Trade deficit has
remained below 20 percent of exports. However, it is high time for Vietnam to
devise measures to contain the trade deficit.
Exports on hold, imports increase
Trade deficit reached approximately US$1.75 billion in the first two months
of this year. According to the General Statistics Office of Vietnam,
imports in February are estimated at US$3.9 billion, down 22.2 percent compared
to January, bringing the total exports in two months to US$8.9 billion in a
relative annual increase of 0.1 percent over previous years.
There is a slight increase in exports thanks to rising key products, such as
garments (US$1.5 billion, up 16.8 percent), footwear (US$682 million, up 4
percent) and seafood (US$543 million, up 19.2 percent). Some products declined
in both volume and value, such as crude oil (US$793 million, down 15.4 percent
in value and 51.3 percent in volume), rice (US$437 million, down 6.8 percent in
value and 24.9 percent in volume), and coffee (US$343 million, down 26.8
percent in value and 21.1 percent in volume). The decline made export value for
two months remain static.
In the reviewed period, imports increased by 39.6 percent to US$10.7 billion
with items for production such as machinery, equipment and tools up 14.5
percent to US$1.9 billion, petroleum up 20.1 percent to US$939 million and
steel up 34.6 percent to US$616 million.
Imports of automobiles in the first two months are estimated to reach US$377
million at a relative annual increase of 115.3 percent.
The Ministry of Planning and Investment said that rising imports are due to
price hikes, which have made imports increase by US$600 million.
Joint efforts to reduce trade deficit
According to Deputy Minister of Trade and Industry Nguyen Thanh Bien, Vietnam’s trade
turnover is likely to rise in the coming months. He predicted the export
turnover in March will reach nearly US$5.5 billion, up 48.6 percent over the
previous month. March’s imports are predicted to hit US$6.4 billion, up by 45.5
percent, therefore the trade deficit will be maintained at approximately US$900
million. As a result, the export turnover in the first quarter of this year is
expected to reach US$14.2 billion, while the import turnover will grow by 16.8
percent. The trade deficit will be valued at about US$2.6 billion, accounting
for 18.3 percent of the country’s total export turnover.
In a recent press briefing, Deputy Minister of Finance Tran Van Hieu
revealed that his ministry will review and restructure the list of import
items, especially luxury products, including automobiles, motorbikes and
cosmetics, in order to reduce trade deficit in the near future. “It is
essential to control the import of these products to ensure trade balance,” he
said.
Earlier, The General Department of Customs adjusted prices for some products
to manage the risk of price hike. Accordingly, the prices of several products,
including mobile phones, imported wines, cosmetics, automobiles, motorbikes,
construction glass and fabrics, were adjusted.
Meanwhile, tariff barriers and technical barriers are also being built to
limit the import of low-quality products. However, the application of technical
barriers when Vietnam’s
technology cannot yet meet practical goals may cause a negative impact on
domestic production if the country does not consider every measure carefully.
Deputy Minister Nguyen Thanh Bien has proposed a number of measures to boost
exports, such as the adjustment of the exchange rate between the Vietnamese
dong (VND) and the US dollar (USD), and the repricing of several farm products
to support farmers and businesses.
Recently, the Ministry of Trade and Industry has cooperated
with the Vietnam Food Association to consume one million tonne of rice for
reserves from the Mekong Delta region to stabilise the price of rice. The
Ministry of Agriculture and Rural Development purchased coffee for reserves to
prevent a reduction in the coffee price as occurred in 2009. Relevant
ministries and agencies have also boosted trade promotion and negotiations with
trade partners to sign export contracts.
