Việt Nam’s exports to the US expected to rise sharply

April 19, 2021 - 08:46


Lychee being canned for export to the US. Việt Nam's exports to the US in the first two months of the year accounted for $13.83 billion or 28.4 per cent of total exports. VNA/VNS Photo Vũ Sinh

 Compiled by Thiên Lý

Exports for the year as of March 15 were worth US$62.01 billion, a year-on-year increase of 22.7 per cent, according to the General Department of Việt Nam Customs.

Exports to the US in the first two months of the year accounted for $13.83 billion or 28.4 per cent of total exports.

In recent years the US has become Việt Nam’s biggest market. Last year, for instance, at $76.4 billion it accounted for 27 per cent of the latter’s total exports.

Thân Đức Việt, general director of Garment 10 Joint Stock Company, said there were several factors behind Việt Nam’s rapid growth in exports including to the US.

Primarily, he said, the COVID-19 pandemic has gradually been controlled around the world, especially after several countries started vaccinating their populations, enabling many of them to reopen their borders and trade to resume.

Businesses in the country, hit badly for the last year or so by the pandemic, are making strenuous efforts to bounce back, he pointed out.

Many countries around the world have rolled out large stimulus packages to spend their way out of the economic slump, and this has revived trade, he added.

Many analysts concurred with these views, saying the US recently launched a $1.9 trillion package to make direct payments of $1,400 to individuals earning up to $75,000 a year starting in April.

This is the third and largest stimulus since the COVID-19 pandemic broke out.

Việt Nam, one of the US’s major exporters, supplying essential items like fisheries products and garments and electronics, is expected to benefit from this relief package.

Việt of Garment 10 told Đầu Tư Chứng Khoán magazine that Vietnamese exporters hope to get orders from the US.

Americans are known as big spenders, and if they get the money from the Government consumption would surely rise, he said.

His own company’s exports to the US saw relatively high growth in the first quarter and are expected to grow further due to the huge new stimulus package.

Bùi Việt Quang, general director of Red River Garment Joint Stock Company, said his company had enough export orders for until August this year, 80 per cent from the US.

“The US’s $1.9 trillion stimulus package will surely affect enterprises that export to the market. We expect to see robust growth [in US export orders] in the fourth quarter.”

Analysts said a recovery in the US economy would help Vietnamese exporters, especially those in the textile and garment industry.

However, analysts also sounded a warning saying while the US stimulus packages would benefit Việt Nam’s exporters in the short term, loose monetary policies could cause high inflation, which would increase their costs whereas they would not be able to increase prices immediately, affecting their margins.

Besides, the inflation would also hurt demand, they added.

Why property companies want to own banks

Nguyễn Tuấn Anh, director of the State Bank of Việt Nam’s department of credit for economic sectors, said growth in bank lending to the property sector in 2020 was 9.97 per cent, lower than the overall credit growth rate of 12.13 per cent.

This is becoming an emerging trend.

Enterprises in the sector have found it difficult to borrow from banks after the central bank issued a circular in 2019 prescribing limits and prudential ratios for banks.

It reduced the use of short-term deposits for medium- and long-term loans from 40 per cent to 37 per cent from October 2021 and to 30 per cent from October 2022.

This was aimed at controlling credit to high-risk sectors like real estate.

In the event, the only option real estate companies have is to themselves acquire stakes in banks.

They also target owning a piece of securities firms since that would enable them to mobilise capital from the market by issuing stocks and bonds.

Thus, Trần Thị Thu Hằng, the CEO of Sunshine group, became vice chairwoman of the Kiến Long Joint Stock Commercial Bank in 2018 and chairwoman of KS Joint Stock Company (KS Securities) around the same time, indicating that Sunshine or related parties had become major shareholders in the two.                                                      

Analysts said the finance and property sectors always have a symbiotic relationship since the latter is highly capital intensive with slow returns.

Thus, Vingroup has tied up with Techcombank, MIKGroup with VPBank, Đất Xanh Group with Viet A Bank, and TNR Holdings Việt Nam with MSB.

While the Government’s efforts to control lending to the property sector have had some effect, banks remain an important source of funding for real estate development projects.

This trend is expected continue in future, analysts said. VNS