Cooling down Overheated Trade Deficit

Ensuring enough electricity for production and livelihoods, supplying sufficient petroleum products and limiting importation of luxury goods are the Ministry of Industry and Trade’s latest measures to narrow trade deficit and ensure supply for the domestic market in the second quarter, Minister of Industry and Trade Vu Huy Hoang said at a meeting on May 4, 2011.

 

The Ministry forecast the April trade deficit at US$1.4 billion, or 19.2 percent of exports, bringing the total trade gap in the first four months of the year to US$4.9 billion, equal to 18.2 percent of exports. In particular, foreign-invested companies reported a trade surplus of over US$1.3 billion (but incurred a trade deficit of US$1.15 billion in case crude oil was excluded). Worryingly, imports from China and ASEAN countries continued to climb, causing a trade deficit of nearly US$4 billion with China and some US$2.6 billion from the ASEAN bloc.

 

Deputy Minister Le Duong Quang said trade deficit was at an alarming rate. Notably, car import surged, forcing the ministry to propose the Government to apply remedy measures to restrict importation of this product.

 

Trade deficit worsened in the last two months; thus, Minister Vu Huy Hoang urged [relevant bodies] to seek out solutions to check in trade deficit at 16 percent [of exports this year]. He said the Ministry of Industry and Trade will have solutions to keep a tight rein on importation of five groups of products which have small value but affect consumer sentiment: automobiles, expensive mobile phones, luxury goods, cosmetics and wine.

 

Industrial production value increased 15.1 percent year on year in the first four months of 2011. Many large-scaled corporations reported higher than average growth like Vinacomin (23.3 percent); PetroVietnam (24.7 percent), Vinachem (17.1 percent), VEAM (26.8 percent) and Vinaincon (33.3 percent).

 

Export turnover was estimated to reach US$26.94 billion in the reporting period, up 35.7 percent year on year. Particularly, Vietnamese-invested companies earned US$11.75 billion from overseas shipments, up 34.0 percent, and foreign-invested enterprises raked in US$15.19 billion, up 37.0 percent.

 

Although industrial production value expanded steadily, input costs surged, specially seaport costs, said Mr Phan Van Chinh, Director of the Import - Export Department which comes under the Ministry of Industry and Trade. Thus, [companies] should focus on reducing input costs and boosting circulation of capital and goods. Besides, the ministry will review import and export activities to increase exports and reduce trade deficit.

 

Minister Vu Huy Hoang requested adequate supply of essential commodities in the second quarter to foil price fevers. The ministry will tighten market probes to prevent unreasonable pricing, and strictly punish trade frauds.

 

The Ministry of Industry and Trade and the Ministry of Finance have repeatedly rejected the rumour that Vietnam lacked petroleum reserves. At the meeting on May 4, Mr Bui Ngoc Bao, President and General Director of Petrolimex - the largest petroleum trader in Vietnam, asserted that the corporation will ensure enough supply in the second quarter. “Petrolimex will guarantee the supply for agents in the second quarter and subsequent months.”

 

Mr Bao said Petrolimex has signed contracts for the second quarter supply which was estimated to rise 17 percent. With current policies, the market will be stable in April and May, he noted.

 

Minister Vu Huy Hoang said: "At the request of the Prime Minister, power supply reduction will not be reduced in May.” He has guided the Electricity of Vietnam not to cut down power supply, especially for manufacturing purposes.

 

In the coming time, the ministry will request its subordinates to adopt flexible policies to regulate the demand and supply and stabilise the market; intensify inspections and supervisions over the implementation of pricing registration and declaration; seriously punish any acts of speculation, unreasonable price hike, trade fraud; control quality, hygiene and safety of goods, develop distribution networks; continue to implement trade promotion programmes, and bring made-in-Vietnam products to sell in rural areas and industrial parks.