With Japan unleashing the world's most intense burst of monetary stimulus earlier this month, Vietnamese exporters have a golden opportunity to increase exports and penetrate deeper into the East Asian market.
Bank of Japan announced on April 4 a policy overhaul intended to double the money supply and achieve a 2 percent inflation target at the “earliest possible time, with a time line of about two years,” Japan Today reported.
The BOJ pledged to inject some US$1.4 trillion into the economy in less than two years, hoping to end two decades of stagnation, Reuters said.
“The stimulus will increase demand for production and goods consumption, and Vietnam will thus benefit from the policy, as Japan is currently the country’s third-largest exporting market,” said Nguyen Trung Dung, Commercial Counselor of the Vietnamese Embassy in Japan.
Vietnam’s export turnovers to Japan topped $13 billion in 2012, with export staples such as footwear and leather, seafood, and agricultural products, Dung added.
However, Dung noted that the stimulus was in fact a money easing policy, which depreciated the yen.
“The yen depreciated 16 percent under Abe’s government, which means Japanese consumers have to pay more for imported products,” he said.
“Hence, foreign goods have to compete with locally made products.”
Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry, also said Vietnam will benefit from Japan’s stimulus.
Japan has long posted trade deficits in agricultural products, textiles and garments, footwear, and processed food, commodities in which Vietnamese exporters have strong competitiveness, he explained.
“Most of the Vietnamese goods exported to Japan are those that the East Asian nation cannot locally manufacture,” he added.
More chances for textiles and garments
Textiles and garments is the sector that enjoys the second-highest export turnover to Japan, after crude oil. In 2012, $1.97 billion worth of textile and garment products was exported to Japan, accounting for 6.2 percent of the country’s import turnover.
The figure is expected to rise 18 percent to $2.37 billion this year, making Japan the second-largest exporting market of the Vietnamese textile and garment sector, according to Le Tien Truong, deputy chairman of the Vietnam National Textile and Garment Group (Vinatex).
The textile and garment sector is traditionally the industry that receives the earliest positive signs from the Japanese market whenever the country launches a stimulus, exporters said.
A chief official at the Saigon 3 Garment Co. said export orders from Japan rose at least 10 percent compared to last year.
“The figure could have been higher but our production could not afford larger orders,” he added.