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Nation sees trade surplus despite falling exports
In the first two months of 2009, Viet Nam enjoyed a trade surplus of some US$300 million, largely due to a slump in imports caused by companies’ cutting back on imported equipment and raw materials, amid tumbling demand.
According to figures released by the General Statistics Office (GSO) in Ha Noi on Wednesday, the country had a trade surplus of $0.4 billion in January and a trade deficit of $0.1 billion in February.
The country’s import turnover in the first two months of 2009 amounted to $7.73 billion, falling by 43.1 per cent compared with the same period last year, while exports fell 5.1 per cent to $8.02 billion.
It was the first trade surplus recorded since February 1996, according to the GSO.
Such a surplus, however, indicates a weakness in "absorbing capacity" of the country’s economy, and will have an impact on Viet Nam’s economic development in the near future, reports Sai Gon Tiep Thi (Sai Gon Marketing) magazine.
The decreasing number of imports into Viet Nam in the first two months of 2009 was attributed luxury goods, automobiles and materials and equipment which were among the imports that suffered a drop. Some 2,600 automobiles were imported into Viet Nam in the first two months, representing a decrease of 27 per cent in turnover compared to the same period last year. Imports of steel ingots and machinery/equipment dropped by 18 per cent and 24 per cent, respectively.
"A positive trade balance in Viet Nam would worry me a little bit because it would suggest that economic growth isn’t there," Alain Cany, chairman of the European Chamber of Commerce in Viet Nam, was quoted as saying by VietnamNet. "Viet Nam needs to import in order to grow. It is not self-sufficient."
Garment and textile exports were up by 0.7 per cent to $1.27 billion. Rice exports were estimated to have more than doubled at $399 million against the same period last year.
Rubber exports, however, slipped 50 per cent to $101 million in the first two months of the year. Coffee exports slipped 10 per cent by value to $440 million.
Gold exports help trade
The country’s exports were buoyed by an estimated rise of more than 3,000 per cent in sales of precious metals and gemstones, to $939 million.
According to Thoi Bao Kinh Te Sai Gon (Sai Gon Economic Times) magazine, in February, the State Bank of Viet Nam (SBV) allowed firms and commercial banks to export a total of 10 tonnes of gold.
At the price of VND19 million per tael (37.5 grammes), the export of 10 tonnes of gold brings in some US$290 million. Gold is currently priced at VND19.6 million per tael in Viet Nam.
Gold exports would help raise Viet Nam’s export turnover and improve its monthly trade balance.
"This is a timely action to mobilise domestic capital resources," the Sai Gon Economic Times opines.
Economists estimate that Vietnamese are holding some 3 million taels of gold which has been stored at home.
With half of this idle amount of gold converted into money and put into circulation, the country’s economy would have a large source of capital for development.
In addition to gold exports, SBV will also provide quotas for gold imports when gold begins to sell at lower prices on the world market.
Firms and banks who exported seven tonnes of gold in February have also received quotas for imports in the same amounts.
SBV will take measures to bring the amount of imported gold and the time for import under control so that both importers and customers can benefit, and at the same time help SBV put foreign exchange under better management.
Gold import and export quotas are also expected to prevent illegal gold trade across country borders.
EVN balks at reform
The management board of the Electricity of Viet Nam Corp. (EVN) has rejected a project to reform the power industry proposed by the Ministry of Industry and Trade (MoIT).
In an official dispatch sent to Prime Minister Nguyen Tan Dung recently, the chairman of EVN’s management board, Dao Van Hung, said EVN "disagrees" with the MoIT project.
Hung said the project was "not feasible" and, if realised, might have an impact on the country’s energy security.
The project on reforming the power industry had been submitted to the government, the deputy minister for MoIT, Do Huu Hao, said earlier last week.
Hao said EVN had power over all energy plants, electricity transmission and distribution networks. As a result, all investments in the energy sector must be approved by EVN.
Under the MoIT plan, EVN reform would begin with power plants becoming independent, and then EVN would only purchase electricity from power plants to sell wholesale to distribution companies. If so, EVN could then be reintegrated into the power distribution group.
Hung said if power plants and electricity transmission companies were separated from EVN, they would find it difficult to arrange sufficient capital for investment.
Instead of the separation, EVN proposed that two corporations specialising in the power generation and transmission sectors should be established as EVN subsidiaries.
"The establishment of these corporations could help EVN avoid chaos, which could help the country’s energy security," said Hung.
Prof. Pham Duy Hien, former head of the Da Lat Nuclear Research Institute rejected EVN’s argument that the reform would threaten energy security, saying that Viet Nam was currently lacking electricity. "Even with EVN, energy security is not ensured," he said.
Hien added the power industry reform was a must and should be accelerated.
Dr Tran Dinh Thien, acting head of Viet Nam Economics Institute, shared the same view, saying that the task of ensuring the energy security of a country should not be assigned to a corporation.
With the current conditions, the Electricity Regulatory Authority and the Ministry of Industry and Trade could be responsible. In the future, Viet Nam could also create a more powerful agency to be in charge of this, Thien said.
Hao added that work on EVN restructuring needed to be done step by step, adding that Viet Nam would not have a real power market until after 2024.
VietNamNet/VNS
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