2008 Import Turnover - A Thorny Problem

“Restricting import excess is a thorny problem” is widely conceded in the conference with Vietnamese commercial counselors, regarding solutions for import excess restriction, which was governed by Nguyen Thanh Bien, Deputy Minister of Industry and Trade, on 29 Feb 2008. The trade gap is a serious problem without remedy, facing the Vietnamese economy for a long time.

 

According to Nguyen Thanh Bien, Deputy Minister of Industry and Trade, import excess in the last two months has really raised the alert. In the last 2 months, the trade deficit has increased to over US$ 4 billion, holding 49.2 percent of export and increasing 4 times over the same period in 2007. Imports are standing at US$ 12.99 billion, increasing by 63.7 percent over last year, focused on production machine and equipments.

Regarding the lack of import control, Bien said this is resulted from inefficiency in project management and production, unsound investment and global integration, which all cause increasing imports.

 

The rocketing import turn-over, rising 23.3 percent over 2007, has been accompanied by high import prices, increasing by 15 percent on average. The price of essential commodities for production is mounting while exports are reduced, especially of strategic goods, such as crude oil decreasing 8.3 percent. Global integration brings opportunities for foreign products in market access, but represents challenges to Vietnamese enterprises that have not fully capitalized such advantages for exports.

 

However, many commercial counselors overseas have not concurred with such causes. Nguyen Ngoc Hai, the commercial counselor in Singapore, has argued that apart from such objective drawbacks, the main subjective ones are resulted from weak administration of functional bodies.

 

Nguyen Van Lich, Head of the Trade Research Institute and Deputy Director of the import excess project, has conceded the shortcomings of import restrictions. “The more import excess is restricted, the higher it is!” he said. Nguyen Van Lich analyzed that the restriction of import excess is complex because requiring macro-management of the government over a long time. It is recognized that the expectation for absolute import control in 2008 and the following years can not be fulfilled.

Supporting this idea, counselors in the conference jointly came up with solutions to import excess. Some analyzed that the import excess is not really a bad sign for Vietnam’s status at this moment, because the amount of imports are obviously increased in FDI and ODA areas. Dao Huy Giam, the Vietnamese commercial counselor in WTO negotiation rounds in Geneva, said that we should neither consider import excess a severe problem nor set specific goals for this.

 

Therefore, according to specialists and commercial counselor, it is not necessary to intervene in the import excess through restriction measures. Imported raw materials, if serving for exports as well as stabilizing export growth with expected turnover of US$ 59.2 billion in 2008, should be kept stable. Others, serving domestic production, should be carefully balanced to avoid bad impacts rising prices on the world market. Many specialists suggested that there needs to be an increase of import towards USD paying markets instead of Euro paying ones, to limit the impact of price rise of the Euro against the USD. Besides, a reasonable adjustment is required on the restricted number of imported cars.

Phan Van Trinh, Deputy Director of the Export and Import Department under the Ministry of Industry and Trade, confirmed that apart from high-tech and value-added exports to increase manufacturing quantities, it is essential for a master project of replacing exported raw materials on imported processing products. It will be focused on the auxiliary industries for garment and textile, leather and shoes by building centers of material and auxiliary material with participation of foreign suppliers.

 

Box: Vietnam’s trade deficit in the Asian market is US$ 29 billion. The top countries exporting to Vietnam include China, Korea, Singapore and Thailand. It is calculated that the imports of Vietnam from ASEAN increase by US$ 3 billion per year, but the increase of export is just 1 billion. The import excess is doubled from US$ 4 billion to US$ 8 billion per year.