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Auto imports put drag on trade balance
Despite a decrease in import turnover, auto imports remain burdensome to Viet Nam’s trade balance as the country still faced a trade deficit of US$2.1 billion in the first six months of 2009.
According to a report released by the Viet Nam Statistics Bureau on June 29, in June alone Viet Nam imported 6,000 units of autos worth US$90 million, an increase of 1,200 in volume and $10 million in value, compared to May’s figures.
The report says this is the fourth consecutive month in which an increase in automobile imports occurred.
In the past few months, Viet Nam has also seen a lot of luxury cars of different brand names, including Porsche, Cadillac, Rolls Royce Phantom and Bentley, brought into the country by air.
Meanwhile, a well-known car importer in HCM City is claiming that many luxury cars which have been imported recently by air are used cars. Buyers must pay $4,000 to $10,000 to bring a car to Viet Nam by air.
In face of the global downturn, total automobile imports into Viet Nam in the first half of 2009 reportedly dropped 57 per cent compared with last year, to 23,100 units worth $392.2 million.
The report says the decrease in automobile import turnover in the first half of the year was due mainly to an increase of several taxes and fees imposed on automobiles in 2009.
According to figures released by the Ministry of Planning and Investment on June 24, the trade deficit of $1 billion in June brought the total trade deficit suffered by Viet Nam in the first half of the year to $2.1 billion.
In the first six months of 2009, the country attained an export turnover of about $27.6 billion, down by 10.1 per cent compared with the same period last year. Meanwhile, the country’s imports are estimated at $29.7 billion, a year-on-year decrease of 34 per cent.
Coffee prices plummet
Vietnamese businesses should temporarily stop signing contracts for coffee export as coffee prices had fallen dramatically to the lowest in three years, the chairman of Viet Nam Coffee-Cocoa Association (Vicofa), Luong Van Tu, said last week.
On the London trading floor, the benchmark coffee price fell by nearly US$240 per tonne in just two weeks, from $1,530 for September delivery to $1,313. Viet Nam’s coffee export price fell to a three-year low of $1,195 per tonne on June 26.
"The price decrease should not be blamed on the laws of supply and demand. Speculators have been deliberately distorting market forces to make profit," Tu said in an interview with Viet Nam Economic Times last week.
He explained that in May speculators spread news that coffee prices would increase sharply, prompting Vietnamese companies to hoard coffee for exports.
In June, speculators stopped purchasing coffee to push prices down and started rumours that the coffee price would drop further towards the year-end.
Vietnamese enterprises, who had hoarded coffee, then panicked and rushed to sell out. As a result, Tu said, many Vietnamese companies are incurring losses of VND3 to 4 million per tonne of coffee.
While many companies have suffered because they hoarded too much coffee, others encountered problems because they had signed export contracts without having the coffee in hand, according to the chairman.
The latter are obligated to deliver exports in September, but, as the coffee price has dropped so dramatically, most farmers have stopped selling.
Viet Nam is expected to produce about 1 million tonnes of coffee beans this year. Already 680,000 tonnes have been delivered. Vietnamese exporters rushed to export this crop earlier and accepted low export prices, and they now are caught short, the remaining volume of contracted exports far exceeds the 300,000 tonnes of coffee left.
Many enterprises have had to delay deliveries from July to September, bearing a penalty of $35 per tonne, or to November, a penalty of $50 per tonne.
Tu said Vicofa has made four recommendations for local exporters: learn carefully about buyers and do not sell products to speculators who may force prices down; do not sign contracts for forward delivery when there is no coffee in hand; inform each other about export prices; and take timely and wise steps to cut losses.
Le Hung Vong
vietnamnews
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