By Nguyen Duy Nghia
Sunday, Sep 15, 2019,14:50 (GMT+7)
At a press conference held in Hanoi to disseminate information on Thai Festival 2019, the Thai ambassador to Vietnam expressed optimism about the possible achievement of the goal of Vietnam-Thailand bilateral trade hitting US$20 billion by 2020. This target was set at the third meeting of the Vietnam-Thailand Joint Committee on Trade in August 2018, which also aims to even out the trade balance between the two nations. Given what has happened to bilateral trade to date, only the Thai side should be happy with this.
In 2015-2017, the two-way trade between Vietnam and Thailand grew 15.5% per year on average. In 2018, it amounted to US$17.673 billion, a rise of 13.6% from the preceding year. The figure for the first six months of 2019 was US$8.809 billion, up 9.3% year-on-year. While Thailand is Vietnam’s largest trading partner in ASEAN, Vietnam is Thailand’s second after Malaysia. Given the current momentum, the target of US$20 billion by 2020 seems attainable.
When it comes to bilateral trade relations, the Thais have several reasons to be more optimistic. The flow of goods from Thailand to Vietnam has been always bigger than the other way around. In 2017, Vietnam imported US$10.6 billion worth of goods from Thailand and exported only US$4.8 billion to the neighbor’s market. The respective figures are US$12.1 billion and US$5.5 billion in 2018, and US$5.9 billion and US$2.8 billion in the first half of 2019. Consequently, the surplus Thailand obtains from her trade with Vietnam is the largest among all ASEAN nations doing business with Vietnam and the third largest in the world after South Korea and China. Thus, it is apparent that the more the bilateral trade grows, the more the trade balance is tilted to the Thai side, which proves Thailand is better at exploiting the market of their trading partner.
The products Vietnam imports from Thailand in the “need to be imported” category make up more than half of her imports from this neighboring market, including machinery, equipment, tools and spare parts, essential raw materials, etc. If the import of such goods was disrupted or reduced, Vietnam’s production and export would be affected. Up to 22 of the 36 products shipped from Thailand can now be made at home, such as home electronics and components, vegetables, computers, plastic products, iron and steel, detergents, cosmetics, kitchen utensils, furniture, etc. In other words, Vietnamese goods are losing their home advantage as local consumers still prefer Thai products.
A look at Thai strategies for conquering the Vietnamese market shows how professional and well-informed Thai entrepreneurs are. Every year, Thai consumer goods exhibitions are staged on a large scale in Hanoi, HCMC and many other localities. Vietnamese businesses do attend similar events in Thailand, but their scale and appeal do not match what Thai people display in the former’s country.
In accordance with the tax cut roadmap within the framework of the ASEAN Economic Community (AEC), Vietnam has abolished multiple tariff lines for Thai imports, an opportunity that is immediately seized by Thai business people, especially those supplying CBU cars. In 2018, CBU units imported from Thailand totaled some US$1 billion. Since the beginning of this year, Thai cars have flooded the market of imported automobiles in Vietnam.
Thailand is currently ranked ninth out of the 129 nations and territories investing in Vietnam, with 521 projects and total registered capital of US$10.38 billion. This figure is modest when compared to those of South Korea, Japan, Hong Kong or Malaysia. However, no investors have ever come so early, penetrated so deeply and stuck so firmly to Vietnam’s market as the Thais have.