteria for export efficiency on
economic; (2) Criteria for export efficiency on economic; and (3) Criteria for export efficiency on
environmental. In each of the above criteria, there are many indicators that can be used to assess
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the efficiency of commodities export, which are quantifiable and not be quantifiable in the current
condition of Vietnam, especially the social and environmental indicators.
2.2.2.1. Criteria for export efficiency on economic
This criteria consists 05 indicators as follows:
(i) Export turnover and export growth rate
The export of each country is considered effective when the total export turnover is big
amount, the export growth rate of the next year is higher than the previous year, exports growth
rate is maintained steadily year by year. It can not be said that a country reached effective in
exporting if the export turnover is low, the export growth rate is uncertain. The unequal increase or
decrease in export turnover is a sign that export activities get into trouble and need to be monitored
and managed in order to have appropriate adjustment policies to support exports activites to
achieve the desired results.
(ii) Trade balance
The trade balance reflects the country's competitiveness in the international market. If a
country suffers a serious trade deficit for many years, it demonstrates that its domestic industries
are not internationally competitive. In contrast, the trade surplus reflects the high competitiveness
of exports in the international market.
However, in many cases, through imported restriction policies (high protection for
domestic production), exports may increase sharply by exploiting the advantages of raw materials,
abundant workers... in the early stages of trade liberalization leading to some countries may have a
trade surplus.
Trade balance shows the status of the economy. The trade surplus contributes to boost
economic growth, creating more jobs, increasing national wealth in the form of foreign exchange
reserves, creating prestige and be the premise for the currency to be freely convertible. In contrast,
long-term trade deficits will threaten macroeconomic stability, increasing foreign debt, weak
competitiveness economy and inefficient investment. Thus, the status of the trade balance is always
concerned by economists and managers, so that the solutions to the trade balance reached the state
beneficial to the economy (the state of the trade surplus).
(iii) Export contributes to economic growth
Internationally, a number of empirical studies have been conducted using national, regional
and international data to clarify the relationship between exports and economic growth.
The majority of empirical studies indicate that exports are positively correlated with
economic growth. There is a positive relationship between exports and economic growth;
increasing exports is one of the main factor make economic growth rising and export growth has
impacted on non-export sectors, contributing to increasing the efficiency of the economy and
promoting long-term growth.
For an export-oriented economy like Vietnam, the analysis of export growth needs to be in
line with economic growth in order to have consistent policies with its goals and strategies.
(iv) Value added of commodities exports
Value added is the new value of goods produced from the production process in an
industry during a given period of time (usually one year).
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It only includes the new value created during the review period, which is called value
added (VA). Value added reflects the performance of the industry during fixed time and it is a basis
for assessing the performance of the industry.
Calculating value added at each stage of the production process gives a more accurate view
of the true value of the sector's contribution to the economy which is based on the value added of
the sector. It will limit the duplication, counting two or three times for one product.
Considering the value added of exports activities to the economy give us a further and
more comprehensive on exports performance instead of considering the turnover only.
(v) Structure and the shift of exports structure
Exports structure in Vietnam is considered by: markets; characterize of commodities; and
economic sectors. Each way of classifying exports structure has different pros and cons. In general,
through the exports structure, we can evaluate the exports performance and the development level
of the countries. The countries have exports structure contain high-tech exported goods, applying
scientific and technical factors will get a large amount of foreign currency. In contrast, the
countries have the exports structure of raw or semi-processed accounting high proportion, the value
of revenue is low, while exhausting natural resources, reducing exports efficiency and
competitiveness in the international market.
Therefore, the restructuring of exports is an urgent and important requirement in economic
development process and restructuring of export goods in order to promote the economic
restructuring along with the direction of industrialization and modernization. Later, it supports
exports activities back. The trend of the world market is to improve the science contents,
technology and competitiveness of exports products in the context of raw and semi-processed
products are increasingly devalued and less competitive.
2.2.2.2. Criteria for export efficiency on social
This criteria consists 02 indicators as follows:
(i) Creating more jobs
With the starting point of an agricultural country with having the big advantage of
abundant labor force, the creation of more jobs is considered as an important indicator to evaluate
the efficiency of exports of goods.
(ii) Increasing exports of the domestic economic sector
When analyzing the exports performance at the national level, there is one indicator that
needs special attention that is the participation of the domestic economic sector in export activities.
If the contribution of the domestic economic sector to exports is high and stable, it can be said that
the country's export activities are efficient and its economy is less affected by economic
fluctuations, political instability lead to negatively impact on economic development. An overreliance on FDI enterprises can cause the country falling into crisis when the FDI sector
simultaneously withdraws its investment when an economic crisis occurs, country policies changes,
increasing protectionism or the rapid change of the technological revolution in the world.
2.2.2.3. Criteria for export efficiency on environmental
This criteria consists 02 indicators as follows:
(i) Access to international standards on environmental protection
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In the context of trade liberalization, when trade barriers are removed, environmental
standards and regulations have become "green barriers" to international trade and are increasingly
applied in developed countries. Under those conditions, meeting regulations and international
standards on environment is the major challenges for developing countries - where there is a lack of
conditions for the implementation and application of agreements, international convention on
environment in production and export. For Vietnam, exports are mainly based on natural goods,
while importers are increasingly required international standards on the environment. We need
trade and environment policies to fully exploit the benefits of trade liberalization and overcome
environmental barriers to improve export efficiency.
(ii) Access to international standards on goods quality
International standards on goods quality are documents that provide requirements,
regulations and technical instructions to the products; guidelines on assessment and inspection on
the characteristics and qualities of products can be used uniformly to ensure the quality of exported
goods in accordance with market requirements, supporting the export activities become fast and
effective, reducing non-tariff barriers in international trade. The modern production process has
required that the products should be manufactured in a "green" process, using economical and
friendly materials and reducing emissions to the environment, means not only focusing quality but
also achieving high environmental standard. The challenges for a developing economy like
Vietnam is the adoption international standards relating to the environment into manufactured
activities, to ensure that materials are used, the exported products characteristics conform to
international standards, easy accessing to imported markets. The approaching in strict standards on
quality goods is an important for Vietnam's exported goods, to help remove technical barriers of
imported countries, saving costs, accessing new markets and increasing market share (by increasing
productivity and competitive advantage)...
2.3. Factors affecting the efficiency of commodities export
2.3.1. Objective factors
Objective factors include the following five factors:
2.3.1.1. Demand of the world market
2.3.1.2. Import policies of partners
2.3.1.3. The process of international economic integration
2.3.1.4. Advances of science and technology
2.3.1.5. Natural conditions, geographic location
2.3.2. Subjective factors
Subjective factors include the following four factors:
2.3.2.1. Government policies
2.3.2.2. Production capacity of the country
2.3.2.3. Management apparatus, human resource involved in goods exports process
2.3.2.4. Infrastructure to support the goods exports process
2.4. Experience of some countries on improving the efficiency of commodities export
2.4.1. China
China's experience on improving export efficiency is considered in the following areas:
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(i) Strategic orientation for exports promotion
(ii) Extending the rights in trade and foreign trade; and decentralizing the management of
trade and foreign trade
(iii) Implementation of exports tax refund policy
(iv) Affirming the important role of FDI sector in promoting exports
2.4.2. Thailand
Thailand's experience on improving export efficiency is considered in the following areas:
(i) Orientations for the development of industries substitution imports
(ii) Adjusting policies to attract foreign direct investment (FDI)
(iii) Encourage all economic sectors to participate in export and diversify export markets
(iv) Diversifying exported products and focusing on strong and specific exported products
2.4.3. Lessons learned for Vietnam
2.4.3.1. Success lessons can be applied
(i) Export promotion policies are implemented in a way these were appropriate to the
specific circumstances of each country
(ii) The exported structure shifting has changed over time in line with the domestic and
international economic situation.
(iii) Promulgate policies to exploit the country's resources, discover and develop new
export commodities
(iv) Promulgate policies to enhance competitive advantage, leading to a shift in exports
structure
(v) Rational exploitation of the role of exchange rates in promoting exports
(vi) Exploiting the role of FDI in promote growth and exports restructuring
(vii) Flexible coordination of export policies instruments
2.4.3.2. Unsuccessful lessons should be avoided
(i) Implement a fixed exchange rate policy and not have a mechanism to control FDI in the
appropriate sector.
(ii) Too focused on the domestic market, not actively seeking overseas markets to increase
exports
(iii) Insufficient attention into environmental protection and human resource development
CHAPTER
3:
CURRENT
STATUS
OF
THE
EFFICIENCY
OF
VIETNAM’S
COMMODITIES EXPORT IN THE PERIOD OF 2006-2017
3.1. Overview of the current status of Vietnam's commodites export
In the period of 2006-2010, the total export turnover of Vietnam reached USD $ 280.4
billion, increased 2.5 times in compared with the period of 2001-2005, the average growth rate was
17.3% per year. In the period of 2011-2015, the process of market opening under bilateral and
multilateral commitments continues positively impact to the economy; total export turnover
reached USD $ 655.7 billion, increased 2.34 times in compared with the period of 2006-2010, an
average growth was 17.5% per year. In 2016 and 2017, continuing to take advantage of the opening
process according to the signed roadmap, the total export turnover reached USD $ 390.6 billion,
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equivalent 59.6% of total export turnover in the period of 2011-2015, the average growth rate is
15.1% per year.
In general, in the period of 2006-2017, exports growth is fast and steady, reached exports
turnover is big amount in compared with many countries in the region, exports growth rate is much
higher than GDP growth rate and becomes a driving force for GDP growth; export structure shifted
positively; the proportion of hi-tech goods increased; export markets is diversified of which
increasing exports activities to the US and the EU markets; FDI sector plays an important role; and
create jobs for millions of workers.
3.2. Current status of the efficiency of Vietnam’s commodities export
3.2.1. The efficiency of commodities export on economic
3.2.1.1. Export turnover and export growth rate
TABLE 1.1. EXPORT TURNOVER OF VIETNAM’S COMMODITIES EXPORT IN 2006-2017 PERIOD
(Unit: Mil. USD, %)
Export
Import
Turnover
Year
Value
Growth
rate
Value
Growth
rate
Trade
balance
Value
Growth
rate
2006
39,826
22.74
44,891
22.12
-5,065
84,717
22.42
2007
48,561
21.93
62,765
39.82
-14,203
111,326
31.41
2008
62,685
29.09
80,714
28.60
-18,029
143,399
28.81
2009
57,096
-8.92
69,949
-13.34
-12,853
127,045
-11.40
2010
72,237
26.52
84,839
21.29
-12,602
157,076
23.64
2011
96,906
34.15
106,750
25.83
-9,844
203,656
29.65
2012
114,529
18.19
113,780
6.59
0,749
228,309
12.11
2013
132,033
15.28
132,033
16.04
0,300
264,066
15.66
2014
150,217
13.77
147,849
11.98
2,368
298,066
12.88
2015
162,017
7.86
165,570
11.99
-3,537
327,761
9.90
2016
176,581
8.99
174,804
5.58
1,777
351,385
7.26
2017
214,019
21.20
211,104
20.76
2,915
425,123
20.98
Source: GSO
WTO accession has helped Vietnam's exports increase rapidly from $ 48.6 billion in 2007
to USD $ 62.7 billion in 2008, reach 4.2 times in compared with 2001. However, high inflation rate
in 2008 and the world financial crisis from the middle of the year had a negative impact on the
Vietnam’s exported performance. As a result, exports turnover in 2009 decreased sharply, stopped
at USD $ 57,096 billion, decreased 8.92% in compared with 2008, but still higher than ones 2007
(at 17.58%). However, by 2010, Vietnam's exports have recovered faster than forecasting and
achieved a higher growth rate than the average increase 15.1% in the pre-WTO period and higher
than the target 15% that have set in the development strategy on imported and exported of goods
for this period.
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According to statistics, except 2009, the remaining years in the period of 2006-2017,
turnover and export growth rate regularly maintained at high level. In 2011, exports reached an
impressive figure with amount of US $ 96.9 billion, double times to the WTO accession 2007; in
2016 the volume was USD $ 176.6 billion, increasing 1.8 times in compared with 2011 and to 2017
the turnover is reaching USD $ 214.02 billion, increasing 2.2 times in compared with 2011 and 5.4
times higher than 2006 year.
Regarding turnover and growth rate, in the period of 2006-2017, it can be said that
Vietnam's exports have achieved efficiency, the turnover and growth rate of the latter period are
higher than the previous ones. Export growth rates and export turnover have achieved high and
continuous for a long time reflects the strong development of Vietnam’s exported goods. If only
considering the turnover and export growth rate; it can be said that Vietnam has been exploited
effectively the benefits of the opening market and the international economic integration.
3.2.1.2. Trade blance
In the period of 2005-2017, the ratio of trade deficit /total export turnover in 2007 was the
highest. However, this rate tends to decrease and reached 17.4% in 2010 and 10.2% in 2011 before
reaching the status of surplus trade for the first time after a long trade deficit in 2012 reaching the
first trade surplus after the long period of trade deficit in 2012.
However, then this rate tended to decrease and by 2010, the trade deficit/total export
turnover has decreased relatively, reaching 17.4% and in 2011 was 10.2% before reaching the
status of trade surplus for the first time after the long period of trade deficit in 2012.
5000.0
2368.0
748.8
1777.0
2915.4
0.3
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
-5000.0
-3553.7
-4314.0
-5064.9
-10000.0
-15000.0
-20000.0
-9844.1
-14203.3
-12601.9
-12852.5
-18028.7
Trade balance 2005 - 2017 period (mil. USD)
FIGURE 3.4. TRADE BALANCE OF VIET NAM IN THE PERIOD OF 2005-2017
Source: General Department of Customs
The Export/Import Index in the period of 2006-2017 tends to progress to 1 showing that
the trade balance of Vietnam has improved significantly. However, a detailed analysis of trade
balance with some of the key partners also point out that the exported acivities seems ineffective.
15
In the period of 2006-2017, we have a high trade deficit with ASEAN, China, and South Korea,
strong upward trend with China and Korea markets. Meanwhile, with developed and distances
markets such as the US and the EU, the trade balance is positive, surplus is high and tends to
increase. In 2006, the surplus with the EU was USD $ 4 billion and is USD $ 26.24 billion in 2017,
increased by 6.6 times; and for the US, the same figures are USD $ 6.9 billion; USD $ 32.41 billion
and 4.7 times.
In general, Vietnam's balance trade has been more positive, getting more surplus, the
competitiveness of exported goods has improved, however, the shift is not sustainable and when
considering with each specific market, our exports activites have not achieved its desired target.
3.2.1.3. Exports contribute to economic growth
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
-20.00%
Export growth rate (%)
GDP growth rate (%)
Export/GDP ratio (%)
FIGURE 3.9. ECONOMIC GROWTH, EXPORT GROWTH RATE AND THE RATIO OF EXPORT/GDP
IN THE PERIOD OF 1995-2017
Source: GSO
The chart shows that Vietnam's GDP growth, export growth rate and export GDP ratio are
almost the same relations. Increased exports tend to push GDP upwards and export/GDP ratio is
likely to fluctuate in the same direction as export growth. Vietnam has taken advantage of the
market opening process to boost domestic production, increasing export turnover, provide stable
income to a large part of the population, especially the vulnerable population (such as low-skilled
workers, farmers), thereby contributing positively to GDP growth.
3.2.1.4. Value-added of exports
When analyzing the efficiency of Vietnam’s exports through the global value chain model,
value-added of the economy is still low on all export products, including the leading exported
goods and the agricultural exported products. Vietnam’s exported goods participating in GVC in
simple stages such as assembling, processing (for textiles and garments, electronics, leather and
16
footwear), semi-processing (for agricultural and aquatic products) - those are fields that require
labor-intensive, low knowledge requirements and the gained value added is also lowest in the
global value chain series.
The stages of high value added, knowledge - intensive as design patterns, brands, labels,
export/distribution of goods ... are mostly implemented by foreign enterprises.
3.2.1.5. Structure and the shift of exports structure
(i) Exports structure by characterize of commodities
According to the SITC classification, in the period of 2000-2015, the exports structure has
shifted positively, the portion of raw or semi-processed goods decreased significantly, from 55.8%
in 2000 to 34.2% in 2010 and 18.7% only by 2015. In contrast, the portion of processed or refined
products increases to 65.1% in 2010 from 44.2% in 2000 and reaches 81.3% by 2015.
According to the state plan, in the period of 2006-2015, exports of heavy industry and
minerals increased rapidly on in absolute value, from USD $ 11.7 billion in 2005 to USD $ 22.4
billion in 2010, nearly double times for 5 years and increasing around 3.3 times in 2015, equivalent
to USD $ 73.3 billion. For light industrial and handicraft products, the exported has continuously
increased, reached USD 13.3 billion in 2005, increased 2.5 times in 2010, reached USD $ 33.3
billion and reached USD $ 65.1 billion USD in 2015. The exports of seafood and agro-forestry
products continued to increase, of which: from USD $ 4.7 billion in 2005 to USD $ 11.4 billion in
2010 and USD $ 17 billion in 2015 for agricultural and forest products; and from USD $ 2.7 billion
in 2005 to USD $ 5 billion in 2010 and USD $ 6.6 billion in 2015 for seafood products.
In the period of 2006-2017, the structure of key exported goods has shifted sharply,
actively according to reducing the exports of crude commodities and minerals; consolidating and
affirming the importance of traditional exported commodities such as textile, footwear and seafood;
increasing the contribution of specific commodities and characteristics of the agricultural country;
and especially the leading role of new exported products, high technology content.
(ii) Exports structure by markets share
Asia is the traditional export market and accounts the largest position. In the period of
2006-2016, export turnover was USD $ 551.5 billion, reached 49.6%, the average growth rate of
2006-2010 was 17. 2% per year and 2011-2015 was 17.8% per year. The mainly exported in Asia
are China, ASEAN, Japan and South Korea, accounting for 75-80%. However, considering in
relations to imported, Vietnam has trade deficit from Asia, mainly from China and South Korea.
America is ranked second position, export turnover in the period of 2006-2016 was USD $ 261.5
billion, accounting for 23.3%, the average growth rate of 2006-2010 was 19.3% per year and 20112015 was 19.6%; of which the United States is the largest market, accounting for 83-85%; in 2017,
trade surplus with the US reached USD $ 32.4 billion, equaling 15.1% of total turnover of the
country. Europe ranked third position with turnover reached USD $ 229.2 billion, accounting for
20.6%, average growth rate of 2006-2010 was 19.5% per year and 2011- 2015 was 17.8% per year.
In the period of 2005-2016, beside to maintain stable export growth in the traditional
markets, the US and the EU are two main markets, creating the largest trade surplus for Vietnam’s
exported; the noteworthy in this period that exported markets structure shifted towards the export
growth rate to the US and the EU grew faster than to Asia.
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(iii) Exports structure by economic sectors
The FDI sector accounts for an increasing role in total export turnover. In 2001, the portion
of the FDI sector was 45.2%. By 2016, the figure reached 71.5%, equivalent to USD $ 126.3
billion. The exported contribution of the FDI sector in the total export turnover is increasing
showing that with the same policies efects FDI sectors have applied the preferences of the markt
openning, integrating and signing FTAs better than the domestic sector.
When considering the trade balance, it can be seen that the exports performance of the FDI
sector is better than that of the domestic sector. The statistics for the period of 2005-2017 show that
the domestic sector is always in high trade deficit and no decline signal, while in the opposite
direction, the FDI sector is in high trade surplus and the trend is increasing. In 2005, the surplus
trade of FDI sector reached USD $ 5 billion and achieved USD $ 17.2 billion in 2015, equivalent to
10.6% of total export turnover; catched USD $ 23.8 billion, account for 13.5% of total export
turnover in 2016 and USD $ 25.8 billion and 12.1% in 2017 respectively. The increasing in export
turover of the FDI sector comes from hi-tech goods such as telephones and components;
computers, electronic products and components; cameras, camcorders and components.
3.2.2. The efficiency of commodities export on social
3.2.2.1. Creating more jobs
After more than 30 years of Doi Moi, the structure of the economy has changed positively,
the share of the agricultural sector has decreased and the proportion of the industry has increased
sharply, leading to the structure of labor in the economic sectors has shift in accordingly. The
establishment of factories and exported goods producing enterprises leading to an increase in the
demand for labors in the industrial sector; create more employment for rural workers. The strong
development of export-oriented industries has created new jobs in the industrial sector, income
improvement, improving the life quality and mitigating negative impacts of unemployment,
ensuring social security issues. The problem in the long run is that export-oriented industries are
labor-intensive and low skilled, that means that the advantage of abundant and cheap labor is
becoming a barrier in the future, especially in the context of the current 4.0 revolution.
3.2.2.2. Increasing exports of the domestic economic sector
Statistics show that the domestic sector accounts for a small share of total exports turnover
tends to decrease in the period of 2006-2017. Of the total value USD $ 214 billion exported in
2017, only USD $ 61.8 billion came from the domestic sector, accounting for 28.9% of total
turnover. Thus, considering his indicator, exports activities is ineffective, reflecting the increasing
reliance of the Vietnamese economy on FDI sector and point out that investment in domestic sector
reform processs has not achieved significant change.
When domestic economic growth is too dependent on the FDI sector, there is the potential
for instability, which can change very quickly as policy preferences change, or investors move
away, or when there is a change in economic fluctuations, politics.
Increasing the efficiency of exported goods at the national level should be begin by
enhancing the competitiveness of domestic enterprises, creating a competitive driving force
between the FDI sector and the domestic sector, minimizing dependence.
3.2.3. The efficiency of commodities export on environmental
18
3.2.3.1. Access to international standards on environmental protection
With its strength as an agricultural country, Vietnam has great potential for export of
agricultural, forestry and aquaculture products. However, statistics show that the contribution of
this group is on the downward trend. The increase in agricultural, forestry and fishery exported
turnover is facing great barriers from the technical standards set by imported countries. Recently, a
high percentage of Vietname’s agricultural and seafood exports have been retained for border
inspection or rejected and returned due to not meeting the environmental standards of the imported
country, leading to the prestige of Vietnam’s agricultural and aquatic products is effected on the
international market, causing economic losses. Access to international environmental standards is
an important channel for improving the efficiency of the export of goods. In order to expand
market share, increase value as well as prestige in the world market, the necessity for export goods
is to meet increasingly international standards on the environment, thereby contributing to the
management and exploitation of appropriate and effective natural resources to develop sustainable
and long-term export.
3.2.3.2. Access to international standards on goods quality
Access to international standards for commodity quality is an important factor in positively
supporting export growth. For key commodities such as textiles and garments, seafood, footwear,
Vietname’s enterprises have strictly followed the process, controlled the quality of raw materials,
auxiliary materials, the way to keep raw materials to avoid lowering the quality,.. However, there
are many firms are not aware the importance of quality standards, this leads to the proportion of
exported goods returned due to not meeting the standards is high, especially for agricultural
products. In order to improve the efficiency of the export of goods, to increase the value obtained
for the economy, it is necessary to improve the access to international standards of quality of
partnerships.
3.3. Main policies affecting the efficiency of commodities export
Policy is an important factor affecting the exported performance of goods and thesis refers
to some policies affecting the exported performance of goods during the past as following: (i)
Exchange rates policies; (ii) Policies to encourage and facilitate enterprises to participate in foreign
trade; and (iii) Policies for supporting industries.
3.4. General assessment
3.4.1. Positive results
Firstly, exported performance in terms of scale and growth rate has reached a high level in
compared with other countries in the region and around the world and is a driving force to GDP
growth.
Secondly, there was a shift in the exports structure under the direction of increasing the
proportion of skilled-intensive products and gradually reducing the proportion of raw and semiprocessed goods.
Thirdly, with the positive improvement in the trade balance, the efficiency of exports have
been increased, the competitiveness of Vietnam’s goods has changed dramatically, creating more
capital for economic development. .
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Fourthly, exports contribute to the employment of millions of workers, improve and
increase income. It can be said that solving the employment problem is one of the positive and
prominent effects of commodity exports alongside contributing to GDP growth.
Fifthly, we are more attention to input materials and supporting industries for export
production in order to participate more deeply in the global value chain, bringing more value added
for the economy.
Sixthly, Vietnamese exported goods are presented in 250 countries and territories, of which
occupy a large market share in the developed markets with high requirements on technical
standards, quality and environment such as the United States, the EU, Japan, Australia.
Seventhly, there is an increase in the diversification of exports, the expansion of the
"export list" of the diversification process, the economy is constrained by the "shocks" that
contribute to macroeconomic stability and sustain economic growth.
3.4.2. Limitations
Firstly, the added value of exports to economic growth is much smaller than the nominal
exports turnover. Because of low value-added ratio, Vietnam is striving to maintain its export
growth in two respects: the number of exported and exported quantity, this implies the risk of
facing trade barriers of imported countries.
Secondly, the proportion of raw materials and auxiliary materials is high, indicating that
the production of exports is highly dependent on imports, while the supporting industries have not
developed accordingly.
Thirdly, the shift in the exports structure is not sustainable, containing many danger factors
such as the transition is focused from raw and semi-processed production process to processing
sectors with labor-intensive, low technology content and the complexity of the products is not high.
Fourthly, the export-enhancing infrastructure has improved, but not in line with the
requirements of trade facilitation.
Fifthly, Vietnam has not fully utilized the opening market process in accordance with
commitments made at ATIGA, AKFTA, ACFTA and AANZFTA to boost exports.
Sixthly, we have not mobilized the active and effective participation of state owned
enterprises in the exports activites. Trade surplus mainly came from the contribution of FDI
enterprises.
Seventhly, efficiency of exports is hindered by the large export growth, based on the
exploitation of natural resources and using more and more factors that increasing the pressure to
environmental pollution.
3.4.3. Causes of limitations
3.4.3.1. Objective factors
Firstly, the use of natural comparative advantage (low comparative advantage) in
international competition is no longer appropriate, we export mainly in raw form, simply
processing leading to the higher exports volume achives, the lower value added brings back to the
economy
Secondly, technical barriers in international trade increase and the trend of
commercial protectionism are negatively impact on the ability to expand and increase exports.
20
Thirdly, the process of market opening and integrating under bilateral and multilateral
FTAs have caused undesirable and not conducive to trade balance.
Fourthly, export activities are lack of active participation of science and technology factors
- it is an important factor to enhance the added value of export goods.
Fifthly, the spillover effect from the exports sector to other ones of the economy is not
clear, typically the slow development of the supporting industries and the supply chains.
3.4.3.2. Subjective factors
Firstly, the legal policy in investment and business is not synchronous, lacking of
consistency, overlapping between fields, creating different understanding in the process of
application at all levels; lack of stability that not create psychological peace of mind for investors.
Preferential policies are promulgated but are scattered, not properly focused on the sectors, fields
and regions need to mobilize investment.
Secondly, exported production is heavily dependent on imported materials, so most
manufacturers are not proactive in their business strategies, depending on the fluctuation of
international prices, leading to not active orders, cancellation, orders postponement, affecting
prestige and export efficiency.
Thirdly, the human resources of Vietnam is plentiful, but the rate of trained workers is low,
lacking of qualified human resources leading to not met requirement of enterprises in general and
FDI enterprises in particular. The advantages of abundant labor force and low-cost is rapidly
decreasing, while the quality of replaced human resources has not yet developed in parallel.
Fourthly, infrastructure systems has been invested but it has not met the requirements of
economic development, especially the roads, ports, infrastructure outside the industrial parks,
environmental treatment facilities; the process of slow innovation, reforms in transport,
transshipment of goods as well as logistics related services...
CHAPTER 4: THE MAIN SOLUTIONS TO IMPROVE THE EFFICIENCY OF
VIETNAM’S COMMODITIES EXPORT TOWARD 2030
4.1. International and domestic context affecting the Vietnam’s commodites export toward
2030
4.1.1. International context
Over the past 10 years, the world economy has many complicated developments, of which
the world growth declined sharply, especially in 2009 with minus growth. In 2017, the global
economy tends to improve markedly with the gains recorded in most developing countries and key
economies. However, the risk to the global economy is forecasted to come from the strengthening
of trade protectionism, the uncertainty in economic policy and the possibility of fluctuations in the
financial market. Contributing mainly to global economic growth is the participation of developed
countries, led by the United States, followed by Europe and Japan.
The recovery of global trade coincides with an increase in investment; however, the
slowdown of trade liberalization was a factor that affected the resilience of global trade. In 2018,
world commodities prices are forecasted to fluctuate slightly in compared with 2017, crude oil
prices are forecasted to continue to rise as the economic recovery trend has increased demand using
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