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Trade deficit not a major concern: Commerce Minister
Laos built up a major trade deficit last fiscal year but the news is not a major concern for the Minister of Industry and Commerce.
Speaking during an interview with local media in Vientiane yesterday, Dr Nam Vinhaket said the Ministry of Industry and Commerce was not worried about the large trade deficit amassed during the first nine months of last fiscal year because it is largely the result of foreign direct investment rather than overconsumption.
He said most of the goods imported were for investment purposes, such as construction materials, electrical equipment and vehicles, and these would help create the foundation for a higher export value in the coming years.
“We have learnt that only 20 percent of imported goods were used for consumption purposes. The rest were used for investment purposes,” Dr Nam said, adding that if the majority of imports had been destined for general consumption, the ministry would have concerns.
According to a report from the ministry, Laos exported almost U$S1.4 billion worth of goods in the first nine months of last fiscal year while importing goods worth about US$1.7 billion, resulting in a trade deficit of around US$324 million.
One of the main factors in the trade deficit was the high value of imported vehicles and spare parts, at US$339 million. Imports of electronic goods amounted to US$205 million, while construction materials were worth about US$149 million. Import values for fuel and food were US$107 million and US$91 million respectively.
The government is anticipating a US$200 million trade surplus this fiscal year based on the assumption that the export value of mining products and electricity will increase.
Dr Nam said that the government had relaxed import a nd export restrictions after learning this did not help to boost productivity. He said Laos needed foreign investment and technology so it was impossible to keep the trade deficit under control.
He also said the relaxing of import and export restrictions was recommended in the four breakthrough approaches outlined in the resolution of the 9th Party Congress, which aimed to abolish administrative procedures that hampered production.
Dr Nam said that in the past the government had tried to control imports and exports to ensure a trade balance, adding that companies wanting to import goods must also have goods to export so as to maintain the trade balance. He also said that companies that didn't export goods were unable to import goods unless they used a quota from another export company.
According to trade officials, the government abolished its policy to limit the trade deficit to within five percent of GDP, saying this was no longer appropriate as Laos will soon be a member of the World Trade Organisation.
The officials also said the import and export of goods should be in line with the principles of a market economy.
vientiane times
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