Vietnam’s exports – in search for the magic growth catalyst
Vietnam's exports peaked in 2020, accounting for 82% of the country's total GDP.
Export financing can be a good tool to boost Vietnam's overall exports and take the Vietnamese economy to the next level, officials have said.
| Garment exports produced at May 10 JSC. Photo: Thanh Hai/The Hanoi Times |
“Vietnam has huge potential to grow exports in many sectors but lack of credit is hampering SMEs’ from expanding,” Sumit Dutta, Founder & CEO of ASEAN Business Partners, said.
Vietnam's exports reached an all-time high in 2020 when total merchandise exports amounted to about $282 billion.
While the country's GDP was about $343 billion, this means that Vietnam's exports contributed to 82% of its GDP in 2020.
Thirty-five percent of Vietnam's exports depend on the output of small and medium-sized enterprises (SMEs), whose limited working capital is a key obstacle to their growth aspirations.
Globally, there are several financing options that can help exporters access the funds they need to grow and expand their businesses, Sumit said.
ASEAN Business Partners (ABP), a multi-disciplinary market entry firm, brings several of these global financing options to exporters in Vietnam, he added.
"ASEAN Business Partners is working with global financiers to provide credit and financing facilities at an affordable cost to SMEs and corporates in Vietnam," said the former CEO of HSBC Bank in Vietnam.
Export financing refers to the financial assistance provided to businesses to support their export activities. It can take many forms, including loans, guarantees, insurance, and factoring.
The primary goal of export financing is to help businesses manage the risks and costs associated with exporting, such as currency fluctuations, political instability, and payment default by overseas customers.
The Vietnamese Government has taken several steps to encourage export-oriented businesses by providing support in the form of loans, credit guarantees, and other financial services, Sumit said.
However, there is room for alternative options and ABP is working with several multinational companies to provide the right export financing platform for exporters, he added.
"These solutions can significantly address the needs of SMEs in the growing ASEAN economy, particularly in Vietnam," said the Director General.
Le Toan Thang, Deputy Director of the National Start-up Support Center (NSSC), said Vietnamese SMEs and innovative start-ups in particular have an excessive demand for trade and export financing.
Businesses need innovative platforms that have been used around the world and professional advice based on international experience, he said.
Thao Nguyen, Country Manager of ASEAN Business Partners in Hanoi, said that robust exports have changed Vietnam in the last 30 years after the Doi Moi (Renewal).
"I hope the world-class global financing companies will facilitate Vietnam's export growth, enable local SMEs to access variable financing sources, facilitate the export process, and create more jobs for the country," she said.
To remain optimistic about exports and support its growth trajectory, Vietnam will see a constant need for working capital, Thao added.
To truly bolster growth, Vietnamese exporters would need timely access to capital, and this creates a huge opportunity in the area of export financing, the ABP country manager said.
"Off-balance sheet, short-term financing at competitive rates is a boon for ambitious exporters who have credible buyers in all markets."
