Diversify import markets to improve trade balance

Diversifying import markets has helped improve the trade balance towards balance and contributed to Vietnam's surplus.

Import turnover reached the highest level ever

Latest figures from the General Department of Customs show that the turnover import Our country's export turnover in July reached an all-time high of 33.88 billion USD.

So, import turnover Our country's imports in July increased by 11.2%, equivalent to an increase of 3.42 billion USD compared to the previous month. Compared to the same period in 2023, imports in July 2024 increased by 25.3%, equivalent to an increase of 6.85 billion USD.

Of which, July's import increased sharply compared to June, clearly recorded in some groups of goods: computers, electronic products and components increased by 1.19 billion USD; machinery, equipment, tools and spare parts increased by 598 million USD; crude oil increased by 173 million USD.

In the first 7 months of 2024, the total value of Vietnam's imported goods reached 212.96 billion USD, an increase of 18.5%, equivalent to an increase of 33.32 billion USD over the same period in 2023. In particular, the strongest increase was recorded in the groups of computers, electronic products and components, up 13.52 billion USD (up 29.4%); machinery, equipment, tools and spare parts, up 3.81 billion USD (up 16.5%); iron and steel of all kinds increased 1.28 billion USD (up 22.9%); phones of all kinds and components increased 1.12 billion USD (up 26.3%).

Imported goods focus on raw materials for production (Photo: Tra Ngan)

According to the General Department of Customs, in the first 7 months of 2024, there were 5 markets/market regions with import increases of over 1 billion USD compared to the same period last year. China was the market with the strongest increase in value at 20.96 billion USD; followed by South Korea with an increase of 3.36 billion USD; ASEAN with an increase of 3.08 billion USD; Taiwan with an increase of 1.98 billion USD and Kuwait with an increase of 1.06 billion USD.

Thus, in addition to traditional markets such as China, Korea, ASEAN, businesses have made efforts to diversify imported goods by expanding to other markets such as Taiwan, Kuwait. In addition, many other markets also have import growth up to double digits such as South Africa, Nigeria, Norway, etc.

This result shows that in recent times, enterprises have proactively diversified markets for imported goods. Diversifying import markets is the result of Vietnam's efforts to sign new generation FTAs, helping Vietnamese goods increase import turnover from new markets with FTAs. Typically, thanks to CPTPP, import turnover from Canada increased by 14.1%; from Mexico increased by 18.5%... Imported goods (mostly raw materials for production) from within the CPTPP bloc also contributed to helping exports of goods to this market bloc benefit from tariff incentives, and export value increased.

Notably, in the first 7 months of 2024, 89% of the total import turnover was the group of goods that needed to be imported (including machinery, equipment, spare parts and raw materials for domestic production), with an estimated turnover of 189.3 billion USD, an increase of 19.7% over the same period in 2023. This is a positive signal for the economy in the context of high domestic production and consumption, the demand for imported raw materials, machinery and equipment for production increased sharply to serve newly signed orders.

Mr. Tran Thanh Hai - Deputy Director of the Import-Export Department - Ministry of Industry and Trade shared that the diversification of markets in both export and import directions is demonstrated through the negotiation and signing of FTAs. Currently, we have 15 FTAs signed and being implemented. In addition, the FTA with Israel has concluded negotiations and is expected to be signed between now and the end of the year.

The Ministry of Industry and Trade is also considering implementing new FTAs such as the FTA with the UAE. This is a country with very vibrant trade activities in the Middle East and can completely become a gateway for us to bring goods to the Middle East and Africa. Or in the Americas, Vietnam has an organization called the Community of American Markets (Mercosur) including 6 countries in South America. This is a potential market and we have FTAs with some countries in this region such as CPTPP with the participation of Chile and Peru. Thanks to that, opportunities for businesses will increase both in terms of import and export.

Diversifying import markets has helped to gradually improve the trade balance. About 10 years ago, Vietnam was continuously a country with a trade surplus. In particular, the surplus in the first 7 months of 2024 reached 14.52 billion USD (a decrease of 1.98 billion USD compared to the surplus in the same period last year).

According to Associate Professor, Dr. Nguyen Thuong Lang - National Economics University, currently the domestic enterprise sector has a higher import growth rate than the foreign-invested sector, showing a significantly high absorption rate of domestic raw materials, fuels and materials. Domestic enterprises have found new orders and are investing heavily in production. This is a sign of expanding domestic production capacity, improving the competitiveness of the domestic enterprise sector. In addition, high import growth and boosted production are the basis for attracting labor, creating jobs, and mobilizing other resources to serve the goal of economic recovery.

Continue to diversify import markets

With the goal of diversifying import and export markets, the Ministry of Industry and Trade is determined to continue to accelerate the negotiation process and put the signed FTAs into effect. Currently, we do not have an FTA with the whole region, especially bilateral FTAs with large markets such as Brazil or Mexico. Therefore, we are accelerating negotiations to sign FTAs with this region. These are priority directions to expand and diversify the market for businesses.

One more thing, there are still many areas with large market areas and capacity such as Africa, South Asia with countries such as Iran, Iraq, Afghanistan, Pakistan... These are market areas where we can continue to research and negotiate to sign FTAs.

In addition, with the FTAs that Vietnam has, exploiting FTAs will still open up great opportunities for businesses. Because the number of FTAs currently covers almost all major markets and there is still very good growth potential for both exports and imports.

Next is the issue of trade promotion. Mr. Tran Thanh Hai said that removing tariff and non-tariff barriers is an important solution, but it is only one of the obstacles we encounter when entering the market. If that barrier is removed but businesses do not clearly understand the tastes and other standard regulations to meet the requirements of the import market, the difficulties will still be there.

Therefore, the role of trade promotion is not only to help us find new customers and new business opportunities, but also to encourage businesses to go out and better grasp the requirements of the external market, helping businesses to be confident. Thereby increasing turnover in both export and import directions.

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