World Bank bullish on Vietnam exports
HANOI - Vietnam's exports should remain strong next year despite the
spreading global economic gloom, estimates the World Bank in a report
titled "Vietnam Economic Monitor".
"Though it is difficult to forecast export earnings growth in 2002, a year of
great uncertainty for the world economy, there are at least three factors
that augur well for Vietnam's export prospects," the report says.
First, the bank points out, the ratification of the Vietnam-US Bilateral
Trade Agreement and its implementation by the end of this year mean that
the nation will have "normal access" for the first time to the large US
market. As well, tariffs slapped on Vietnamese goods there will come
down from about 40 to 4 percent, which means that despite a weakening
US economy, Vietnam may see growth in exports to this market,
especially if a lower-price niche for manufacturers can be developed.
The second window of opportunity for Vietnamese exports may open up in
China. That country is not only the fastest-growing economy in the world,
but is also set to open up more to imports after its accession to the World
Trade Organization.
"Vietnam has demonstrated considerable ability to push export volumes of
products such as agricultural crops, seafood and garments despite
weakening external demand," the report says. "The Chinese market should
present a good opportunity to continue along this line."
The third key factor identified by the bank is that Vietnam has announced
a multiyear reform program that is expected to facilitate entry of private
enterprise into export trade and production and help reduce export costs.
But export earnings growth may not continue at its earlier breakneck
speed, the report warns - it could be as little as 7 percent this year
compared with 25 percent in 2000.
Falling world prices of oil and agricultural commodities - comprising nearly
40 percent of total exports - will actually lead to declines in earnings from
them. But vegetable and fruit (comprising 17 percent of agricultural
exports) and seafood (about 10 percent of non-oil exports) are expected to
post double-digit growth.
Manufactured goods are expected to perform poorly, rising by a mere 1
percent, because of a crash in the volumes of footwear, electronic and
computer items. Garment exports are expected to grow by 8 percent, the
same as last year.
The World Bank report estimates inflows of foreign investment to be about
US$1 billion in 2001. Europe in the past two years has become a
significant source, especially the United Kingdom, France and the
Netherlands.
"We expect a pullback in private capital flows to emerging markets -
including East Asia - due to September 11 and its aftermath," the World
Bank says. "Vietnam is not only vulnerable to the fall in the overall
availability of foreign investment for emerging markets but also to
economic weaknesses in specific countries that have been the major
investors."
Thus recessions in Singapore, Taiwan and Japan and slowdowns in Hong
Kong, South Korea and Malaysia will depress foreign investment inflows
further. "But it is quite possible that these investment sources may find
Vietnam a more stable and safer place for their funds in this region than
many other countries where the risk of instability looms," the World Bank
concludes.
Asia Times - November 7, 2001.
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