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Vietnam Economy Highlights
[Import-Export] The General Department of Customs has said Vietnam’s trade deficit narrowed to $6.294 billion in the first half of this year, down from $6.728 billion estimated by the General Statistics Office in early July. The figure accounted for 19.38% of the country’s total export value during the period, compared to the National Assembly’s cap of 20% for the whole year, the department said on its website late July 9.
The Southeast Asian nation exported $32.759 billion worth of goods in H1, rising 17% on-year, and spent $38.759 billion on imports, soaring 29.1%. In June, the country’s exports rose 0.1% on-month to $6.317 billion and its imports fell 1.7% on-month to $7.059 billion, resulting in Vietnam’s trade gap of $742 million, the lowest figure in the year to date, the department said.
Vietnam’s export value is forecast to rise 16.6% and 18.37% from a year earlier to $66 billion and $67 billion this year, outstripping the National Assembly’s and Government’s set target of 6%, Head of the Export and Import Department Phan Van Chinh said at an online meeting of the Ministry of Industry and Trade July 6.
The Southeast Asian nation is predicted to import between $80 billion and $81 billion worth of goods in 2010, up 16.23% and 17.68% on-year, resulting in the country’s trade gap of $13 billion and $15 billion.- Source: Vietnam Business Forum, 15/07/2010,3
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[Import Export] Vietnam’s trade deficit was 750 million USD in May, the lowest level since the beginning of the year or about 12.3 percent of the country’s total export turnover. According to the MOIT, the total trade deficit in the first five months of the year hit 5.37 billion USD, accounting for 20.8 percent of the total export value. However, some economic analysts have warned that the export value could soon suffer if a number of difficulties are not resolved such as the increase in the cost of input materials, the rise in price of goods in the international market, unskilled workers in manufacturing and the high interest rates on loans.- Source: Vietnam Plus, 21/05/2010,1
[FDI] A rise in foreign direct investment inflows is set to eat into Vietnam’s sizeable trade deficit. The Ministry of Planning and Investment’s Foreign Investment Agency (FIA) data indicated that disbursed foreign direct investment (FDI) capital in the country during the year’s first four months hit $3.6 billion, a 6 per cent rise year-on-year.
The FIA reports emphasised that FDI disbursements had exceeded $1 billion during the past two consecutive months. “This is a very promising sign for the country, coupled with a distinct regain of the country’s principle FDI contributions in industrial and manufacturing sectors,” said the FIA report. Between January and April, the country’s newly registered and expanded FDI capital reached $5.92 billion, including $5.59 billion from 263 new FDI projects with a 58.5 per cent increase in value.
Among those, American AES and Vietnamese coal and mining conglomerate Vinacomin’s $2.1 billion, 1,200 megawatt coal-fired power plant in the northern Quang Ninh province and Japan’s Kobelco Vietnam’s $1 billion iron nuggets-making facility in the central Nghe An province are the largest FDI projects for the last four months.The steel mill licenced in March and the power plant licenced in April helped bring the industrial and manufacturing sectors back the top list of Vietnam’s FDI contributors, followed by property, which had dominated the FDI list since early 2009. “We are expecting that more FDI will come in from foreign-invested power projects by the end of the year, some of which are now under negotiations and expected to be licenced soon,” said an FIA official.Prakriti Sofat, vice president of Barclays Capital said Vietnam’s low manufacturing costs and sizeable population remained attractive factors for foreign investors coming to the country.
Sofat suggested that Vietnam could take full advantage of its stable political environment to win over foreign investors in the process of deciding where to invest.
“Clearly, Thailand has been seen a lot of political upheavals so Vietnam has in some sense been gaining some of Thailand’s shares in FDI. For 2010, we expect Vietnam’s FDI disbursements of $11 billion and remittances inflows to be $7 billion, which should more than cover the annual trade deficit,” said Sofat, who forecast Vietnam’s trade deficit at around $11 billion for this year.
Standard Chartered Bank’s quarterly report on Vietnam’s economy is also upbeat on Vietnam’s FDI potential. “The trade deficit reached $3.5 billion in the first quarter of 2010, broadly in line with our full-year forecast of up to $15 billion. More importantly, disbursed FDI rose by 13.6 per cent year on year to $2.5 billion in the first quarter, which will further alleviate concerns about the balance of payments,” said the Standard Chartered report. At the end of April this year, Vietnam had 11,523 FDI projects worth $185 billion in registered capital, more than half of which came from industrial and manufacturing sectors. At the time of the FIA’s April reports, South Korea was the biggest foreign investor in Vietnam with 2,495 projects worth $21.9 billion, followed by Taiwan with 2,087 projects ($21.6 billion) and Japan with 1,211 projects ($19.3 billion).
In the first four months of the year, foreign-invested enterprises’ (FIEs) export values including crude oil rose 31.9 per cent on year to $11.25 billion, against $20.1 billion of Vietnam’s total exports. FIEs’ import values increased by 55.6 per cent to $10.24 billion.
- Source: VIR, VMR, 09/05/2010,7
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[Economy] Vietnam needs to target 7 percent economic growth in the second half of 2010 to meet its full-year expansion goal of 6.5 percent, Prime Minister Nguyen Tan Dung said at a ministerial meeting yesterday. The nation’s growth may increase by as much as 0.5 percentage points in the second quarter from 5.83 percent in the previous three months, according to a statement on the government’s website. Vietnam’s economy has been “relatively stable” so far this year and the government will continue to prioritize the maintenance of stability as well as prevent inflation from accelerating to a very high level, according to the statement. The Southeast Asian nation’s government has been implementing measures including eliminating the links between market interest rates and the benchmark to buoy the economy. The central bank on April 14 issued guidelines for lenders to set their own rates for lending at “reasonable levels,” to make it easier for companies to access funds.
Vietnam’s economy may expand 7.2 percent this year, the fastest pace since 2007, according to HSBC Holdings Plc. That would be faster than the 6 percent forecast from the International Monetary Fund. Consumer prices climbed 9.23 percent in April from a year earlier, down from 9.46 percent in March, as food costs eased. The country expects to keep inflation at 7 percent this year.- Source: Bloomberg, VNCentral, 03/05/2010,4
[Import-export] Two-way trade between Vietnam and the Association of Southeast Asian Nations (ASEAN) has gone up steadily each year but still records a deficit, said the Ministry of Industry and Trade.
Head of the ministry’s Asia-Pacific Department Dao Tran Nhan said that two-way trade registered an annual average growth rate of nearly 26 percent during the 2005-08 period, reaching 29.8 billion USD in 2008, doubling 2005’s figure. The figure was only just over 22.4 billion USD in 2009 due to the impact of the global economic crisis, and a year-on-year decrease of almost 25 percent.
In the first quarter of 2010, however, two-way trade exceeded 6.1 billion USD, a year-on-year rise of 37 percent, making up nearly 19 percent of the country’s import-export revenue.
Vietnam exports mainly textiles and apparel, footwear, crude oil, rice, electronic components, seafood, coffee and fruits and vegetables to ASEAN with export revenues of crude oil and rice making up more than 42 percent of Vietnam ’s total to the bloc. Within the bloc, Singapore , Thailand and Malaysia are leading importers of Vietnamese goods. Statistics have shown that the value of goods exchanged with the three partners accounted for 72 percent of Vietnam ’s import/export revenues with ASEAN in 2009. Cambodia , Laos and the Philippines are markets with great prospects for increasing export revenues.
- Source: VCCI, 24/04/2010,5
[Economy] Prime Minister Nguyen Tan Dung has asked the State Bank of Vietnam (SBV) to continue implementing flexible monetary policies in order to fulfil its set targets. The PM noted that the SBV should continue supervising credit organisations in providing loans with negotiable interest rates for effective projects as well as keeping a close watch on commercial banks’ foreign currency lending for materials imports.
In the first quarter of this year, Vietnam attained an economic growth rate of 5.8 percent while ensuring social welfare. However, inflation was high and the trade deficit increased 23 percent while the foreign currency payment balance decreased.
- Source: Chinhphu, 22/04/2010,2
[General] Vietnam’s economic growth accelerated to 5.83 percent in the first quarter from a year ago, buoyed by construction, tourism and banking services amid robust domestic demand. Growth was almost twice as fast as the 3.14-percent expansion in the first quarter of 2009, according to figures released by the General Statistics Office in Hanoi today. Gross domestic product expanded 5.3 percent last year, after quickening to 6.9 percent in the fourth quarter.
Industry and construction accounted for 43 percent of the economy in the first quarter, expanding 5.65 percent from a year earlier. The gain was 1.7 percent in the same period last year. Services grew 6.64 percent from a year earlier, making up 42 percent of GDP, after increasing 4.95 percent in the first quarter of 2009. The hotel and restaurant business advanced 7.82 percent as the number of foreign visitors to Vietnam jumped 36 percent in the first quarter from a year earlier. Financial services grew 7.86 percent and construction grew 7.13 percent.
- Source: Business Monitor, 01/04/2010,6
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