Increasing Processed Products for Export

Mr. Hoang Van Dung, Standing Vice Chairman of Vietnam Chamber of Commerce and Industry (VCCI), had an exchange with Vietnam Business Forum’s reporter Lan Anh on the sidelines of the ASEAN 100 Leadership Forum 2007 held in August, focusing on inner-bloc cooperation and development enhancement.

 

In fact, Vietnam is focusing on traditional markets like the EU, Japan and the US. These markets import a large majority of Vietnamese goods. Exports to other ASEAN countries are usually in small volume with small value; hence, enterprises are not dedicated to these markets. Vietnamese commodities are similar to those manufactured by other ASEAN countries, mainly from agriculture, light industry, apparel, and assembled electronics products. The market size and income of ASEAN countries like Indonesia and the Philippines are low; thus, Vietnamese products face numerous difficulties in competition on these markets.

 

At present, Vietnam mainly exports material products like rice, coffee and crude oil to ASEAN nations. The production of apparel, footwear and ships exported to these countries is reliant on imported materials. Consequently, the more Vietnam exports, the more it imports. In other words, only when we can provide materials for our industries will we resolve the trade deficit. In my opinion, the import tendency will exist for at least several years to come.

 

Vietnamese exporters need processed products. They can cooperate with companies throughout ASEAN to process products for export to ASEAN countries and to other regions. At the same time, enterprises must have their own trademarks - vital for development - because most exported Vietnamese products bear foreign brand names. Vietnamese companies are only subcontractors. It is said that when the sweat on Vietnamese workers dries, they will run out of money. The gain from the export of 100 shirts outsourced in Vietnam is equal to the export of a single shirt in South Korea. Enterprises must have trademarks from the designing stage to selling stage. We should not rely too much on outsourcing because this is only suitable for the short-term, a way of creating more employment. If we do not grow up, we will be subcontractors forever.

 

In fact, there is still a wide divide between old members and new members in ASEAN. To enhance competitiveness as well as the cooperation within the bloc, Vietnamese enterprises should actively survey the market and join hands with other companies in ASEAN to boost investment cooperation. In that way, Vietnamese companies can change their commodities, as well as consolidate their advantages in exported products. ASEAN countries should assign production among nations to reduce product cost and improve the general capacity of the bloc. Especially, it needs time to bridge the gap among ASEAN countries.

 

However, the problem is Vietnamese enterprises’ limited understanding of ASEAN. They have not fully tapped CEPT/AFTA to enjoy preferential treatment like other companies in the region. In my opinion, the most important thing is to understand the target market clearly to make profit.

 

The development of China and India are objective conditions for Vietnam and the ASEAN bloc, because these countries will need to import Vietnamese and ASEAN commodities when they develop. Vietnam can choose competitive products to export to these two markets. I think China and India are two strong rivals against Vietnam, but this is also an objective factor to boost the development of Vietnam as well as ASEAN nations.

 

VCCI will organise market survey delegations and trips to determine exportable products of Vietnam. At the same time, we will cooperate with regional countries to increase information exchange and trade promotion. We will also cooperate in organising trade fairs and building websites for enterprises to access updated market information.