5-12-2024 (HANOI) Vietnam has emerged as ASEAN’s second-largest trading nation, surpassed only by Singapore, according to recent World Trade Organisation (WTO) data. The Southeast Asian nation’s meteoric rise from a modest trading position to becoming the world’s eleventh-largest exporter by 2023 marks one of global commerce’s most striking success stories.
The country’s extraordinary journey, particularly over the past decade, has caught the attention of international trade analysts. Dr Phung Thi Lan Phuong of KTP FTA Consulting notes that Vietnam has joined an elite group of the world’s fastest-growing exporters, alongside economic powerhouses India, Canada, and China, during the 2019-2023 period.
Central to this success has been Vietnam’s aggressive pursuit of international trade agreements. The government’s economic integration strategy has yielded 16 free trade agreements (FTAs), establishing robust trading relationships with approximately 60 global partners.
Whilst foreign direct investment (FDI) has played a pivotal role in Vietnam’s export success – accounting for 70% of export turnover – recent developments suggest a shifting landscape. The first ten months of 2024 witnessed unprecedented growth in the domestic sector, which expanded at four times the rate of FDI-driven exports.
This domestic resurgence represents a significant turning point for Vietnam’s economy. The share of local businesses in total export-import turnover has reached 32%, signalling a gradual reduction in the nation’s historical dependence on foreign investment. This figure marks a recovery from previous declines, though still shy of the 35.4% recorded in 2015.
Vietnam’s ascent in global trade rankings has been equally impressive. From modest positions of 50th in exports and 44th in imports in 2006, the nation had advanced to 23rd and 20th respectively by 2021. Within ASEAN, this places Vietnam firmly in second position for both imports and exports, behind only Singapore.
Despite maintaining a consistent trade surplus since 2012 (with a brief exception in 2015), challenges remain. The country’s domestic value-added rate of 52% falls below global averages, highlighting areas for improvement. Trade experts suggest that Vietnamese enterprises must now focus on capability enhancement, reduce their reliance on imported materials, and seek higher-value positions within global supply chains.
