Recipe for Change
Diversity is the child of necessity. That's one lesson that
Vietnam is taking to heart as it pushes to expand
exports despite the global economic slowdown.
Analysts believe that Vietnam can further diversify its
mix of agricultural and manufactured products and
match them to niche markets. Both China and the
United States have been flagged as key markets for
Vietnam to target.
Vietnam has already demonstrated some nimble
manoeuvring. "Vietnam has shown considerable
capacity to re-orient exports," says Adam Fforde, an
economist at the National University of Singapore.
Over the last two years, Fforde points out, "rather
severe losses in markets such as Singapore and Taiwan
were offset by rapid gains in others, such as China, the
EU, and Asean members such as Indonesia, Thailand
and the Philippines."
Falling oil prices are fuelling the urgency of
diversification. The brunt of the recession will probably
be felt only next year, with Vietnam's oil-export
earnings estimated to decline by as much as 20%.
Commodity prices are unlikely to improve, with robusta
coffee already trading at a third of its 1998 price and
rice prices falling by more than 40% since 1998. Sharp
declines in overseas consumer confidence will continue
to affect Vietnamese garments and beverages.
But the World Bank notes that this difficult period could
translate into an export breakthrough, as international
businesses rethink their procurement strategies. "This
situation presents Vietnam with easier opportunities to
break into these markets now than will be the case
later," the bank says in a report prepared for a donors'
gathering in Hanoi on December 7 and 8.
Vietnam's 2001 growth rate was a respectable 4.8%,
according to the bank, though that's well short of the
7% claimed by Hanoi. Overall export-earnings growth
is expected to be 7% this year, at around $15 billion,
down from the 25% export-earnings growth rate last
year. From January to November, Vietnam recorded
$13.8 billion in exports, a 4.9% increase over last year.
Notably, manufactured export earnings rose by only
1% in 2001, in sharp contrast to last year's 16%, due
to the collapse in exports of footwear, electronics and
computers.
Displaying its flexibility, however, Vietnam saw rapid
growth in vegetables, fruits and seafood exports, which
all grew at double-digit rates this year. Other successful
export items include furniture, toys, hides and skins and
processed foods.
On November 28, Vietnam's National Assembly finally
ratified the U.S.-Vietnam bilateral trade agreement,
signed by U.S. President W. George Bush on October
16. The agreement will kick in early next year, but the
climate of improved relations has already had some
positive impact: Vietnam's exports to the U.S. in the
first 10 months of the year reached $897.2 million, a
42.6% year-on-year increase.
Sadly, the U.S. is already proving to be a rather fickle
trading partner. Shortly before the National Assembly
vote, U.S. lawmakers voted to restrict imports of
Vietnamese catfish, following intensive lobbying efforts
by American catfish breeders.
The Chinese market is breeding more sustained
excitement. Economic issues were high on the agenda
when Vietnam Communist Party chief Nong Duc Manh
visited China in early December. Now that China has
joined the World Trade Organization, look for
increasing imports of Vietnamese meat and
vegetables--ingredients of hope in a rapidly changing
world.
By Margot Cohen - The Far Eastern Economic Review - December 6, 2001.
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