Vietnam's Industry and Trade: One Year after Joining WTO

 

Since Vietnam joined the WTO, industry value is expected to reach VND 467,935 billion, up 17 per cent versus the same period of 2006, so it will fulfil the planned target for 2007 (17-17.2 per cent), among which the state sector increased 10.3 per cent, non-state sector increased 20.8 per cent, and the foreign invested sector increased 18,2 per cent (Gas and Oil fell 6.7 per cent, other industries increased 23.4 per cent).

 

The non-state sector has the higher growth rate and a growing number of newly established companies, while many state companies have been transformed into corporations.

 

A year after joining the WTO, trade continues steady growth. For example, for 10 months in 2007, exports reached over US$ 39 billion, increasing 18.6 per cent. Nine commodity groups have reached exports over US$ 1 billion, and four commodity groups among them reached over US$ 3 billion.

 

Most export products have increased since the same period of 2006, among which the textile and cloth industry increased 31.1 per cent putting Vietnam in the top ten exporters worldwide of textile and cloth, wood products increased 22.4 per cent, water products increased 10.8 per cent, coffee products increased 42.6 per cent, and vegetable and fruits increased 15.1 per cent. 

 

The US is Vietnam’s biggest export market accounting for 21 per cent, the EU holds second place with market share of 19 per cent, and Japan holds third place with 11.8 per cent. According to estimates, exports to the EU will increase 28.5 per cent over 2006, exports to the US will increase nearly 26 per cent, and exports to Japan will increase about 6 per cent.

 

Services have also reached high growth, total retail turnover for 10 months reached VND 583,800 billion, increasing 22.7 per cent on year. However, the inflation rate of 8.12 per cent is the highest in recent years, especially the prices of oil, gasoline, materials and food have increased sharply.

 

The trade deficit in October is about US$ 1.05 billion, or 25 per cent of exports. The deficit over 10 months this year is US$ 8.9 billion, 22.8 per cent of total exports. The high trade deficit is due to price surges on certain imports, the influence of import tax reductions and slow deployment of non-tax regulations.

 

The Ministry of Industry and Trade have applied measures to restrict the trade deficit. The minister of industry and trade underlined that exports will be encouraged, especially for major items such as textile, shoes, and water products, all products with big market shares and competitive edge. Another focus will be on exporting new products such as electrical appliances, electronics and electrical wire cables. These products have showed strong growth; their annual export was small amount in the past but in 2007 it increased sharply to nearly US$ 2 billion.

 

One important measure is to develop support industries producing machines, equipment, components, spare parts and materials to restrict the import of products such as oil, chemicals, steel, automobile components and materials for textile and cloth. Minister Vu Huy Hoang said, the US$ 7.8 billion export of textile and cloth of 2007 relies on US$ 5 billion of imported materials. So, the actual export by the industry is estimated at about 30 per cent. However, according to the plan, by 2015 when the three oil refineries and steel blank production plants go into operation, and the production programme of one billion metres of cloth is implemented, imports of these products will be restricted.

 

In addition, to protect domestic production the Ministry of Industry and Trade will implement measures and technical barriers restricting imports of certain items, in accordance with the regulations of the WTO and other international organisations of which Vietnam is a member.