Nghe An's export enterprises: A panoramic picture with 'hard to overcome' difficulties?

Many challenges for export activities

In the context of a difficult world economy and inflation in many countries, Nghe An province's export activities continue to record growth. A report from the Department of Industry and Trade shows that the total export turnover in 2022 reached 2.54 billion USD, ranking 28th out of 63 provinces and cities nationwide and 2nd in the North Central region.

Many items have export turnover growing quite well compared to 2021, such as textiles, phone components, wood chips, superfine white limestone powder, paving stones, wood pellets, etc. Notably, the proportion of processed exported goods continues to increase, especially forestry products, minerals, construction materials, processed seafood and some processed agricultural products such as dried tea and fruit juice.

Export market situation of Nghe An enterprises in 2022. Graphics: Huu Quan

In 2022, Nghe An enterprises exported goods to over 133 countries and territories around the world. A representative of Vinh Plastic Packaging Joint Stock Company - a unit with extensive experience in manufacturing and supplying cement packaging products, PP packaging, Jumbo bags, Sling bags said that the company's products are consumed domestically and exported; in 2022, revenue reached 998 billion VND, profit reached 35 billion VND, creating jobs for 1,000 workers. Realizing that the domestic market is increasingly competitive and changing, in recent years the company has focused more on the export market. Currently, the company's main export markets are Korea, Singapore, Thailand, Malaysia, Philippines, New Zealand. In addition, in the past year, the company also expanded its market in a number of countries such as Papua New Guinea, Japan, the US, and Norway.

However, export activities are facing many difficulties and at the Conference on implementing the 2023 export plan recently organized by the Provincial People's Committee, many businesses frankly stated the difficulties in their operations and proposed solutions to remove current "bottlenecks".

According to businesses, most production costs have increased, but selling prices are difficult to increase due to market competition with domestic and foreign companies in the same industry. Especially domestically, businesses compete fiercely, causing market imbalance and increasingly low profits. High costs of electricity, water, and fuel, along with the pressure of immediate payment, make it difficult for stone powder businesses in the mining and processing stages.

Recently, many textile and garment enterprises have suffered a serious decline in orders.

For textiles, from the second half of 2022, rising inflation and tightening spending in some important export markets such as the United States and the EU will cause textile purchasing power to decrease, and many textile enterprises will experience a serious decline in orders. The problem of declining consumer demand in countries around the world is a major difficulty and challenge for Nghe An's exports in 2023.

Many mineral enterprises have reported shortcomings in regulations on export stone standards, the issue of mine licensing... Mr. Nguyen Trung Hai - Director of Trung Hai Mineral and Trading Joint Stock Company said: White limestone powder is mainly exported to countries such as India. Currently, this item is facing fierce competition from foreign competitors, especially Malaysia because the price from these countries is much cheaper (Malaysia and India have their own Trade Agreement, the export tax from Malaysia is 3% and the import tax to India is 0%); sea freight costs have increased many times while the price remains unchanged, causing profits to decrease sharply. Enterprises in the industry are facing difficulties, so they compete with each other, without any connection, so the price of export products is further lowered.

Stone powder products prepared for export by Trung Hai Minerals and Trading Joint Stock Company. Photo: Thu Huyen

Sharing about the export policy, Mr. Pham Van Tam - Director of Tan Long Joint Stock Company said: Currently, the State is allowing the export of raw materials and boulders, so foreign customers do not buy processed products from Vietnam because the added value lies in the processing stage. For example, the selling price of raw boulders for export fluctuates around 16 - 17 USD/ton, equivalent to 370,000 VND/ton. If processed deeply according to the value chain of goods, with 8 million tons of exported white marble, the revenue is about 63,986 billion VND, while we export 8 million tons of raw materials of white marble and boulders, the revenue is only 2,944 billion VND. This shows that the difference in added value is very large. Thus, the province and departments, branches, and competent authorities should consider stopping the export of raw boulders.

Mr. Tam also proposed to review the current electricity price: "Businesses are being subjected to a peak price increase of 285% from 9am to 11:30am and paying electricity bills three times a month, which is unreasonable. An increase of 285% compared to the production price of 1,007 VND/kWh makes the price of finished products high, making them uncompetitive with other countries in the region."

In addition, some businesses such as BVN Thanh Chuong Joint Stock Company reported that input material prices are unstable, the waterway system of Cua Lo port has not been cleared and dredged to ensure a depth of 8 - 9m, so large cargo ships cannot enter and exit, and logistics services are also "stranded".

Timely solutions to overcome difficulties

Faced with the difficulties, businesses want to stabilize policies and increase "pushing force" from many sides. It is necessary to pay attention to investing in transport infrastructure and logistics services connecting businesses in the Southeast Economic Zone to seaports; promptly issue policies to support, attract and reduce warehousing costs for containers to the port. Invest in upgrading Cua Lo port to meet international port standards, increasing loading and unloading capacity to 10 million tons, instead of the current level of 4.1 million tons. On their part, businesses are aiming for solutions to expand and seek new sources of supply, new markets and try to make good use of markets with FTAs ​​that Vietnam has signed...

Produced at Trong Phuc Garment Company Limited in Dien Chau. Photo: Thu Huyen

Representative of Vinh Packaging Joint Stock Company proposed: In the context of the world economy facing signs of recession, complicated political fluctuations and declining consumption of goods affecting most businesses and industries, the Company proposed to have policies to support businesses in accessing foreign customers, connecting trade with markets through embassies and consulates in other countries; have policies to support reducing lending interest rates, expanding credit room for manufacturing and exporting enterprises. The State has a policy to stabilize the USD/VND exchange rate to avoid affecting the price of USD sold to foreign markets, helping businesses limit risks in exchange rate differences and have better planning in production and business. Strengthen the development of logistics activities in the province. If there is an international shipping line calling directly at the port in the province, it will reduce the logistics costs of businesses, because currently they have to pull containers to Hai Phong port...

Talking to businesses, Mr. Pham Van Hoa - Director of Nghe An Department of Industry and Trade shared that the difficulties of the world economy and global trade in late 2022 are forecasted to not be overcome immediately. However, Mr. Pham Van Hoa said that there are still many positive factors such as trade agreements continuing to be implemented with a roadmap for tariff reduction; attracting investment from countries such as Korea, Taiwan, Japan... will be the driving force to create new production capacity for exports; Nghe An enterprises continue to promote initiative and creativity, seek new markets, and exploit advantages from FTAs.

Containerized white stone and plastic beads exported through Cua Lo port. Photo: Thu Huyen

Accompanying businesses, implementing many solutions to support businesses in production and business, expanding export markets, and actively contributing to growth targets is the policy of Nghe An province's leaders. Nghe An currently has 299 OCOP products, which are a source of goods for businesses to promote exports and create jobs for workers. Many activities to promote infrastructure investment, attract investment, etc. are also facilitating import and export activities in the area.

Thu Huyen