The export value of timber and wood products in Vietnam is estimated to reach over 6 billion USD in the first five months of this year, an increase of 18% over the same period last year, according to General Department of Vietnam Customs.

Notably, the exports of wooden products is expected to bring home over 4 billion USD, up 7.5% compared to the same period last year.

To Xuan Phuc, Managing Director of Forest Trends' Forest Policy, Trade, and Finance Initiative, said that Vietnam’s timber industry will gradually recover in 2024 as demand for the products is increasing.

According to Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, said that Vietnam is among the top timber exporters in the world. Vietnamese timber reaches 170 countries and territories worldwide, making deeper inroads in key markets like the US, Europe, the Republic of Korea and Japan, and marking greater presence in emerging markets like Middle-East and India.

Lap said that Vietnam has affirmed its position in the global timber market thanks to its advantages in forestry development, support policies, and accession to free trade agreements.

Moreover, Vietnamese companies are investing in new technology and digital transformation to develop new products and services and increase competitiveness, efficiency and productivity.

However, Vietnam’s timber industry is also facing many difficulties , especially when major importers have been imposing stricter requirements on origin, green production, reduction of greenhouse gas emissions, and the Carbon Border Adjustment Mechanism (CBAM) - a carbon tariff on carbon-intensive products imported to the European Union (EU).

Last year, the EU adopted a regulation to curb the market's impact on global deforestation and forest degradation around the world, as well as protecting the rights of indigenous people. The EU Deforestation Regulation ("EUDR") mandates extensive due diligence on the value chain for all operators and traders dealing with certain products derived from cattle, cocoa, coffee, oil palm, rubber, soya and wood.

According to this regulation, businesses exporting rubber wood furniture to Europe have 18 months for large companies or 24 months for small and medium companies to prepare to meet the requirements of the EUDR.

Lap added that the internal capacity of Vietnamese businesses is also a limitation as most of them mainly produce following orders and designs of foreign distributors.

Production and export have grown continuously for years but still rely on cheap labour and raw materials, and the added value of products is not high.

He noted that most businesses are small in scale and do not have enough capacity to build brands. Small businesses can be weak in responding to sudden and continuous fluctuations in the market. Vietnamese products are rarely distributed directly to customers but via foreign distribution channels and foreign businesses, Lap added.

Nguyen Liem, Chairman of the Binh Duong Furniture Association, said that exports of Vietnamese timber and wooden products to the US increased in the first months of this year, pushing the industry’s growth.

US importers highly value and consider Vietnam an important timber and wood product supplier in the world, Liem said, adding that if businesses can make use of this advantage, they can create breakthroughs.

However, focusing too much on a key market is also a weakness, Lien said, emphasising that Vietnamese timber producers need to diversify markets and increase exports to other potential markets./.\

Businesses seek sci-tech rule changes

Businesses and scientific researchers are seeking amendments to tech transfer and financial mechanisms through Vietnam’s sci-tech law.

The Ministry of Science and Technology (MoST) is working on amendments to the 2013 Law on Science and Technology (LoST) towards creating further refinements for businesses and intellectuals.

“The ministry will drastically amend the law with many new points, transforming it into an effective tool and important legal corridor to strongly promote science, technology, and innovation, with technology transfer and financial mechanisms being among the amendments,” said Nguyen Hoang Giang, Deputy Minister of Science and Technology.

The MoST’s plan is reinforced by the government’s determination to create a more enabling environment for the sci-tech sector. At a meeting to celebrate Vietnam Science and Technology Day on May 16, Prime Minister Pham Minh Chinh proclaimed that sci-tech and innovation are a fundamental element of both digital and green transformation.

“Science, technology, and innovation are the shortest path to achieving our goals. Therefore, we need to prioritise resources in institutions, mechanisms, policies, infrastructure, and people,” he noted. “Lessons from successful cases around the world, especially in South Korea, Japan, China, the United States, Germany, and Finland prove the great role of sci-tech in the development and advancement of nations.”

He requested relevant authorities to further promote the role of science and technology and innovation in all fields, considering this an important political task of all levels. They must focus on key tasks and solutions, such as building policies for inclusive development, investing in infrastructure, improving the quality of human resources, and increasing attraction and diversification.

Also of note to carry out includes strengthening the model of public-private partnerships, and having appropriate policies to lure reputable Vietnamese and international scientists to contribute to domestic sci-tech development.

At the meeting, Pham Van Tai, general director of business corporation THACO, said, “The business community looks forward to support from the MoST to create new advantages for businesses to participate in research, development, and application of sci-tech and innovation.”

It is regarded that the sci-tech industry is still facing many issues in terms of legal problems, human resources, limited state funding, and a big sci-tech gap with developed countries. The business community is waiting for improvements not only in the LoST, but also the Law on Capital City for Hanoi.

As shown in MoST statistics, investment in sci-tech has been decreasing compared to the level stated in the LoST. While investment must be no less than 2 per cent of the total annual state budget expenditure, in 2023 the state funding for sci-tech was only 0.82 per cent.

Nguyen Quan, chairman of the Vietnam Automation Association, which represents the voice of more than 1,000 member businesses, said that a major problem involves technology transfer, especially transferring research results to businesses.

“As shown in existing rules, when a research project is funded by the state budget, the result is owned by the state. Moreover, if research results are transferred, it is necessary to evaluate the product as intellectual property - a type of intangible asset,” Quan said.

“But currently, there is no competent agency assigned to evaluate assets and almost no-one dares to value them for transfer to businesses,” Quan continued.

He added that research projects also encounter difficulties in disbursement, payments, invoices, contracts, and bidding for equipment and materials procurement. Although financial management under the fund mechanism has been regulated in the sci-tech law, it has not yet been accepted for application to the relevant task management system.

“Along with amending the LoST, it is necessary to pay attention to amending laws on the state budget, corporate income tax, and on public employees to have a consistent legal system,” Quan added. “In addition, other laws such as on public procurement, public investment, use of public assets, and tech transfer must also be amended to remove obstacles in research activities, application, and commercialisation.”

SBV announces plan to inspect gold trading entities

The State Bank of Vietnam (SBV) has announced a plan to conduct inspections of gold trading operations at two commercial banks and four businesses.

The entities subject to inspection include TPBank, Eximbank, Saigon Jewelry Company (SJC), Doji Precious Metals, Phu Nhuan Jewelry JSC (PNJ), and Bao Tin Minh Chau, according to an SBV official at the Compliance Announcement Conference on Business Gold Practices held in Hanoi on May 22.

The inspection, which will feature representatives from the Government Inspectorate, Ministry of Public Security, Ministry of Finance, and Ministry of Industry and Trade, is set to last 45 days.

The inspection team will focus on compliance with legal regulations regarding gold business operations, anti-money laundering practices, accounting policies, preparation and use of invoices and receipts, and tax reporting and performance of tax obligations, based on the regulations of the Inspection Law and related statutes.

The audit period covers activities from January 1, 2020, to May 15, 2024, and could be extended if necessary.

Deputy Governor of the SBV Pham Quang Dung said that during the inspection, additional subjects and contents could be added if deemed necessary. The SBV plans to enhance state oversight of gold business activities and impose strict sanctions on legal violations in gold trading.

The SBV will also continue to take measures to increase the supply of SJC gold bars and narrow the price gap between domestic and international gold prices, Dung added.

Dragon Capital becomes major shareholder of Nam Long Group

Fund management firm Dragon Capital has raised its stake in Nam Long Group, whose NLG shares are traded on the Hochiminh Stock Exchange, to 5.18% and become one of the real estate developer’s major shareholders.

Amersham Industries Limited, a member of Dragon Capital, purchased 1.8 million NLG shares on May 16 while Samsung Vietnam Securities Master Investment Trust, another member of the fund management firm, acquired 0.17 million NLG shares.

The deals raised Dragon Capital’s ownership in Nam Long Group from 4.67% to 5.18%.

In related news, Nguyen Xuan Quang, chairman of Nam Long Group, registered to sell two million NLG shares, reducing his ownership from 11.03% to 10.51% of Nam Long’s charter capital. The transaction is expected to be conducted from May 22 to June 20.

Regarding business activities, Nam Long recorded revenue of VND204.6 billion in the first quarter of 2024, down by 13% year-on-year. The real estate developer incurred a loss of VND65 billion.

Closing the trading session today, NLG rose by 1.77% day-on-day to VND45,900 per share, with more than 3.2 million shares transacted.

With 278 winners and 152 losers, the VN-Index of the Hochiminh Stock Exchange shot up by 14.12 points, or 1.11%, against yesterday’s session, at 1,281.03 points.

More than 968.1 million shares worth VND23.3 trillion were traded on the southern bourse, falling by 14% in volume and 19% in value compared to the previous session. Block deal transactions contributed VND2.4 trillion to the overall value, with 134.4 million shares changing hands.

Domestic coffee prices rising again

After short-run price stability, the price of coffee in localities of Vietnam increased again to nearly VND5,000 per kg on May 22.

Specifically, traders in the Central Highlands province of Dak Nong are paying VND110,400 per kg (US$4.32). In the meantime, the product is being sold at VND109,000 a kg in Lam Dong Province. In Dak Lak and Gia Lai provinces, the purchasing price has increased to VND109,800 a kg and VND110,000 a kg respectively.

Local traders disclosed that coffee prices normally decrease from May to August because Brazil and some other countries are in the harvest season and the supply is abundant.

However, the sudden increase in coffee prices in the local market and the huge demand of trading volume shows that concerns about supply shortages along with geopolitical and economic uncertainties are still weighing heavily on buyers.

The coffee market is forecast to continue to increase in the near future and Robusta coffee prices will soon return to US$4,000 a ton. Experts predict that by 2024, Vietnam's coffee exports could reach $5 billion because many factors are attributable to the achievement including a high increase in prices.

The world’s rising demand of some green coffee products for making instant coffee is also pushing up domestic demand.

Green Business Title 2024 program launched in HCMC

The Green Business Title is an annual program organized by the People's Committee of Ho Chi Minh City in collaboration with Sai Gon Giai Phong (SGGP) Newspaper and the Ho Chi Minh City Union of Business Association.

Launched in 2023, the Ho Chi Minh City Green Business Title recognized 90 businesses for their achievements. Building on this success, the organizers have officially launched the Green Business Title program for 2024.

The program aims to achieve three core objectives. The first is to honor, reward, and encourage businesses that comply with waste management regulations during production and operations and engage in research and production of environmentally friendly products.

The second is to enhance corporate responsibility in environmental protection, aiming for sustainable growth. The third is to support businesses in promoting themselves, increasing competitiveness, and integrating into the global economy.

For detailed information on submitting applications for the Green Business program, visit the website www.huba.vn.>

Agricultural products enjoying good export season

At the Northern bordering gates of Vietnam each day, hundreds of agricultural product trucks have customs clearance, showing a promising time for farmers this year.

The lychee season has just begun, and by May 23, 2024, more than 4,200 tonnes of fresh lychee had been bought by Chinese businesses to transport via Kim Thanh II Border Gate in Lao Cai City. Every day, about 200 vehicles carrying fresh lychee from the provinces of Bac Giang and Hung Yen pass this border gate.

Because both lychee and longan in the North suffer from serious crop failures, the harvested ones are enjoying very lucrative prices and consumption is quite high.

At the two border gates of Tan Thanh and Huu Nghi in Lang Son Province, about 250 – 300 trucks have customs clearance for exported goods, mostly farm produce.

According to Deputy Head Phung Van Ba of the Customs Unit of Huu Nghi Border Gate (under the Customs Department of Lang Son Province), since this April, the quantity of trucks passing the border gates of this province to sell merchandise in China has been quite large, at around 400 vehicles per day on average. They mostly use the border gates of Huu Nghi and Tan Thanh. Around half of them transport agricultural products, and 50 electronic items.

On the opposite side, each day, approximately 600-800 trucks come for importing procedures. Deputy Head Ba said that due to this heavy workload, even at weekends, the staff at the province’s border gates are still on duty. Agricultural products passing these gates are mostly durians, dragon fruits, jackfruits, grapefruits, and lychees.

Deputy Head Nong Quang Hung of the Customs Unit of Tan Thanh Border Gate informed that besides common imported produce, since the beginning of 2024, there have been new items like wooden boards, coke, and construction machines.

Particularly, for the first time, tractor-trailers have been imported into Vietnam via Tan Thanh Border Gate. This leads to the estimated import-export turnover for the first 5 months of 2024 reaching $460 million, a rise of 60 percent compared to 2023.

Renewables company’s tax dues prevent chairman from travelling abroad

The chairman of major hydroelectricity and renewable energy producer Trung Nam Group has been prohibited from leaving the country until the company pays its tax debts of VNĐ21 billion (US$840,000).

Nguyễn Tâm Thịnh’s ban is related to taxes owed by the company’s Thuận Nam solar power plant.

The company said the plant is struggling due to slow payments for electricity by state-owned Electricity Vietnam (EVN).

The company recently paid overdue customs duties of over VNĐ27.5 billion in HCM City.

The company has outstanding bonds worth VNĐ24.3 trillion, and subsidiaries too have issued bonds.

But it nevertheless remains a significant player in the energy industry. 

Vietnam Airlines resumes Hanoi to Chengdu flights

Starting June 25, the national flag carrier, Vietnam Airlines, will reopen a route for flights from Hà Nội to Chengdu, China.

Four flights per week will depart Hà Nội on Tuesday, Wednesday, Friday and Sunday.

Flights will operate to Chengdu Tianfu International Airport, one of the largest and most modern airports in China.

This route is an important part of Vietnam Airlines' strategy to grow its international flight network, making it easier for tourists to travel between Việt Nam and China. Vietnam Airlines has launched various promotional offers for this route.

Euro investment takes on green hue

European companies increasingly beef up their manufacturing facilities in Vietnam with a focus on green production capacity.

This month, Swedish packaging giant Tetra Pak announced an additional €97 million ($105.3 million) investment to expand its packaging material production in the southern province of Binh Duong, bringing total investment in the site to over $23 million.

Tetra Pak’s expansion plans for the Binh Duong facility will include an additional production line, which will be fully operational by the third quarter of 2025. With this expansion, the facility will have the capability to produce new and innovative packaging formats.

Elsewhere, staBOO Thanh Hoa, a joint venture with Swiss company staBOO Holdings AG, in April gained approval from Thanh Hoa People’s Committee to build a bamboo processing factory with a total investment of around $125.7 million.

The factory has a designed annual capacity of 225,000 cubic metres of chipboard panels and plywood made from bamboo. It is expected to consume 1,000-2,000 metric tonnes of bamboo per day and create more than 3,000 jobs.

European investments such as these are geared towards sustainable development and green production. In particular, Tetra Pak will implement the upcoming changes for the Binh Duong facility in accordance with its dedication to environmental responsibility and corporate stewardship, ensuring sustainability standards are upheld throughout the process.

Another Danish company, Lego Group, is investing more than $1 billion in building its first carbon-neutral plant in Binh Duong province. The toymaker company plans to operate its carbon-neutral factory in the second half of this year.

Likewise, staBOO’s bamboo processing factory will produce green patented products used in construction and furniture, providing efficient carbon emissions reduction solutions to the global market.

Dominik Meichle, chairman of European Chamber of Commerce in Vietnam (EuroCham), told VIR that the trend of green manufacturing led by European companies is poised to have a ripple effect across Vietnam’s industrial landscape.

“As European firms collaborate with local suppliers, valuable knowledge about eco-friendly production processes is shared, encouraging Vietnamese businesses to adopt higher sustainability benchmarks. This not only enhances their competitiveness but also makes them more attractive to foreign investors,” he said.

According to Meichle, when sustainable practices prove to be successful both environmentally and economically, they create positive momentum for the development of regulatory policies. Demonstrating that green manufacturing is advantageous for both environmental health and economic growth encourages policymakers to support and promote these practices among domestic businesses.

“This includes providing incentives, creating supportive frameworks, and fostering collaborations between industry leaders and local enterprises. The alignment of proven sustainable methods with policy support can lead to widespread adoption of greener industrial operations, enhancing the overall competitiveness and attractiveness of Vietnam’s industrial sector to foreign investors,” he added.

Beyond cost considerations, Vietnam’s appeal as an investment destination lies in the government’s concerted efforts to improve infrastructure and promote a business-friendly environment. While progress is still needed, Vietnam is undoubtedly moving in the right direction, making it an increasingly attractive destination for European manufacturing investments, Meichle added.

The trend of European companies expanding their manufacturing capacity is closely aligned with the findings from EuroCham’s Q1 2024 Business Confidence Index report. Accordingly, 71 per cent of European businesses in Vietnam are expressing confidence in the country’s long-term future.

Gloomy car market requires u-turn

Vehicle manufacturing and consumption is struggling due to a dreary market, decreasing output, and poor motivation for development.

According to the Vietnam Automobile Manufacturers Association (VAMA), sales for the entire market in April were at just 24,350 for vehicles of all types, down 11 per cent on-month, and up 9 per cent on-year.

In the first four months of 2024, sales of the entire market reached 82,515 units of all types, down 11 per cent on-year, of which, completely knocked down (CKD) cars decreased by 17 per cent, and completely built unit (CBU) cars went down by 3 per cent.

TC Motor revealed that Hyundai car sales in April 2024 hit 4,276 units, almost 300 units lower than in March and April of last year. In the first four months of this year, Hyundai car sales reached 14,420 units, a sharp decrease compared to 19,328 units in the same period last year.

Other car manufacturers also reported decreasing on-year sales in the first four months of 2024. Toyota reduced by 32 per cent, Hyundai by 25 per cent, Kia by 22 per cent, Lexus by 14 per cent, and Mazda by 13 per cent.

“There are many burdens in the economy and business activities, consumers are still cutting down on spending, so the car business is not thriving,” said Tran Trung Hieu, a showroom owner in Nam Tu Liem district in Hanoi. “Demand for new cars is poor, while that of used cars is better.”

According to the General Statistics Office, sales of CKD and CBU cars in the first four months of 2024 are estimated at 88,300 and units, respectively.

Thus, the total supply of new cars in the market was estimated at more than 133,000 units, in combination with about 65,000 vehicles in inventory from 2023, so the total supply this year is nearly 200,000 units. Meanwhile, businesses estimate total market consumption in the first four months at nearly 130,000 units of all types. Supply is nearly 70,000 units higher than demand.

Due to excess supply and a lot of inventory, businesses and agents are announcing promotions and reduced prices to clear sales. Numerous car models from luxury to affordable cars have been discounted by thousands or tens of thousands of US dollars. However, sales are still not improving much, and the vehicle market is still in the recession.

Moreover, sales of CKD cars in the first four months were 21,000 units lower than in the same period last year, and 62,700 units less than in the first four months of 2022.

“This also means that domestic car manufacture and assembly is still falling sharply. The auto industry is losing development motivation,” said Ninh Huu Chan, VAMA general secretary.

Economic difficulties, along with strong competition from imported CBU cars, have caused the backward growth for CKD cars. It is unlikely that the output of CKD cars will surpass the figure of 350,000 units in 2023.

“For the auto industry, maintaining capacity and growing steadily can be impetus for development. As manufacture growth regresses, the driving force for development is no longer there,” Chan said.

Amid this gloomy market, the prime minister recently assigned the Ministry of Finance to consider and propose extending the tax payment deadline and reducing registration fees for CKD cars.

If approved, these cars will be able to continue receiving a 50 per cent registration fee support in the second half of this year. On three occasions during 2020-2023, CKD cars enjoyed 50 per cent registration fee policy that lasted six months each.

The auto market is expected to become more open. Currently, the import tax on CBU cars from the ASEAN region to Vietnam has been reduced to zero. The import tax on CBU cars from the European Union, the United Kingdom, and Japan will also do so by 2030, and thus domestic manufacture and assembly is gradually losing its advantage.

“Domestically manufactured and assembled vehicles have too few chances to grow in the coming years,” Chan said. “If output is maintained at low levels, the country’s auto industry cannot overcome its disadvantages or utilise its advantages.”

While people’s income is not high, cars with fewer than 10 seats take on many taxes and fees, including import tax, special consumption tax, VAT, and more, so market scale is struggling to grow quickly, Chan added.

“To develop the industry, the most important factor is large output. So stable and long-term support solutions are needed to create competitiveness for domestically manufactured cars,” Chan said.

Vendors seek global supply chain access

Vietnamese businesses have opportunities to become vendors of global manufacturers as companies increasingly seek to diversify their global supply chains. However, they need to overcome strict requirements to enter the market.

Hanoi Plastics JSC, a member of An Phat Holdings, and its South Korean partner PowerNet Technologies last week signed an MoU marking their strategic comprehensive partnership on electronic equipment assembly.

This event is deemed an important milestone, opening up prospects for cooperation and development for both sides and laying a stepping stone for Hanoi Plastics (HPC) to participate more deeply in the supply chain for leading South Korean businesses in the future.

PowerNet Technologies is currently a tier-1 supplier of Coway, a major brand in South Korea, with decades of experience in manufacturing and developing household appliances, notably air and water purifiers. Thus, this would be an important step for HPC to participate more deeply in the supply chain for Coway, while also ushering in opportunities for the company to become a leading supplier for businesses in South Korea and global electronics groups in the future.

Speaking at the signing ceremony, Pham Do Huy Cuong, CEO of An Phat Holdings and chairman of the Board of Directors of HPC, said, “The MoU marks a new success for HPC in its efforts to diversify the supply chain, realising the goal for production and business expansion, and product diversification to catch up with increasing market demands. This is also a solid stepping stone for us to engage more deeply in the global value chain, contributing to bringing high quality Vietnamese-made products to global customers.”

According to the Ministry of Planning and Investment (MPI), many enterprises from the likes of the US and South Korea have recently arrived in Vietnam to survey its semiconductor ecosystem.

“The potential is available. However, there is still a limited number of local companies capable of supplying products/technologies that meet the immediate demands of South Korean companies,” said Hong Sun, chairman of Korean Chamber of Commerce in Vietnam, at the Vietnam Business Forum (VBF) in Hanoi in March. “Additionally, there is insufficient information available about promising local companies. Especially in advanced industries such as semiconductors, electrical/electronics, and IT, the disparity is more pronounced.”

According to a Japan External Trade Organization (JETRO) report delivered at VBF 2024, the local content ratio of Japanese companies in Vietnam has only increased by 10 per cent over the past 10 years, which needs to be further accelerated. As of 2022, only 0.2 per cent of nearly one million domestic businesses joined the supply chain of supporting industries.

The localisation ratio for automobiles is between 5-20 per cent, the electronics sector at 5-10 per cent, and mechanical processing at 15-20 per cent. Meanwhile, the localisation ratio of the high-tech sector is 1-2 per cent only.

According to JETRO, businesses operating in Vietnam depend on imports for more than 60 per cent of production inputs, while supply chains have been disrupted for some time and transportation costs are still high.

Bui Van Thanh, director of New Sun Law Group, told VIR, “In general, the foreign partners often have extremely strict requirements about product delivery. At the contract, they often require domestic vendors to ensure that goods delivery is not interrupted in any situation, which means that Vietnamese vendors have to prepare a reserve of goods of within six months to a year.”

This requirement in particular is extremely hard for Vietnamese suppliers to get a slot in the partners’ supply chain because they have to suffer pressure to produce products with competitive prices and at the same time prepare financial sources to ensure a large number of reserved goods, added Thanh, who is a legal consultant for Taiwanese corporations in Vietnam such as Foxconn, Luxshare, and Pegatron.

The financial potential plays a crucial role when domestic vendors negotiate with foreign partners. However, said Luu Van Dai, director of metallurgy treatment group Metal Heat Vietnam, the problem is that the modest financial resources are one of the biggest disadvantages for domestic suppliers. Metal Heat Vietnam provides heat and surface treatment of metal products for domestic and foreign-invested partners nationwide.

“When foreign investors decide to invest in Vietnam, they will look at five factors: capital, technology, manufacturing progress, products, and the market. Thus, if domestic manufacturers can become vendors of these corporations, it is a precious opportunity to improve their competition capacity,” Dai said.

In August 2023, the Ministry of Industry and Trade proposed to the government policies to support enterprises operating in supplying parts and materials for garments and textiles, footwear, electronics, automobile production and assembly, and mechanical engineering. Approval of the proposals, which included an interest rate subsidy of 3 per cent, is not yet forthcoming.

Bilateral trade boon felt with United States

A comprehensive strategic partnership has helped expand bilateral trade between the United States and Vietnam, with the former gradually removing technical barriers for the latter’s exports.

The General Statistics Office (GSO) reported that in the first four months of 2023, Vietnam’s export and import turnover with the US declined 22.1 and 11.9 per cent on-year, respectively – both due to economic difficulties and the US’ technical barriers. Total trade hit $32.5 billion.

However, the grey situation has changed to brighter colours in the first four months of this year, when total bilateral trade reached $38.6 billion, including $34.1 billion worth of Vietnam’s exports – up 19.1 per cent on-year, and $4.5 billion of US’ exports – up 4.6 per cent on-year.

Key Vietnamese exports included high-tech products like consumer electronics and smartphones, along with garments and footwear.

According to the GSO, such a major rebound in trade reflects a rosier landscape, fuelled by the comprehensive strategic partnership forged last September in Hanoi during US President Joe Biden’s historic state visit to Vietnam.

“To further sharpen the partnership, both nations need to increase exchanges in visits at all levels, boost political trust – especially respect for the two nations’ political regime; and continue to consider expand investment and trade as a big focus, while intensifying bilateral ties in science and technology, and innovation including a semiconductor ecosystem,” stated Vietnamese Minister of Foreign Affairs Bui Thanh Son.

Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi (AmCham), told VIR that the US and Vietnam becoming comprehensive strategic partners have and will provide both nations with new trade and investment opportunities.

“Vietnam has become one of America’s fastest growing trading partners and we expect this positive trend to continue,” he said. “The US is Vietnam’s second-largest trading partner, its largest export market, and one of the top drivers of investment here. Vietnam has risen to become a top-10 trading partner of the US and the economic relationship between the two countries is expected to continue its rapid growth.”

Two-way trade between Vietnam and the US soared from $450 million in 1995 to $110.6 billion last year.

One of the reasons behind a rise in bilateral trade, especially Vietnamese exports to the US, is that the US has provided more favourable conditions for Vietnamese products.

For example, after a thorough investigation, the US Department of Commerce (DoC) last November concluded that steel pipe products imported from Vietnam did not evade the anti-dumping and countervailing duties that the US applies to similar goods from Taiwan.

One month earlier, stemming from the US’ imposition of anti-dumping duties on South Korean stainless steel round wire products, the DoC also concluded that Vietnam’s stainless steel wire did not evade anti-dumping duty in the US.

More than a week ago, it also issued a notice terminating the investigation into the product scope of steel wheels imported from Vietnam. The probe was initiated in August 2023 into the product scope of steel traction wheels imported from the Vietnamese market.

The petitioner, Dexstar Company of the US, had submitted a request to the DoC to launch a scope review investigation on steel wheels completed in Vietnam from components originating in China.

Based on the information and documents collected during the investigation process, the DoC unveiled its intention to end the investigation of the case on March 15 as Vietnamese enterprises did not import any wheel components from China to produce wheels as alleged by the plaintiff.

In 2023, Vietnam exported 1.08 million tonnes of assorted steel products to the US, up 58.8 per cent, earning $852 million, up 1.2 per cent on-year.

Last November, the US Department of the Treasury continued not to list Vietnam as a currency manipulator in its latest semi-annual report on the macroeconomic and foreign exchange policies of major trading partners of the US.

In the joint statement on the elevation of bilateral relations last September, the US appreciated Vietnam’s efforts to further modernise and enhance the transparency of its monetary policy and exchange rate management framework, to promote macroeconomic stability and to ensure the safety and soundness of the banking system.

At present, the US is considering the recognition of Vietnam as a market economy. This would align with President Biden’s goal to make the Southeast Asian manufacturing hub a ‘friend-shoring’ destination for the US.

Last September, Vietnam filed an official request that the DoC consider it a market economy, citing the country’s economic reforms made in recent years. If the status upgrade is accepted, it will mean an end to high tax (anti-dumping and countervailing duty) on Vietnamese imports in the US. The DoC will complete their review in late July.

“In any case, if Washington DC decides to change Vietnam’s non-market economy (NME) status to a market economy label, there will be significant implications for trade relations and broader geopolitical dynamics in the Asia-Pacific region,” said Asia Briefing, a subsidiary of consultancy firm Dezan Shira & Associates.

The US has considered Vietnam an NME since 2002. Per US law, an NME is defined as any foreign country that the DoC determines does not adhere to market principles regarding cost or prices, leading to the sale of goods within that country failing to reflect their fair value.

At present, according to Asia Briefing, the US assesses the value of a product intended for import from an NME like Vietnam by referencing a third country – a market economy such as Bangladesh. It uses the perceived product value in Bangladesh as a benchmark. Consequently, this benchmark is presumed to represent the production cost for a Vietnamese company, without consideration for the company’s actual cost data.

This calculation causes the dumping margin to be pushed up substantially and does not actually reflect the situation of Vietnamese companies.

Luan Nguyen, Cargill Vietnam country president, told VIR, “Cargill has long advocated for the recognition of Vietnam as a market economy, especially given its implications for key industries like aquaculture. Vietnam’s classification as an NME has resulted in significant anti-dumping taxes on species such as pangasius and shrimp, adversely affecting their competitiveness in vital markets like the US,” Nguyen said.

According to Nguyen, recognition as a market economy would alleviate these burdens, facilitating access to the US market.

“This regulatory shift would not only reduce trade barriers but also strengthen bilateral relations between the US and Vietnam,” Nguyen said. “Market economy recognition would stimulate production and services in industries where Vietnam holds export strength, including agricultural products. This, in turn, fosters greater economic collaboration between the nations.”

Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers, also commented that if the US recognises Vietnam as having a market economy, future anti-dumping lawsuits initiated by the US will be subject to market economy rules, meaning that the US will no longer use a third country as a replacement value.

“It is hoped there will be more advantages for Vietnamese exports to the US,” Nam said.

In 2023, Vietnam’s shrimp exports to the US are estimated to hit $682.5 million, down 15.4 per cent on-year, while exports of tuna and tra fish hit $326.6 million and $271 million, down 32.9 and 49.6 per cent on-year, respectively.

In Q1 2024, the US imported nearly 182,800 tonnes of Vietnam’s shrimp products worth $1.4 billion.

According to Vietnam’s Ministry of Planning and Investment, cumulatively as of April 20, the US was Vietnam’s 11th largest foreign investor with total registered capital of over $11.9 billion for over 1,350 valid projects.

“Vietnam is increasing its attractiveness as a destination for American investment as many companies seek to diversify their global supply chains,” said Sitkoff from AmCham.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes