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Imports up again, especially imports of consumer goods
Vietnam witnessed a trade deficit return two months ago. While some experts believe that this heralds the heating up of the national economy, as businesses need more imported materials for domestic production, others say that the trade gap should not be seen as good news.
These latter experts have pointed out that imports of products which serve as input materials for industries have just increased slightly, while the worrying thing is that consumer goods imports have increased sharply.
According to the Ministry of Industry and Trade, imports of consumer goods in May reached $5.9 billion, an increase of 8.1 percent over April. Imports in the first five months of the year reportedly were $23.98 billion, and Vietnam’s trade gap $1.12 billion. Not counting gold exports, the trade gap was $3.6 billion.
In May, imports of milk and dairy products rose by 56 percent, vegetable oil and animal fat increased by 21.6 percent, cars under the form of complete built unit (CBU) increased by 15.5 percent, CBT motorbikes 18.6 percent. Meanwhile, imports of production materials only increased slightly by 4-5 percent.
The import turnover of materials which serve production for export decreased by 10-20 percent, while imports from big partners in Asia decreased by 30-40 percent, from Europe 40 percent.
Imports by 100 percent domestic-owned enterprises decreased by 40 percent over the same period of last year, while imports by foreign-invested enterprises decreased by 31 percent, which shows the slower recovery of domestic-owned enterprises than foreign-invested enterprises.
In fact, imports of materials for local production have not increased sharply again because the demand for goods in the domestic market remains low because of the economic downturn.
In fact, businesses all want to take full advantage of the low prices of products in the world’s market to import materials in big quantity for local production in anticipation of the national economy’s recovery.
However, a lot of difficulties have hindered their plans.
The Vietnam Textile and Apparel Association (Vitas) has reported to the Ministry of Industry and Trade that the interest rate subsidy-related policies are relatively complicated, making it difficult for businesses to access preferential loans.
Commercial banks recently have difficulties in balancing foreign currency supply and demand. They do not have enough foreign currencies to sell to import companies, while the businesses lucky enough to purchase dollars from banks have to pay 1-2 percent more than the quoted prices.
However, it seems that garment enterprises are still luckier than other enterprises as the proposal by the Vietnam Textile and Garment Group to borrow working capital in VND at preferential interest rates to purchase $15 million worth of cotton to hoard up was accepted by the Government in the Government’s March 3 notice.
Other associations including the Cashew Association and Coffee and Cocoa Association want to extend the interest rate subsidisation period and more simple procedures to access bank loans. Only when seeing these things, would businesses dare import materials and machines for domestic production.
VietNamNet, TBKTSG
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