08:18 | 28/04/2015 Trade
(VEN) - Vietnam’s long run of achieving a trade surplus finally came to an abrupt end when the country imported US$1.8 billion more than it exported in the first quarter of 2015. Most of these goods were imported for domestic production. The Ministry of Industry and Trade said it will closely monitor foreign trade to efficiently manage this sector.
Goods mostly imported for domestic production
According to the Ministry of Industry and Trade, Vietnam’s import differential of US$1.8 billion for Q1 2015 is equal to 5.1 percent of the country’s export revenue for this period. (Vietnam imported US$453 million and US$1.115 billion more than it exported in the first quarter of 2013 and 2014, respectively). However, experts and financial managers are not overly concerned about this.
Cao Viet Sinh, head of the inter-sectoral macro working group (the Ministry of Planning and Investment, Ministry of Trade and Industry, Ministry of Finance, and the State Bank of Vietnam) said imports had increased because the demand for production materials in the first quarter of 2015 was up 16.1 percent from the same time last year.
Echoing Cao Viet Sinh’s opinion, Minister of Industry and Trade Vu Huy Hoang said although the import value had increased, most of these imports were machinery and materials for production. He added that the value of imports under state control increased slightly, and noted the fact that Vietnam’s high imports relative to exports during the first quarter was not something abnormal. Finally, he said that if exports are promoted and imports are kept under control, the trade deficit rate in 2015 will be kept at five percent or less of the country’s export revenue in the same year.
Finding solutions to boost exports
Exports are expected to face many difficulties in the coming months following the decrease in the price of crude oil and crude oil’s export value. A number of new investment projects are expected not to begin operation or have products for export until late 2015. Farm produce, forestry products, and seafood exports achieved a high growth in 2014, but the production capacity of these products has reached a saturation level so further growth of these exports is not expected. Although many free trade agreements have been signed and will be signed in the coming months, time is needed for these FTAs to translate into a positive impact on exports.
Vietnam set an export revenue target of US$165 billion for 2015. More than US$35.67 billion or 21.6 percent of this has been achieved thus far, indicating that strenuous efforts need to be made if the target is to be reached.
The Ministry of Industry and Trade has solutions for the time ahead, including continuing to promote administrative reform, simplify some import and export procedures related to export activities, strengthening trade promotion with a focus on large potential markets, and working with ministries, localities and businesses to build production connectivity. The ministry is watching developments closely and has devised appropriate management measures to control unnecessary imports.
By Phuong Lan