Vietnam's goods export: Necessary to have quality improvement

By Prof.PHD Dang Dinh Hao- PHD. Pham Hoang Linh|18/05/2023 16:01

To improve Vietnam’s goods export in the coming time, there have been many things to do, from investing in modernizing export technology, organizing and manageing business production to developing human resource, having a skilled professional workforce...

Vietnam's impressive export growth

Since the “door-opening” of the economy in 1986, Vietnam’s exports have experienced continuous growth. In a decade (2009-2019), Vietnam’s export turnover increased 4.6 times- from USD 57bn to USD264.6bn- equipvalent to the average growth rate of the whole period about nearly 6% pa.


Even during the Covid-19 pandemic (2020-2021), Vietnam’s export turnover still maintained positive growth when reaching USD 281.4 billion, respectively (an increase of 6.3% compared to that of 2019) and USD 335.8 billion (an increase of about 19.3% compared to that of 2020). Especially, from 2020 Vietnam has become the country with the 19th largest import-export value in the world. 2022 is the first year that Vietnam’s economy as well as the world’s economy begins to recover from the pandemic.

Besides the difficulties left by Covid-19, the world has also facing an energy crisis as a result of political instability between Russia and Ukraine, followed by inflation in many countries. Inflation inevitably leads to a decrease in demands for goods and an increase in costs of goods. These were two risks that adversely affected Vietnam’s exports. However, after 2022, Vietnam’s export results still had impressive growth. Total import- export turnover in 2021 reached USD668.5 billion, an increase of 22.6% compared to that of 2020 and in 2022 it reached the record of USD735.00 billion, an increased of 9.46% compared to that of 2021).

In addition, since 2009 Vietnam officially escaped from the low- income level, becoming a low- middle-income country. To escape the middle-income trap like many other countries, increasing the contribution of export to income growth is important. To do so, it is necessary to have a breakthrough growth in quantity based on a strong improvement in quality.

Vietnam’s proportion of high-value exports is higher than the world’s average. Therefore, it can be temporarily concluded that Vietnam is having comparative advantages in exporting processed and high-tech goods, but the comparative advantages are only of the low (processed and manufactured goods) and medium level (hi-tech goods), which partly shows Vietnam’s goods export quality is not high.


Vietnam's goods export quality

Vietnam’s goods export quality has had remarkable progress thanks to stable growth rate of turnover for long time. It is obvious that the proportion of high-value goods such as manufactured goods and high-tech goods has had significant increase during the study period. In addition, Vietnam has also improved its comparative advantage in exporting these products, but the improvement was still not enough to improve the quality of Vietnam’s export in a breakthrough when Vietnam’s comparative advantage performance was only low and medium. In addition, Vietnam’s contribution to the value of exported goods is still modest when outsourcing still plays an important role in Vietnam’s exports, but mainly focuses on simple processing stages, such as assemblying wit low value (processing fee only accounts for about 30% of the goods value after processing, while the value of input material accounts for over 60% of the goods value). At the same time, more than 60% of Vietnam’s goods export value caomes from FDI enterprises. Thus, with the domestic content only about 30%, the quality of Vietnam’s export still needs to improve a lot in the near future.

Necessary to improve Vietnam's goods export quality
To improve Vietnam’s export quality in the coming time, there is still a lot of work to be done from investing in modernizing export technology, organizing and managing production and business processes to developing human resources and professional and highly-skilled labor force...


First of all, it is necessary to increase the localization rate in the value of Vietnam’s export goods in two directions: First, reducing the processing of low- value stages and increasing the processing of high-value stages. Second, it is to redirect FDI flows from focusing on outsourcing and assembly to technology transfer, in order to increase Vietnam’s domestic content. Next, for the above orientations to be really feasible, accompanying solutions must include improving qualifications and applying technology to export production, improving the quality of human resources and improving institutions.

In nature, it is not possible to increase Vietnam’s domestic content in the value of exports if Vietnamese enterprises keep processing simple stages. To do so, domestic enterprises are required to grasp and apply production technology and source technology to be able to participate more deeply in the commodity value chain. But to achieve that, the key issue lies in the quality of human resources capable of applying and creating technology. The logistics problem in exporting goods also needs to be improved fundamentally from payment methods, customs procedures, forwarding and transporting goods... And finally, the institution must be improved for the state to support actively and effectively enterprises in the process of increasing the domestic content and further improving the quality of Vietnam’s export.

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Vietnam's goods export: Necessary to have quality improvement