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More efforts to control trade deficit and stabilise prices
It is essential to boost domestic production and encourage Vietnamese people to use Vietnamese goods to stabilise the macro-economy, said Minister of Industry and Trade, Vu Huy Hoang, at the National Assembly’s question & answer session in Hanoi on November 22.
Trade deficit still under control
Mr. Hoang said 2010 was the first year Vietnam reached higher export growth (23 percent) than import growth (19-20 percent). However, trade deficit remain a huge challenge to the national economy while domestic businesses have to import machinery, materials which currently accounts for 93 percent of the country’s total import turnover.
In addition, the supporting industry has not yet developed strongly enough to meet domestic needs and the prices of some imported products are on the rise. For example, the garment and textile and leather shoe sectors can only be supplied with 43 percent of the required materials and the rest is imported.
On the other hand, a small section of Vietnamese consumers prefer imported goods to locally-made products. All these factors have affected the exchange rate of Vietnamese dong, consumer price index, trade balance and the macroeconomy.
In the face of the situation, the Vietnamese Government has taken drastic measures to control trade deficit. Import surplus was US$18 billion in 2008, US$12.9 in 2009 and is likely to reach approximately US$12 billion in 2010, equivalent to 17 percent of export turnover.
Mr. Hoang said the Ministry of Industry and Trade (MoIT) plans to reduce the level of import surplus to 14 percent over export turnover from now through 2015.
Regarding the relatively high imbalance of trade between Vietnam and China, Mr. Hoang said his ministry is working out solutions to increase Vietnam’s exports to China and gradually reduce imports.
Under a five-year bilateral trade plan to be signed soon, Vietnam will ask China to boost its imports of Vietnamese goods and create the best possible conditions for Vietnamese businesses to join trade promotion activities for introducing their products to partners.
To resolve issues related to Vietnam’s high export surplus to major markets such as the US and the EU and its import surplus to some regional countries, Mr. Hoang said Vietnamese businesses should expand export markets, especially untapped potential markets such as Africa and South America and should not focus only on a major market to avoid risks.
Stabilising market prices
In reply to NA deputies questions about measures to control inflation and stabilise prices, Minister Hoang said more efforts are being made to ensure supply and demand of 11 essential goods, including rice, salt, fertilizer, steel, and petroleum.
Measures should be focused on encouraging businesses to boost domestic production by developing distribution networks, particularly retail distribution networks while facilitating foreign businesses’s involvement in the distribution market and properly implementing the Ordinance on Prices and combating fake and poor-quality products.
No fertilizer imports as from 2015
A NA deputy from Kien Giang said fertiliser demand was ensured only up to 60 percent of domestic production while 40 percent was imported. When will the fertilizer sector be able to meet domestic demand?
Mr. Hoang said the country will need around 9 million tonnes of fertilizer a year but it can produce only 6 milllion tonnes and the remainder is imported.
However, if plans are successful, the construction of the Fertilizer Production Plants in Ca Mau with a capacity of 800,000 tonnes/ year and Ninh Binh (500,000 tonnes/year) will have been completed by 2012. In addition, another fertilizer plant will be expanded in Bac Giang. So, Vietnam will not have to import fertilizer by 2015, Mr Hoang said.
Concerning fake fertiliser, Mr. Hung said how to check and handle cases of fake fertilizer production remains a thorny problem for the relevant agencies and can not be addressed overnight because sanctions are not strong enough. The MoIT will ask the government to impose stronger sanctions to deal with fake fertiliser producers in the future.
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