Strict control of imported goods

How to put imported goods under strict control will be a key solution to keep the trade deficit at 20 percent. As planned, there will be a focus on petroleum, luxurious consumer goods and automobiles.

Deputy Minister of Industry and Trade, Bui Xuan Khu has asked the Export-Import Department and the Domestic Market Department under the Ministry of Industry and Trade (MoIT), the Vietnam Oil and Gas Corporation (PetroVietnam), the Vietnam National Petroleum Corporation (Petrolimex) and 11 other petro outlets to help stimulate consumption of up to 800,000 tonnes of oil from the Dung Quat Oil Refinery, and gradually reduce or stop importing petrol.

Bui Ngoc Bao, General Director of Petrolimex- a company that accounts for up to 60 percent of the market share for petrol consumption in Vietnam, says that since the Dung Quat Oil Refinery produced the first tonne of oil and petroleum products, Petrolimex has bought only 87,000 tonnes from the plant. Currently, consumption of Dung Quat’s oil and petroleum products goes through the go-between, the Vietnam Oil Corporation (PV Oil), thus affecting outlets’ import and consumption levels.

Apart from solutions to reduce oil and petrol imports, three other deputy Ministers of Industry and Trade, Nguyen Thanh Bien, Le Danh Vinh and Le Duong Quang, have called for strict control of high-end consumer products, cosmetics and vehicles with less than 9 seats and have asked banks not to provide loans for the importation of mobile phones.

To reduce the trade deficit, the Export-Import Department will have to double-check all imported goods and consumer goods under State management. In addition, the department will also consider granting automatic import permits to limit the importation of unnecessary goods.

As a result of rising steel imports from ASEAN after the import tax rate of 0 percent was imposed, the Vietnam Steel Corporation has asked the relevant agencies to strictly control the quality of imported steel, particularly rolled steel products in order to balance supply and demand whilst protecting domestic steel production.

Making full use of incentives to boost exports

Despite such effort, it seems difficult to fulfill the projected target for 2009. However, making full use of incentives, especially tariffs in the free trade areas, businesses will increase export value in the two remaining months of the year and into next year.

Mr Bien says that it is very important for businesses to exploit these advantages as they will help deal with the “rising in volume but decline in value” problem while still maintaining the import-export balance. In addition, associations and management agencies must closely coordinate in managing exports effectively and preventing forcible price gauging, in order to avoid a shortage of products when prices hike.

It is a fact that the exchange rate range of plus and minus 5 percent often leads to the speculation of foreign currency, causing a number of difficulties for businesses. Therefore, banks should devise more flexible management policies for exchange rates to create good conditions for businesses to boost exports.

This will help to cope with countries like the US and EU which are imposing anti-dumping taxes and trade barriers on Vietnamese goods. In addition to close coordination among associations, businesses must actively work with the Department of Competition Management to check export proportion to prevent one and too many products from being exported to one market.

For garments, which is one of the key export products, a representative from the Vietnam Textile and Garment Group (VINATEX) and the Vietnam Textile and Apparel Association (VITAS) has proposed that the Ministry of Industry and Trade, with the help of the Government, iron out snags in borrowing preferential loans. This will encourage the garment sector to expand its export markets and promote trade effectively.

Deputy Minister Khu reaffirms that besides implementing measures comprehensively, management agencies will continue to solve outstanding difficulties in administration procedures for import-export, ports, taxes and customs to boost exports. Mr Khu also urges to reduce meetings and conferences and focus on dealing with difficulties for businesses. He also proposes that management agencies such as the Import-Export Department works on Saturdays to grant early export licences for businesses. The Ministry will send working groups to businesses and localities to help them surmount obstacles.

In addition to measures designed to contain the trade deficit and boost exports, from now to the end of this year, it is imperative to make the best of the Government’s economic incentives while implementing construction projects with greater efficiency to enjoy the benefits of the investment stimulus package.