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New FTAs to bring fresh drive for industries amid COVID-19

11:36 | 17/08/2020

Several industries have been hit hard by the negative impact of Covid-19 pandemic, the agricultural sector is expected to surge thanks to the export opportunities brought about by new-generation free trade agreements (FTAs).

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new ftas to bring fresh drive for industries amid covid 19
(Photo: VNA)

Vietnam's garment and footwear are the hardest hit industries by the Covid-19 epidemic because orders from major markets such as China, the US and the EU have been delayed, reported by VOV.

Textile and garment exports during the first seven months of 2020 fell over 12% to USD 16.18 billion, while footwear exports also dropped 8% to USD 9.53 billion against the same period from last year.

Most significantly, textile and apparel exports to major Vietnamese markets, including the US, Japan and the EU, have dropped dramatically. Local firms have also witnessed a sharp decline in both their revenue and in terms of their worker numbers.

Overall, the garment and textile industry was hit by a 21.22% drop in terms of laborers and 38.43% fall in turnover, whilst the leather sector declined by 28.39% in terms of labourers and 29.23% in turnover. Textile and footwear sector is among the most labor-intensive industries. Workers in these sectors laid off and caused the unemployment rate to rise at a faster rate due to the impact of the epidemic.

The recovery of the garment, textile and footwear industries will depend on the epidemic situation globally. As the Covid-19 is not controlled, local businesses will face the risks of dissolution and bankruptcy due to a plunge in export orders.

new ftas to bring fresh drive for industries amid covid 19
(Photo: Urban and Economy)

The General Statistic Office indicates that growth in the agro-forestry-fisheries sector during the first half of the year reached only 1.19%, whilst the number of labourers and revenue made by local firms endured a drop of 26.4% and 36.8%, respectively.

There remains a positive outlook for the sector to move forward as agricultural products remain essential items, especially during the epidemic period.

New FTAs such as the European Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will contribute to expanding export markets for Vietnamese farm produce.

After a year to implement the CPTPP Agreement, Vietnam has not taken full advantage of the opportunities that this agreement brings. Export growth has not been uniform, with a negligible increase in markets such as Singapore (only 0.06%); even, exports to Australia decreased by nearly 12% year on year. In addition, the market share of Vietnam's exported goods in CPTPP partner countries is largely low, reported by Industry and Trade News.

new ftas to bring fresh drive for industries amid covid 19
(Photo: Saigon Financial Investment)

A number of crucial solutions that can be implementing moving forward, including removing hurdles for the sector, applying scientific and technological achievements in production to improve productivity, while enhancing quality control to ensure high standards of food safety and hygiene are maintained.

As the Covid-19 hit Vietnam's exports to major markets such as China, the US, and the EU, it has also disrupted global supply chains in many industries, including the automobile and motorcycle manufacturing sector.

The export of means of transport during the first seven month period dropped 12.3% to US$4.36 billion, according to the GSO. The first half of the year saw the Industrial Production Index of the automobile manufacturing and assembly industry by 16.4% in comparison to the same period last year.

The volume of domestic automobiles declined 26.6% to 88,100 units, while motorcycle production also fell by 6.4% to more than 1.3 million units. The inventory index increased by nearly 130%. This results in the sector to face unprecedented challenges due to the impact of the epidemic.

The recovery of the automobile and motorcycle assembly sector is still largely reliant of what will occur in relation to the epidemic situation. If the Covid-19 keeps progressing in a complicated manner, a number of automobile assemblers are likely to be forced to partially suspend the production, while other business plans will also be delayed.

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Candy Lee