As assessed by the European-American Market Department under the Ministry of Industry and Trade (MOIT), this is a really impressive growth rate in the context of many trading partners of Vietnam encountering difficulties due to the impact of the COVID-19 pandemic. Such an optimistic signal is even more meaningful in light of the fact that the Vietnam-UK Free Trade Agreement (UKVFTA) has been temporarily applied since January 1, 2021, promising to continue creating new motivation for bilateral economic-trade cooperation in the near future.
In the structure of Vietnam’s export items to the UK, agricultural exports retained stable and positive growth, with seafood exports reaching US$19.72 million (up over 18% year-on-year) and fruit exports hitting more than US$1 million (up 148.6%). These are all commodity industries with many opportunities for increased export value through tariff preferences as prescribed by the UKVFTA.
According to UKVFTA commitments, the import tax on most raw shrimp (fresh, frozen, chilled) into the UK will be reduced from the basic tax rate of 10-20% to 0% as soon as the agreement comes into force. For vegetables and fruits, it will immediately eliminate 94% of the total 547 tariff lines. Many products of Vietnam’s strength such as litchi, longan, rambutan, dragon fruit, pineapple and melon, will have more market access advantages compared to tropical fruits originating from competing countries like Brazil, Thailand, and Malaysia which have not signed an FTA with the UK.
The manufacturing industry also registered amazing growth regarding its January exports to the UK, with US$252.59 million of phones and spare parts (up more than 371% year-on-year); US$74.58 million of machinery, equipment and spare parts (up nearly 110%); US$31.82 million of computers and electronic components (up 91%); and US$15.96 million of iron and steel of various types (up 11%).
Meanwhile, Vietnam imported over US$59 million worth of products from the UK last month, up 34.3% compared to January 2020. Some commodity groups posted remarkable year-on-year growth in terms of turnover, including metals (excluding steel) (US$467,000, up more than 1,462%), pesticides and raw materials (US$1.04 million, up over 505%), and garment & textile materials (more than US$3 million, up more than 131%).
Vietnam continued to enjoy a trade surplus with the UK market in January, at an estimated US$598 million, representing an increase of 113% over the same period last year.
In 2020, Vietnam-UK trade reached US$5.64 billion, with Vietnam exporting US$4.95 billion of products and enjoying a trade surplus of US$4.27 billion. The UK continued to be the third largest trading partner of Vietnam in Europe, after Germany and the Netherlands.
In terms of investment, by the end of December 2020, the UK has 411 projects in Vietnam with a total registered capital of US$3.84 billion, ranking 15th among the 139 countries and territories investing in the Southeast Asian country. The UK’s projects mainly focus on the areas of banking-finance, oil and renewable energy.
