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Local exporters slowly regaining their mojo
The export and import turnovers of Vietnam’s domestically-owned enterprises have produced a $3 billion trade deficit for the first five months of the year, a bright spot amid a slew of dark economic news.
The Ministry of Planning and Investment’s (MPI) data showed that local firms’ value of exports reached $20.2 billion, while that of imports touched $23.2 billion. In May, the turnover reached $4.3 and $5.4 billion, respectively, resulting in a $1.1 billion trade deficit, down from April’s $1.73 billion.
Government officials offered an upbeat assessment of the data. “Local enterprises’ export-import activities have seen signals of a recovery, manifested via their trade deficit,” said MPI Deputy Minister Dang Huy Dong.
“The trade deficit is a good signal of local enterprises’ health,” said Huynh Dac Thang, vice head of the Ministry of Industry and Trade’s (MoIT) Export-Import Department. “It means a production rebound as currently 70 per cent of inputs for local production is imported. It is expected that the trade deficit will continue in the coming months, due to a rise in industrial production.”
In this year’s first five months, the index for industrial production (IIP) augmented 5.2 per cent against last year’s corresponding period, when the IIP had climbed 4.2 per cent over the previous year. Notably, the on-year IIP rise for the processing and manufacturing industries was 5.5 per cent, significantly higher than the on-year 3.8 per cent rise of last year’s corresponding period.
Do Huu Phuong, director of home appliance maker Hoang Anh Export-Import Company in Hanoi, said the company’s imported materials like steel, plastics and cloth in May climbed 15 per cent against April, when this rate augmented 10 per cent on-month.
“During this year’s first five months, the rate ascended 12 per cent against the same period last year, when the rate went up 10 per cent on-year,” Phuong said.
Such products imported by this company also saw good growth as prescribed in an MPI report submitted to the government in May. It showed that the import of steel increased 30.1 per cent in quantity and 16.3 per cent in value, plastics increased 16.7 per cent in quantity and 16.1 per cent in value ($2.22 billion), cloth up 17.8 per cent ($3.3 billion) and garment materials up 18.7 per cent ($1.48 billion).
Between January and May, Vietnam’s total export value - including that of foreign-invested enterprises (FIEs) reached $49.9 billion, up 15.1 per cent on-year - and the import value reached $51.9 billion, up 16.8 per cent on-year, respectively, with a $1.9 billion trade deficit.
Specifically, FIEs occupied nearly 60 per cent of Vietnam’s total export turnover for the first five months of the year, during which they also accounted for 55.3 per cent of the country’s total import turnover.
If crude oil exports are excluded, FIEs’ trade surplus would be $1.1 billion. If not, their trade surplus will be nearly $4.1 billion.
During this year’s first five months, FIEs have also exported 98.3 per cent of phones, over 90 per cent of computers and electronic products, and nearly 70 per cent of footwear, according to the MoIT.
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