“Uniquely Unimportant: Vietnam’s Trade with Southeast Asia” by Malcolm Cook

2019/81, 4 October 2019

Vietnam’s rise as a trading economy and important node in regional production chains over the last decade has greatly added to Southeast Asia’s economic dynamism and attractiveness to foreign capital. It has deepened and broadened Vietnam’s economic development and contributed to the ASEAN Community’s priority of reducing the development gap between its newer poorer mainland Southeast Asian member-states (Cambodia, Laos, Myanmar and Vietnam) and the wealthier maritime Southeast Asian member-states and Thailand.
According to Vietnam’s trade statistics collated in the CEIC Database though, from 2013 to 2018, Vietnam’s trade with Southeast Asia has been uniquely unimportant and declining in relative terms. Vietnam is the only economy in Southeast Asia that has seen its share of imports from and exports to the region both decline, and decline markedly.
In 2013, only 16.5% of imports to Vietnam came from Southeast Asia, the lowest share of any Southeast Asian economy and far below its new ASEAN member-state peers. In 2013, 63.5% of imports to Laos came from Southeast Asia (predominantly from Thailand), while for Myanmar it was 35.0% and for Cambodia 30.5%. Six years later, imports from Southeast Asia only accounted for 13.7% of imports to Vietnam (still the lowest share among Southeast Asian economies), while the Southeast Asian share of imports increased slightly for Laos to 68.8% and surged for Cambodia to 40.1% and for Myanmar to 46.0%. The share of imports from Southeast Asia from 2013 to 2018 also increased for Malaysia, the Philippines, Singapore and Thailand.
The export side offers a similar if less stark story of Vietnamese exceptionalism. In 2013, only 14.3% of Vietnamese exports went to Southeast Asia, the second lowest share among the ten Southeast Asian economies after Cambodia at 14.0%. 49% of Myanmar’s exports went to Southeast Asia and 54% of Lao exports did as well (predominantly to Thailand). In 2018, only 10.4% of Vietnam’s exports went to Southeast Asia. The shares of exports to Southeast Asia also fell for Cambodia (down sharply to 5.8%), Laos (52%) and Myanmar (25.1%). The share of exports to Southeast Asian increased from 2013 to 2018 for Brunei, Indonesia, Malaysia and Thailand, while level-pegging for the Philippines, and declining only slightly for Singapore.
Vietnam, along with Singapore, has assertively sought bilateral preferential trade agreements with key extra-regional trading partners and has ratified the mega-regional CPTPP deal. The other Southeast Asian economies have been less ambitious largely sticking to trade deals negotiated through ASEAN. Vietnam’s trading success shows the benefits of its ambition to look beyond ASEAN both for Vietnam and for Southeast Asia’s development divide.   

Dr Malcolm Cook is Senior Fellow at ISEAS – Yusof Ishak Institute.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS – Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.