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WB encourages Vietnam to raise production, reduce deficit
Vietnam should increase exports and domestic production to decrease reliance on imported products and reduce the trade deficit, a leading financial economist from the World Bank (WB) stated at a workshop in Hanoi on July 22.
Addressing the workshop, Noritaka Akamatsu, head of the WB’s Finance and Private Sector Programme, said that Vietnam ’s trade deficit, which was equivalent to 10 percent of GDP, was to be expected given the fluctuation of domestic and global markets. However, he said that the situation could improve provided appropriate management policies were instituted.
He suggested that Vietnam focus on two major areas. First, the country should boost domestic production and exports to eliminate the need for imports. Second, it should step up the mobilisation of capital for production, particularly through the stock market and the sale of bonds.
Representative from the International Monetary Fund (IMF) Benedict Bingham said such changes would be difficult for Vietnam as its trade deficit accounted for nearly 40 percent of total export turnover.
Bingham said that changes would be particularly challenging because the Government would have to increase its foreign currency reserve or credit to balance trade payments while at the same time applying a tightened monetary policy.
Deputy Minister of Industry and Trade, Bui Xuan Khu, said that if Vietnam kept inflation in check for the remaining months of the year, its export value was estimated to reach 61.2 billion USD, surpassing the Government’s target. He said his ministry had asked associations and businesses to find ways to begin reducing production costs while increasing production and export capacity.
In a move to meet the target of importing roughly 35.1 billion USD in the second half of the year, Khu said, the Ministry of Industry and Trade had scrutinised all imported commodities so that it could cut any non-necessities. By the year’s end, the ministry expects to cut more than 7 billion USD from the estimate issued earlier this year for imports of raw materials, components, machinery, and several other commodities. The import value of materials for cigarette production, consumer goods, CPU and auto components would also be reduced by roughly 1 billion USD.
The ministry also estimated it would reduce steel and petrol imports by 1.5 million and 1 million tonnes for the rest of the year, respectively.
To reduce the trade deficit, Khu said, the ministry would also either cease importing goods or increase import duties and other fees imposed on products not encouraged by the Government. It would also work with banks to stop lending to businesses planning to import these products.
Khu revealed that authorities could continue to raise import duties on luxury goods like automobiles, their components and gold.
According to the General Statistics Office, the country’s trade deficit in the first half of the year was triple that of the same period last year, reaching nearly 14.8 billion USD.
VNA
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