Despite the difficult domestic and international economic environment, Vietnam – U.S. bilateral trade in 2011 was US$21.8 billion, up 17.5% over the previous year, with Vietnam’s exports to the U.S. $17.5 billion (up 18%), and imports from the U.S. $4.3 billion (up 17%), demonstrating once again that manufacturing foreign direct investment (FDI) and trade are strong and stable factors that support Vietnam’s economic and social development. In comparison, total bilateral trade in 2012 may reach about US$24.6 billion (up 12.8%), with Vietnam’s exports to the U.S. about $20.0 billion (up 14%), and imports from the U.S. about $4.6 billion (up 7%).Growth of Vietnam’s apparel exports to the U.S. is likely to continue to slow because of increasing labour costs, increased competition from countries such as India, Indonesia, Bangladesh, and Mexico, not to mention Cambodia and Myanmar, and reduced demand in the United States. The hope for Vietnam is that exports of “modern manufacturing” and services will take up the slack, both in export revenue and employment.
However, lack of trained workers and increasing wage costs without productivity gains in the factories and efficiencies in the economy (transportation infrastructure, customs, business services) that reduce costs may slow the growth of Vietnam’s exports to the U.S. According to the Asian Development Bank, less than 30% of young workers, who comprise half the workforce, have completed upper secondary education.
As for increasing labour costs, the below chart and table show actual minimum wages in vnd/month 2008-2012, proposed minimum wages in 2013, and projected minimum wages in 2014-2017 based on the Party Central Committee Decision 23-KL/TW, May 29, 2012 to “Adjust the minimum wage more rapidly in the private sector so that by 2015 the minimum will reach the level of the Basic Needs Wage.”Vietnam rapidly achieved the status of 2nd-ranked supplier to the U.S. textiles and apparel import market after entry into effect of the Vietnam-U.S. Bilateral Trade Agreement in December 2001 and Vietnam’s entry into WTO in January 2007, more than doubling its exports from about $3 billion in 2005 to over $7 billion in 2011, taking market share mostly from Mexico, it seems. However, Vietnam’s rapid growth of textile and apparel exports to the U.S. market has slowed since 2010 as other “2nd Tier Countries,” such as Indonesia, Indonesia, and Bangladesh, steadily increased their exports, while Mexico seems to have halted and reversed, since 2010, the sharp fall in its exports to the U.S. between 2005 and 2009. However, according to a number of industry experts, India’s infrastructure for garment manufacturing is still not adequate to match its raw material sources, which may be the core of their exports to the U.S. (cotton fiber, cotton yarn, fabric) and India still has much more to do in order to utilize all of their local raw materials, which may be difficult for them to achieve in the next 5 years. Mexico has NAFTA preferential access to the U.S. market.