The situation that Vietnam’s foreign trade is dominated by foreign companies and imports of raw materials has not changed

The situation that Vietnam's foreign trade is dominated by foreign companies and imports of raw materials has not changed

Against the background of the epidemic, Vietnam’s foreign trade still maintained a relatively high growth, which has become the main driving force for its economic recovery, but the situation that foreign companies dominate exports and rely on imports of raw materials has not changed. First of all, the export of foreign enterprises accounts for more than 70% of Vietnam’s total foreign trade exports. In the past three years, foreign companies’ exports have accounted for more than 70% of Vietnam’s exports, including 70.1% in 2019, 72.3% in 2020, and 73.6% in 2021. In 2021, Vietnam’s total foreign trade import and export volume will be US$668.5 billion, with foreign companies accounting for 69.6%. There are not many foreign companies, but their contribution to exports is much higher than that of local companies. Taking wood product exports as an example, foreign companies account for 48% of the export value and local companies account for 52%, but the number of foreign companies only accounts for 15% of the industry, while local companies account for 85%. Some provinces and cities rely heavily on foreign companies. Take Bac Ninh Province, for example, in 2021, the province’s export volume will be US$44.8 billion, ranking second in the country (after Ho Chi Minh City), with a surplus of US$6.5 billion (the foreign trade deficit of Ho Chi Minh City is US$15.2 billion in the same period). Bac Ninh has achieved such achievements mainly because foreign companies are among the best in the country in attracting foreign investment, and foreign companies have played an important role in promoting local exports. The situation in Taiyuan, Binh Duong, Dong Nai and other provinces is similar.

The second is the dependence of raw materials on imports. The development of supporting industries in Vietnam is lagging behind, and the raw materials needed for production by foreign companies rely on imports. Local enterprises are more dependent on the import of raw materials. In addition to the intermediate products with high technical content, even agricultural products need to be imported. For example, the raw materials of aquatic products are imported and exported after processing; the raw materials of cashew nuts are imported and exported after processing; the logs and boards are imported, and wood products are exported after processing.

The third is high dependence on imports from some countries. At present, Vietnam imports from more than 90 countries and regions, but mainly from China. In 2021, Vietnam will import US$109.8 billion from China, accounting for one-third of total imports, an increase of 30.4% over the previous year. Among the main imported commodities, 50% of telephones and parts are imported from China; 60% of fabrics and 50% of textile fibers are imported from China; China is the largest source of imports of machinery, equipment and parts. Vietnam imports wood from 15 countries and regions, and China is the largest source of imports.