Promising Start to the Year
The outlook for 2024 appears optimistic as businesses in Vietnam experience excitement and positive developments right from the beginning of the year. Mr. Phạm Quang Anh, Director of Dony Garment Company, shared insights into the order situation for 2024. He mentioned having secured orders until the end of the second quarter from partners in the US, the Middle East, and several Southeast Asian countries, including Malaysia, Singapore, and Cambodia. Additionally, negotiations for new orders with partners commenced promptly, beginning on the 10th day after Tet when operations resumed. On the domestic front, Dony has also received uniform orders from prominent corporations.
In a conversation with Saigon Investment, Mr. Quang Anh discussed the industry landscape, highlighting the misconception in 2023 that Vietnam's garment sector faced a shortage of orders while Bangladesh was overwhelmed with demand. However, upon closer investigation, he dispelled this notion, revealing that some factories in Vietnam also struggled with order shortages. Nonetheless, he acknowledged a critical fact: labor costs in Bangladesh are approximately half as expensive as those in Vietnam, resulting in a selling price that is 10-20% lower. Despite this cost advantage, concerns arise for ordering partners due to uncertainties, such as the potential impact of worker strikes, particularly given the substantial workforce in Bangladeshi factories. In comparison, Vietnam offers a more stable environment, making it a favorable choice for business partnerships.
Commenting on the overall situation of the garment industry, Mr. Phạm Xuân Hồng, Chairman of the Ho Chi Minh City Textile, Garment, Embroidery, and Knitting Association, expressed that at the beginning of the year, most enterprises witnessed a relatively stable situation, with expectations for further improvements in the second quarter. Mr. Hồng anticipates positive signals in the coming months. He notes that after a year of cautious spending, there is potential for consumers in major importing countries to increase their spending capacity this year. Additionally, a stable environment can contribute to Vietnamese businesses securing more orders.
Not only the garment industry, but various sectors experienced positive export developments in January. The wood industry, in particular, stood out as wood and wood products were the only products in the agriculture, forestry, and fishery sector with a turnover exceeding USD 1 billion. Seafood exports in January reached USD 730 million, marking a substantial increase of 60.8% compared to the same period in 2023. Notably, the fruit and vegetable industry witnessed remarkable growth, with export turnover reaching USD 459 million in January, a notable 89.2% increase from the previous year. Durian, a key export product in this sector, has consistently reached peak prices. Even during the recent Lunar New Year holidays, thousands of businesses remained actively engaged in exporting goods.
Preliminary statistics released by the General Department of Customs on February 20 revealed that during the Lunar New Year period (from February 8 to 14), over 1,000 Vietnamese enterprises participated in the import and export of goods nationwide. The total value of the country's import and export goods during this period reached an impressive USD 1.41 billion.
Motivational Outlook for 2024
Discussing the aspirations of the fruit and vegetable industry in 2024, Mr. Đặng Phúc Nguyên, General Secretary of the Vietnam Fruit and Vegetable Association, conveyed optimism following an impressive start to the year. The industry aims to achieve a target of USD 6-6.5 billion, with durian being the key product and China as the primary market. Likewise, the coffee sector in the agricultural industry has received positive news about prices from the beginning of the year, and a favorable year for coffee exports is anticipated, with turnover expected to range from USD 4.5 to 5 billion.
Encouragingly, most industry groups express confidence in the possibility of recovery this year. This sentiment aligns with the broader national goal of achieving a 6% growth target for exports, equivalent to USD 377 billion, in 2024.
In a recent report, Vinacapital provided positive insights into Vietnam's exports, estimating a January turnover of USD 33.57 billion, representing a remarkable 42% growth compared to the same period last year. Vinacapital's analysis attributes this surge to the adjustment in US business orders, which, having ordered a substantial amount of "made in Vietnam" goods during the COVID-19 period, curtailed orders last year to manage inventory. The report suggests that this trend is now reversing, with Vietnam experiencing an increase in export orders in January 2024. The analysis further anticipates a continued rise in export orders from Vietnam in the upcoming months, propelled by the robust strength of the US economy, evident in the country's consumer confidence reaching its highest level since the post-epidemic reopening boom.
Amidst the joy and optimism for the new year, businesses and associations are mindful of the challenges they have faced, are facing, and may encounter in the near future. A primary concern is the escalating shipping costs attributed to tensions in the Red Sea, impacting various industry groups. Not only are shipping fees on the rise, but many shipping companies are also imposing additional charges. The Vietnam Shippers Association, representing import-export businesses, recently reported that shipping lines have arbitrarily increased port loading and unloading fees by 10-20%, exacerbating difficulties in light of the escalating Red Sea tensions.
Beyond the general concerns regarding freight rates and additional ship surcharges, each industry faces unique challenges. The seafood sector, particularly the shrimp industry, is grappling with trade defense barriers in the United States. Ms. Kim Thu, a shrimp market expert affiliated with the Vietnam Association of Seafood Exporters and Producers, disclosed that the American Shrimp Processing Association (ASPA) has submitted a request to investigate anti-subsidy taxes on imported shrimp, including those from Vietnam. Although the outcome remains uncertain, it is anticipated that Vietnamese shrimp exports to the US will be impacted in the first half of 2024.
