According to the Department of Industry and Trade, the aforementioned markets account for 50% of export turnover in the province. In the first 10 months of 2015, the total export turnover into these markets reached 6 billion USD and it is expected to increase stably in the year-end months since many enterprises in the province have been ready to expand their export and the said markets are placing large orders in Vietnam.
The US and Japan are the two major export markets of Dong Nai province and also the two members of Trans-Pacific Partnership (TPP). Now TPP has finished negotiations over agreements and is waiting for approvals from the Parliaments of member countries. Therefore, many enterprises in Dong Nai province have gradually oriented their export targets toward these markets to get themselves prepared for TPP. At the same, they are also seeking partners from the US and Japan to make cooperative investment in various fields in Dong Nai province.
Mr. Ta Trung Hieu, General Director of Vingal Industries Joint Stock Company, which is located at Bien Hoa Industrial Zone 2 (Bien Hoa City), said that: “The US and Japan are our export markets for steel products, although we do not receive many orders yet. In the coming time, we will be paying more attention to trade promotion activities in these two markets to seek potential partners and increase the market share of export so that we are able to enjoy tax incentives when TPP takes into effect.” The US has been the biggest export market of Dong Nai over the past few years. The export turnover into this market accounts for more than 30% of the province’s total export turnover, reaching 3.7 billion USD particularly in the first 10 months of the year. The major export categories to this market include: footwear, textile, wood and wooden products.
Mr. Dao Tran Nhan, Counsellor of Vietnam’s Trade Envoy to the US, said that: “Finishing TPP negotiation is a huge success for Vietnam, because when officially joining TPP, we will see a decrease in tax rate of 18 thousand tax lines. The major benefits that TPP brings to Vietnam include an increase in export, foreign investment attraction and balanced relationships with key markets. However, livestock, automobile and sugar industries shall be facing a lot of difficulties”. According to Mr. Nhan, the current tax rates of several goods categories exported into the US are up to 67%, so when these tax rates decrease, Vietnamese enterprises will have more competitive advantages than those in non-TPP countries such as: China, India… For example, in 2014, Vietnam’s footwear export to the US reached 3.5 billion USD, and the corresponding tax payment was 450 million USD. When TPP is signed and the tax rate is 0%, the tax payment of 450 million USD will be returned to enterprises. According to Peterson Institute for International Economics, when TPP is signed and takes into effect, Vietnam will see an increase of 25% in GDP and 32% in export.
As for Japanese market, Vietnam has been enjoying benefits from the free trade agreement and there are 3,234 tax lines applied with 0% tax rate. Mr. Nguyen Trung Dung, Counsellor of Vietnam’s Trade Convey to Japan said that: “As for the categories exported to Japan, Dong Nai province should be paying more attention to trade promotion activities and programs to Japanese localities in order to increase its export turnover. And the enterprises in the province must establish more relationships with Japanese enterprises to attract investment in agricultural processing industry and export to Japan and TPP countries. The prices of agricultural products exported to Japan are very high, but they will be facing very strict quality requirements”.
* Competing in cheap markets
The UAE and China are considered as two easy markets without strict quality requirements, but the prices of goods exported to these market must be very cheap. “Our company can handle many huge orders from foreign partners. We consider US and Japan as our premium markets, whereas UAE and China are considered as middle markets. With the advantages of available domestic source of natural rubber, we believe to see an increase in export to the said markets” – said Mr. Le Bach Long, Director of Nam Long Co., LTD, located in Long An commune (Long Thanh district). According to Mr. Bui Huy Hoang, Counsellor of Vietnam’s Trade Convey to China, if the enterprises in Dong Nai province want to expand their export to China, they must ensure two factors: cheaper prices and higher quality than Chinese products.
The UAE is an easy market, Vietnamese goods exported to this market must be very cheap in order to compete in price with products from China, Thailand and India. And the products exported to the UAE market must meet heat requirements due to this country’s hot climate. “The UAE’s economy is open, so all export procedures into this country is simple. Domestic consumption is mainly based on import, import tax rate varies from 0-5% applied on all categories of goods. This is the 3rd biggest re-export market in the world, the goods imported into this country shall be exported to North Africa, Middle East and Middle Asia” – said Mr. Pham Trung Nghia, Counsellor of Vietnam’s Trade Convey to the UAE.
