Jan 2, 2013

Vietnam - FIEs Lead On Export Growth

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After riding out the economic storm to brighten Vietnam’s export performance in 2012, foreign invested enterprises are expecting more export jackpots for the new year.

Under the glow of hundreds of electric bulbs, 1,500 workers at Korean-backed garment maker KJ Vina in Binh Duong province are working to meet the company’s export orders for early 2013.

In 2012, KJ Vina’s revenue totaled $4.8 million, besting its 2011 revenue amid the country’s economic slowdown. “This figure reflects our great efforts in keeping export markets of the US and Europe. It is also a win amid increasing economic difficulties,” said a company representative.

“Many other foreign garment makers in Binh Duong also had a good 2012 for exports,” said the source.

Some other South Korean-backed garment firms which reportedly had big monthly export turnover in 2012 include Hansae Vietnam ($22 million) in Ho Chi Minh City, and Eins Vina ($17 million) and Poong In Vina ($13 million) in Binh Duong.

The General Statistics Office (GSO) last week reported that Vietnam-based foreign invested enterprises’ (FIEs) garment and textile export turnover in 2012 grew 60 per cent on-year and held 70 per cent of Vietnam’s total garment and textile export turnover of $17 billion in 2012.

A propellant for economic growth

According to the GSO, while the local export sector faced a challenging 2012, FIEs enjoyed big export windfalls, especially for Vietnam’s staple exports, making a great contribution to the economy’s growth.

Specifically, many industrial products have seen a strong export turnover in 2012, such as TVs, computers and laptops ($7.9 billion, up 69.1 per cent against 2011), telephones and mobile phones ($12.6 billion, up 97.7 per cent), and machinery and equipment ($5.5 billion, up 26.9 per cent) and garment and textile ($11.9 billion, up 7.1 per cent). Most of these products are made by foreign firms, the GSO said.

Typically, the GSO cited South Korea’s electronic product maker Samsung as expecting to fetch an export turnover of $12 billion in 2012. Vietnam’s total mobile phone export turnover in 2012 was $12.6 billion, up 97.7 per cent against 2011.

Meanwhile, the US-backed chipset maker Intel was reported by Ho Chi Minh City’s Department of Information and Communications to reap export turnover of $1.4 billion in 2012.

The US-backed turbine maker General Electric Vietnam reported that it had fully realised its target of fetching an export turnover of $166 million in 2012. During 2010-2012, this company has earned a total of $278 million from exports.

In another case, at Japanese-invested industrial equipment maker Saigon Precision in Ho Chi Minh City, 2,000 workers have been focusing on fulfilling the company’s export orders for 2013 since November 2012, following an injection of $25 million investment capital.

Vietnam’s agro-forestry export turnover reached a record $17.7 billion in 2012, up 18 per cent on-year. Many FIEs also contributed a big share.

Ajay Bhagat, managing director of Indian-invested Hanoi-based plywood producer Vietductch International Joint Stock Company, said his company had been operating in Vietnam for two years, and 2012 was “an excellent export year” for his firm, with total export turnover of $6 million.
“We have fulfilled our export orders for 2012 for months. Vietnam boasts big raw materials and preferential incentives for exporting high-quality wood products. Meanwhile, the world’s demand for this product is increasing strongly,” Bhagat said.

Syed Nishat Hussain, general director of Indian-invested tea maker $6 million Phu Ben Tea Company Ltd in Phu Tho province, said 2012 was a “golden year” for his company’s export performance. “We are quite satisfied with our tea exports as we exported 2,000 containers of tea overseas in 2012,” Hussain said. “It is difficult to say about our total revenue now as we have to make calculations. But we have earned some profit.”

Since 1993 when Vietnam had a trade surplus of $40 million, the country in 2012 for the first time enjoyed a trade surplus, at $284 million. FIEs had a trade surplus of nearly $12 billion including crude oil exports—and $3.6 billion excluding oil. Meanwhile, the local economic sector suffered from a trade deficit of $11.7 billion.

“Vietnam’s trade picture in 2012 is quite different from many other previous years and from the trade picture of many developing countries home to low export growth, especially amid economic woes nationwide and globally,” said the GSO’s head Do Thuc.

Vietnam’s total export turnover in 2012 reached $114.6 billion, up 18.3 per cent on-year. FIEs occupied 17.7 of this 18.3 per cent.

While the local economic sector’s total export turnover was $42.3 billion, up only 1.3 per cent on-year, the figure for the foreign economic sector was $63.9 billion (excluding crude oil exports), up 33.5 per cent on-year.

The GSO’s National Account Department head Ha Quang Tuyen said the export growth had held 27.23 per cent of Vietnam’s total economic growth rate of 5.03 per cent for 2012. “Thus it is clear that foreign exporters have contributed greatly to the country’s economic growth,” Tuyen said.

An expected brighter picture

The KJ Vina representative said the garment and textile export market in 2013 was expected to be brighter than 2012. “We expect a $5 million in revenue for 2013. [The figure for 2012 was $4.8 million]. However, this target means we will have to make bigger efforts.”

Meanwhile, Bhagat of Vietductch International said his company was expected to rake in a plywood export turnover of $12 million for 2013, when his factory will have expanded capacity. This figure would double the $6 million in 2012.

Phu Ben Tea Company also expected a strong year 2013. “We have already had so many export orders for 2013 and currently we have 3,000 hectares of tea and want to expand more to boost exports and revenue,” Hussain said. “Vietnam’s investment is very good.”

Hussain said his company aimed to export 233,000 containers of tea in 2013. “Vietnam is an ideal market for tea production and exports. It is likely that we will expand our investments here.”
General Electric said it expected an export turnover of $166 million for 2013, the same as in 2012, due to economic difficulties causing a reduction in consumption of its products.

Le Thi Minh Thuy, head of the GSO’s Service and Commerce Statistics Department, said the FIEs’ contributions to Vietnam’s export turnover increased from over 45 per cent several years ago to about 56 per cent now.

“FIEs have big capital, technology and output markets, while these factors are always coveted by local cash-strapped enterprises,” Thuy said.

Thuy said FIEs’ exports would continue strongly growing in 2013 due to their export plans and orders already made, with stable export markets. For instance, the turnover for the whole garment and textile export sector was forecast to be $18.5 – 19 billion and about $13 billion for exporting mobile phones.

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