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Ministries take action to curb trade deficit
Ministries and agencies have taken steps deemed necessary to curb Vietnam’s trade deficit, following the instructions of the Prime Minister, according to a report in Nguoi Lao Dong. Until the end of 2010, the import of certain non-essential goods and consumer goods will be restricted.
There are 1500 items on a list compiled by the Ministry of Industry and Trade (MOIT). These include cars, mobile phones, meat and meat products, vegetables, grains, tobacco, perfume, cosmetics and other products.
The Ministry of Finance has announced it will flexibly apply taxes and fees and apply other necessary measures to control imports.
Meanwhile, at MOIT’s request, the State Bank of Vietnam has instructed commercial banks to restrict lending in foreign currencies to fund the import of certain products, including steel, sugar, salt and NPK fertilizer.
MOIT has also set up a technical barrier to imports of rolled steel and steel plate. The automatic restrictions are in effect from July 5 until December 31, 2010.
Enterprises which have been granted salt import quotas may only import three kinds of salt, i.e., coarse salt, refined salt for industrial and medical use, and refined table salt. The decision covers transactions from June 1 to December 31, 2010.
MOIT is compiling a draft circular on the import of new passenger vehicles with less than 16 seats. The draft, which is being discussed among ministries, would restrict the entry of automobiles to five seaports, Cai Lan (Quang Ninh), Hai Phong, Da Nang, HCM City and Ba Ria – Vung Tau.
Pham Chi Cuong, Chairman of the Vietnam Steel Association, applauded the measures. He said that it is unreasonable that domestic steel mills are running at 50 percent of capacity while imported steel is flooding the domestic market. In 2009, Vietnam imported nearly six million tons of steel, including products which can be made in Vietnamese mills.
In the first three months of 2010, 1.7 million tons of steel products were imported to Vietnam, including 57,000 tons of rolled steel and 68,000 tons of steel plate. It is estimated that the restrictions will enable Vietnam to save some $700 million in foreign exchange, both reducing the trade deficit and easing difficulties on domestic enterprises’ shoulders.
Arguments have been raised about the restriction of mobile phone imports. Some analysts say that mobile phone should be considered as an essential consumer goods. They reason that if high tariffs push prices up, they will ‘pave the way’ for smuggled goods to enter Vietnam.
Minister of Industry and Trade Nguyen Thanh Bien said that the import tariff on mobile phones is fixed at zero percent under commitments made in the ASEAN-China free trade agreement. Therefore, MOIT is not considering a tariff on the phones, but rather a luxury tax.
Dr. Vu Dinh Anh, Deputy Head of the Market and Price Research Institute called the restrictions on consumer goods imports an essential and timely measure. Anh does not think that they will have a big impact on the trade deficit, however, because the goods on MOIT’s list accounts for only ten percent of imports by value. Anh believes that the steps just announced should be followed by a lot more measures to curb trade deficit.
Meanwhile, Dr. Nguyen Duc Thanh of Hanoi National University urges cautionin applying measures to curb the trade deficit. He said that if the ‘medicine’ is too strong, this may distort the national economy and upset the business plans of enterprises.
vietnamnet, NLD
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