Nghe An increases the proportion of processed industrial exports to 83.2% by 2025

"Bottlenecks" that need to be removed

In recent times, the structure of exported goods has had many positive changes. The total export turnover of textiles and garments; wood and wood products; fuels, minerals and construction materials accounts for 70% of the province's export turnover. The proportion of industrial goods and processed goods has been increasing, accounting for an increasingly large proportion of the total export turnover.

Commodity export marketcontinues to be expanded. Up to now, Nghe An enterprises have exported goods to the markets of more than 150 countries and regions. The number of export participants has been constantly increasing and their operations have become more and more effective, especially the private economic sector and the foreign-invested sector thanks to the increasingly improved production and business environment in the province.

Produced at Royal Foods Factory, Nam Cam Industrial Park. Photo: Thu Huyen

However,export volumeis still small, not commensurate with the potential, and has not effectively exploited the province's advantages. According to data from the General Department of Customs, the export turnover in 2020 of enterprises in Nghe An province ranked 35th out of 63 provinces and cities nationwide and ranked 4th in the North Central region (after Thanh Hoa, Ha Tinh and Thua Thien Hue). The average export turnover per capita is low compared to the national average. In 2020, it reached ~237 USD/person/year (national average ~2,870 USD/year).

Although the structure of export goods has many positive changes, the proportion of high-value processed industrial goods is still low. There have not been any new products with large turnover contributions; high-value added products account for a low proportion. Export turnover depends on industrial products such as textiles, footwear, electronics and computer components... most of which are still processed and assembled. The whole province has only 02 products with turnover of over 100 million USD.

Unloading wood pellets for export to Japan at Cua Lo port. Photo: Thu Huyen

The export growth rate is not high and unsustainable, not reaching the set plan target; the shift in export structure towards industrialization and modernization is still slow; export growth is still mainly growth in breadth, in which goods using natural resources and simple labor still account for a high proportion in the export structure; in-depth export growth is still limited, not creating key products with high added value and large domestic content.

The export turnover of foreign-invested enterprises (FDI) accounts for a small proportion of the province's total export turnover: In 2020, it reached 206.7 million USD, accounting for 25.4% of the province's total export turnover; meanwhile, nationwide, FDI enterprises account for over 63% of the country's total export turnover.

Although Nghe An's commodity export market has made significant progress in recent times, it is still limited, with unstable trading relationships and a heavy dependence on the Chinese market.Logistics servicesAlthough the province's service infrastructure, service types, components and number of participating enterprises have improved recently, they are not yet synchronous, with many "bottlenecks" leading to increased costs and reduced competitiveness of import-export enterprises.

Do Lang Industrial Park, Nghi Lam (Nghi Loc) has a tangle of power lines and incomplete infrastructure, affecting investment attraction and production of factories. Photo: Thu Huyen

According to the assessment, although Nghe An enterprises are numerous, they are mainly small and medium enterprises, not proactive and have many limitations in improving competitiveness such as: poor knowledge of integration and experience in international trade, no long-term business and export strategy; little willingness to connect and cooperate in work, sometimes even unhealthy competition. The capacity of goods and enterprises to participate in the global value chain is still weak, vulnerable to shocks in the world market, leading to low export efficiency.

Mr. Nguyen Minh Tuan - Head of Import-Export Management Department, Department of Industry and Trade said that Nghe An's exports are still not really stable and sustainable. The added value of exported goods is low, mainly based on exploiting factors of natural conditions and cheap labor resources, there are no export goods with high competitiveness to be able to participate in the stage of creating added value in the global value chain.

Need a synchronous solution

In the period of 2021 - 2025, according to the spirit of the Resolution of the 19th Provincial Party Congress, the target is to strive for the export turnover in the province to reach the target of 1,765 million USD by 2025, of which goods export reaches 1,295 million USD, an increase of 59.2% compared to the export results in the period of 2016 - 2020. Therefore, the Provincial People's Committee, the Department of Industry and Trade, and related departments and branches are focusing on building and approving the Project "Export Development of Nghe An Province in the period of 2021 - 2025". This is considered a very necessary move, contributing to the economic restructuring, creating jobs for workers, paying the budget, and promoting the economic development of the province.

Tuna processing line at Fescol Tuna Processing Factory in Dong Nam Economic Zone. Photo courtesy of Thu Huyen

In fact, Nghe An's goods export activities are having many favorable opportunities. That is, Vietnam is integrating more and more deeply into the world economy; theFree trade agreement(FTAs), especially new generation FTAs ​​such as CPTPP, EVFTA, UKVFTA, RCEP create favorable conditions, opening up great opportunities for comprehensive and stronger cooperation with major partners, meeting the needs of people and businesses. The investment and business environment is constantly improving. The Government has been making efforts to become a "constructive government", creating a more favorable environment for businesses, which will have positive impacts on production and business activities of enterprises. The trend of shifting investment capital flows in the post-Covid-19 period, along with good preparation of infrastructure of industrial parks such as VSIP; WHA Hemaraj, transport infrastructure, seaports, aviation, railways, ... are constantly being upgraded, investment will open up opportunities for Nghe An to create a source of goods to promote exports.

However, the new generation trade agreements that have been and are being implemented will bring many opportunities for export activities but also many challenges for Vietnamese enterprises in general, Nghe An enterprises in particular in the conditions of commodity production; competitiveness and infrastructure serving exports in the province are still limited. Therefore, with the view of not being too dependent on one market, the industry and trade sector is effectively implementing commitments and exploiting opportunities from free trade agreements to expand and diversify export markets, especially key strategic markets (the United States, Japan, Korea, China, ASEAN). Increase the processing and manufacturing content, increase the added value and competitiveness of export goods, proactively participate in regional and global value chains, build and develop a number of strong brands for the province's export goods.

Textile and garment industry is still an industry with high export turnover, creating many jobs for workers. Photo: Thu Huyen

Sharing about the upcoming solutions, Mr. Pham Van Hoa - Director of the Department of Industry and Trade added that the industry is focusing on consolidating, improving the competitiveness and expanding the scale of export enterprises; continuing to promptly grasp and implement solutions to remove difficulties of enterprises, especially in capital, labor, reforming administrative procedures in tax management, customs, land, quarantine; continuing to remove "bottlenecks" in transportation and logistics services... to stimulate the expansion of export production. Focus on applying technology in searching and exploiting foreign markets combined with strengthening information work, market forecasting. Promote training, education, tax consultancy, market access, effectively applying incentives from FTAs ​​of which Vietnam is a member.

The target by 2025 is to achieve total export turnover of 1,800 million USD, of which export turnover of goods will reach 1,300 million USD, accounting for 73.7% of total export turnover. Increase the proportion of processed industrial goods exports from 77.5% in 2020 to 83.2% in 2025; reduce the proportion of fuel and mineral goods from 10.3% in 2020 to 7.9% in 2025. Budget revenue from the export and import sector in the period of 2021-2025 will reach 7,700 billion VND.