Nghe An: Is the target of 1 billion USD in goods export turnover 'far away'?

"First leg" growth is quite good

The export market of Nghe An enterprises has been continuously expanded over the years. By the end of 2018, enterprises in the province had exported goods to 122 countries, compared to only 66 countries in 2015. In particular, some major export markets such as: China market accounted for over 47.8% of the total export turnover of goods in the province; Korea accounted for 17.6%; India accounted for over 4.7%; Laos accounted for over 3.8%; Japan accounted for 3.1%;... In 2019, in Nghe An, there were about 175 enterprises participating in export activities, of which 10 enterprises achieved a turnover of 20 million USD or more and 3 enterprises achieved a turnover of over 50 million USD.

Cargo ships dock to unload goods at Cua Lo port. Photo: Nguyen Hai

In 2019 alone, export turnover is estimated at 1.1 billion USD, up 4.8% compared to 2018; of which, export of goods is 780 million USD, up 8.3%, reaching the annual plan target. Enterprises in the province have exported over 50 groups/items of all kinds, of which some items have quite good growth in turnover compared to the same period in 2018, typically: Textiles and garments with an estimated turnover of 260 million USD (up 36% compared to 2018); Superfine white limestone powder with an estimated turnover of 43 million USD (up 7%); Seafood with an estimated turnover of 15.2 million USD (up 137%); Plastic additives with an estimated turnover of 17 million USD (up 21%); Processed fruits and fruit juices are estimated to reach a turnover of 30 million USD, more than 3 times higher than the same period in 2018. In addition, tea increased by 8%, pepper increased by 37%, rice increased by 28%, packaging of all kinds increased by 20%, and handicrafts increased by 19%.

Export turnover chart. Graphics: Lam Tung

In particular, with about 20 enterprises participating in export, textiles and garments are one of the province's key export items with an increase of more than 43% over the same period. This is also the item with the highest export turnover increase in the period from 2015 to 2018, up nearly 136%. The director of a garment enterprise in Bac Vinh Industrial Park said: In 2019, the yarn industry faced many difficulties due to the US-China trade war, but the garment industry had many opportunities for development, Chinese garment enterprises shifted to Vietnam with many orders. With this growth momentum, in 2020 we are planning to increase production and business by about 30% compared to the previous year.

Textiles and garments continue to be the leading sector in export turnover of Nghe An. Photo: Thu Huyen

Difficult to achieve the target of 1 billion USD in export turnover

In the period from 2015 to 2018, Nghe An's export turnover increased by 55.5%, from 463 million USD to 720 million USD. Items such as textiles, wood chips, fibers, various textile yarns, plastic additives, various stones... grew quite well. However, in 2019, due to the sharp decrease in import demand from the Chinese market - the export market accounting for nearly 48% of the total export turnover of the province, the export turnover of items such as fresh fruits; cassava starch; fibers, various textile yarns, and phone components also decreased sharply. In particular, the trade war between the US and China has significantly affected the export activities of a number of key products.

Yarn is one of the export products in Nghe An with low growth rate. Photo: Thu Huyen

In fact, most businesses face difficulties in export markets, world commodity prices have fallen sharply, raw material supply is limited, some businesses have switched from direct export to acting as satellite factories for parent companies (transferring products to parent companies in other provinces for export), strongly affecting the province's export turnover.

Therefore, the target of striving for an export turnover of 900 million to 1 billion USD in 2020 is considered difficult. Mr. Hoang Minh Tuan - Head of the Import and Export Management Department (Department of Industry and Trade) said: "Despite efforts, the average export turnover growth rate in the period 2015 - 2018 reached 14%, of which the export of goods achieved a growth rate of 16%, but with the general difficulties of the economy, of businesses in the area... the industry forecasts that in 2020 it is likely to only reach below the target set by the resolution".

Currently, businesses in the province have exported goods to 122 countries. Graphics: Thu Huyen

According to many experts, the import and export activities of Nghe An province are still very modest compared to many localities across the country. Annual export turnover is only ranked 30-35/63 provinces and cities nationwide. The export turnover of some traditional export products such as peanuts, frozen seafood, processed livestock, etc. has been decreasing, even disappearing from the list of export products (peanuts can only be exported through unofficial channels). The export scale is still small compared to the potential and development requirements; the average export turnover per capita is still low compared to the national average. Although export turnover has grown over the years, it is still not really stable, the efficiency is not high; many export items of enterprises still depend on goods from other provinces and foreign markets (such as cassava starch, pepper, wood products, etc.); the value-added content in export products is still low. Some problems that businesses have encountered in recent years related to wood import activities from Laos, VAT refunds, etc. have not been thoroughly resolved.

Some traditional export products such as peanuts, frozen seafood, processed livestock, etc. have seen their export turnover decrease, and are even no longer on the list of export products. Photo: Document

Regarding the cause, according to the Department of Industry and Trade, the province does not have a key area for producing export goods with large volumes like in some other regions; has not attracted domestic and foreign investors with strong potential to invest in projects to develop the production of agricultural, forestry and seafood for export. Import and export enterprises in the province are mostly small and medium enterprises, with small production and business scale, weak financial capacity; most enterprises do not have a long-term export business strategy, low competitiveness. Export infrastructure, logistics activities, and supporting industries for export are still limited, not becoming a driving force to promote export development. Some products have abundant supply but are transferred by enterprises to parent companies in other provinces for direct export (textiles, phone components, construction materials).

In 2019, the estimated export turnover of goods reached 780 million USD, still meeting the planned target, but only increasing by 8.3%. Therefore, in order for the province's export turnover to reach the target of the Resolution of the Provincial Party Congress for the 2015-2020 term of 900 million - 1 billion USD in 2020, it requires synchronous participation with effective solutions from functional sectors and enterprises participating in export.