VietNamNet Bridge - High export turnover and high export growth rate are figures usually cited in government agency reports as proof of economic development. However, there are many problems behind the figures.

FIEs are the main exporters

 

Vietnam has been maintaining a two-digit export growth rate over many years. However, this does not show the development of Vietnamese businesses, because the majority of exports come from foreign-invested enterprises (FIEs).

FIEs, which have been scaling up their business in Vietnam, make up 70 percent of total export turnover. 

According to the General Statistics Office (GSO), Vietnam exported $50.1 billion worth of products in the first four months of the year, an increase of 8.2 percent over the same period last year. Of this amount, $15 billion went to Vietnamese enterprises’ pockets, while the other $35.1 billion was from FIEs and crude oil exports.

A report from the General Department of Customs (GDC) showed that 10 export product items have turnover of $1 billion and higher. The majority of products are exports from FIEs.

FIEs’ exports account for 60-70 percent of export turnover of Vietnam’s key export products such as apparel, footwear and wooden furniture.

Le Viet Duc, who has a doctorate of economics, said Vietnam’s export turnover has been growing more rapidly than import turnover growth. A trade surplus was first recorded in 2012.

However, the export turnover growth rate has been decreasing continuously since 2012. 

The growth rate was reported at 13.6 percent for 2014. However, Duc said, the real figure would be 9.1 percent if not counting the price increase.

“FIEs have much higher export growth rate compared with Vietnamese enterprises. They are the biggest exporters and most of Vietnam’s key products are exported by them,” Duc said.

He cited a Ministry of Industry and Trade’s report as saying that FIEs exported 60 percent of the $6.5 billion worth of textiles and garments in the first four months of the year. 

Meanwhile, 50.1 percent of wooden furniture export turnover of $6.2 billion in 2014 were from FIEs. 

When asked about the Vietnamese enterprises’ business performance, Dien Quang Hiep, director of Mifaco, a wooden furniture manufacturer, said the enterprises are working as hired workers in their home market. 

“Vietnamese enterprises do not get many orders. Though the situation is expected to be brighter this year, our profit is still far below that of FIEs,” he said.

Textiles and garments are believed to be the biggest beneficiary from free trade agreements. However, Pham Xuan Hong, deputy chair of the Vietnam Textile and Apparel Association (Vinatas), warned that the number of orders Vietnamese enterprises are still far below expectations.

NLD