10 outstanding features of Vietnam’s foreign trade in 2007

The Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade has pointed out the 10 most outstanding features of Vietnam’s foreign trade in 2007.

Vietnam is expected to gain the total export turnover of $48bil this year, an increase of 20.5% over 2006. Meanwhile, the estimated import turnover is $59bil, up by 31% over 2006.

There are 10 outstanding features in import-export activities as follows:

1. There was a sharp contrast in exports in the first half of the year compared to the second half. The first half was considered a difficult period, when the export turnover was $3.74bil a month, while the second half saw a breakthrough, when the average monthly export turnover was $4.26bil.

2. The exports of key export items were very satisfactory. Nine items saw the export turnover higher than $1bil, four of which had the turnover of more than $3bil, two items had the turnover of more than $2bil.

This is for the second consecutive year, apparel exports can bring the second highest turnover, after crude oil. Wooden furniture ranks the 5th among the biggest export items. Vietnam has surpassed Thailand and Indonesia to become the biggest wooden furniture exporter in South East Asia, together with Malaysia.

Vietnam has fulfilled the yearly plan in rice export. Vietnam’s rice is now being exported at the prices equal to Thailand’s.

Vietnam’s rice has been exported to more than 70 countries and territories, including the difficult-to-please US, Japan and the EU.

The turnover from coffee exports has exceeded the turnover from rice exports. Seafood exports are satisfactory. Vietnam remains the biggest cashew nut exporter in the world, when its products are being consumed by 40 markets. The country holds up to 50% of the world’s pepper market and witnesses a very satisfactory year when the export price is double the previous year ($3,760/tonne vs $1,540).

3. Vietnam now can export valuable products. For the first time, Vietnam exported the equipments for steam-boiler which Russian TKZ group used to assemble the power plant in India. The Maritime Mechanics Service Company launched at Vung Tau port the oil rig serving oil and gas exploitation, which was then exported to Malaysia.

4. Vietnam has been trying to diversify its export items. It exports $300mil worth of cassava starch, higher than the turnover brought about by key products including tea, peanut, fruits and vegetables.

5. 2007 is the first year which witnesses the considerable growth rate in domestic invested enterprises’ export (23.1%).

6. Key economic centres keep leading in export. HCM City remains the No 1 in exports with $6bil worth of exports. Hanoi’s export turnover is expected to exceed the $4bil level, while Binh Duong exceeded $5bil.

7. Hundreds of exhibitions and trade fairs have been organized, which helped introduce Vietnam-made products to the world. Vietnamese enterprises participated in well known trade fairs abroad, including the one on wooden furniture in the US, on seafood in Europe, and the 4th CAEXPPO in Nan Ning, China.

8. Despite the high trade deficit, the payment balance is still within control. There are four reasons behind the increased imports: a) the national economy maintains high growth with high foreign investments; b) import material price increases; c) the export growth rate is lower than import growth rate (20.5% vs 31%); d) the effect from tax cuts and higher consumer demand.

9. Management authorities show shortcomings in material import management. The authorities disagree on whether to allow the importing of consignments of scrap steel.

10. Enterprises keep complaining about complicated import-export procedures. Statistics showed that every year, every enterprise has to spend 1,959.2 hours to fulfill tax duties. Directors of a company asked to be jailed, while another director asked to be shot, because they are on the verge of bankruptcy due to tax refund delays.

 VNECONOMY 19.12

5-years’ collective economy reviewed

The country’s renewal process was again under the spotlight yesterday at a national conference in Ha Noi organised by the Party Central Committee’s Secretariat.

The talks centred on the nation’s progress in the last five years implementing a Party Central Committee Resolution on continuing the country’s renewal and development as well as raising the effectiveness of the collective economy.

Politburo member and standing member of the Secretariat Truong Tan Sang said the number of co-operatives and co-operative groups in the last five years had increased remarkably.

Co-operatives had diversified their industries, scale and competence, and more were making a profit, he said, adding this was an important step in strengthening, renewing, and developing the collective economy for the future.

By the end of June, the country had more than 320,000 co-operative groups, an increase of 32 per cent over 2001, 17,599 co-operatives and 40 co-operative alliances, rising 80 per cent over 2001. They have attracted more than 12.5 million members.

The country now has 8,535 co-operatives in agriculture, forestry and salt refining, involving 6.9 million members.

But attendees at the talks said only about 20 per cent of co-operative groups were registered with local People’s Committees. Their capital and properties were small, and their operations were not very stable.

To tackle shortcomings in the resolution, Sang urged participants to come up with good models and experience to boost their sectors and localities.

According to the Steering Committee the collective economy should have gained a higher growth rate, accounting for a bigger ration of the nation’s GDP by 2010. 

VNS 19.12

Time to open more to FDI, says UN report

Viet Nam should open new sectors of its economy, particularly services, to foreign investment, advises the United Nations Conference on Trade and Development (UNCTAD).

The opening to foreign investment was the way to realise the full potential of FDI, it says in its draft Investment Policy Review for Viet Nam.

The report emphasises FDI flows into Viet Nam have been focused on manufacturing for exports.

Little has gone for services

Manufacturing accounted for 44.8 per cent of FDI between 1995-2000 and rose to 69.5 per cent in 2001-06, the review says.

"The country should consider strategies to promote FDI in physical infrastructure and human resource development to avoid future bottlenecks," said UNCTAD researcher Quentin Dupriez.

New investment in telecommunications, transport, electricity and education would benefit Viet Nam’s sustained economic development.

Co-author of the review, Dupriez presented the draft for discussion at a seminar organised by UNCTAD in collaboration with the Planning and Investment Ministry in Ha Noi yesterday.

Although Viet Nam had opened to foreign investment only in 1987, response from international investors had been strong, he said.

Now the country was seen as viable alternative to China and an opportunity for risk diversification.

The researcher said there was a strong correlation between FDI inflows and Viet Nam’s real Gross-Domestic-Product growth during the past 20 years. Foreign-invested enterprises produced 13 per cent of GDP, almost 40 per cent of industrial output and 60 per cent of exports in 2006.

He emphasised that skill requirements would increase with development and that Viet Nam should facilitate training in, and the importing of, skills identified as needed.

The country should have a comprehensive audit of the labour market, identify the skills gap, enable the temporary entry of foreign workers with the needed skills and promote skills transfer to nationals, he said.

The researcher recommends that Viet Nam consider a "second generation of doi moi (renewal)" for investment policy.

Viet Nam should also simplify its tax system, he said.

While there should not be too many tax incentives, general corporate taxation should be attractive to all enterprises.

Deputy Planning and Investment Nguyen Bich Dat agreed that new openings for FDI were needed to help Viet Nam take the next step in the value-added chain.

There had been a clear trend of FDI inflows into high technology, he said. "Viet Nam’s WTO commitments can basically be considered ‘floor commitments’ that enable openings to new markets," the deputy minister said.

"We should scrutinise the services sectors so that we can open markets more quickly for those services where Viet Nam’s players are strong, and slower for those services where domestic producers are weak."

The UNCTAD’s coincides with a Planning and Investment Ministry conference scheduled for next month to review 20 years of foreign investment.

HCM City Planning and Investment Department deputy director Lu Thanh Phong said the review would include a comprehensive assessment of Viet Nam’s investment policies.

STAR-Vietnam project deputy director Phan Vinh Quang said that while FDI had focused on manufacturing, the UNCTAD report should have separate labour-intensive and non-labour-intensive chapters so as to show the effects of FDI on job creation.

The report will be revised before publication, probably in April.

VNS 19.12

More foreign banks to open branches in Viet Nam

The Commonwealth Bank of Australia , the Industrial Bank of the Republic of Korea (IBK) and Fubon Bank of Taiwan have been given the green light to open branches in Viet Nam .

Vice Governor of the State Bank of Viet Nam (SBV) Phung Khac Ke announced the agreement, which still remains in principle, on December 4.

The SBV has been processing requests from 19 foreign banks to open branches in Viet Nam after Decree 22 was made public.

It has also received requests to establish five 100 percent foreign-invested banks in Viet Nam .

The SBV has also given the nod, in principle, to the establishment of four local commercial banks, namely the Oil and Gas bank, the Bao Viet bank, the FPT bank and the Lien Viet bank.

VNECONOMY 06.12