Vietnam urged to reduce trade deficit in services

09:28 | 24/05/2018 Economy- Society

(VEN) - Economists say Vietnam has the potential to increase its service export value and decrease the trade deficit in services with foreign partners.

vietnam urged to reduce trade deficit in services
Logistics services are a major Vietnamese import

High trade deficit

The Ministry of Industry and Trade says that while it has the potential to increase tourism, labor and transport services, as well as software exports, Vietnam has suffered a trade deficit in these fields for many years.

Data by the General Statistics Office of Vietnam (GSO) show that Vietnamese businesses exported services worth an estimated US$3.9 billion in the first quarter of 2018, up 18.2 percent from the same time last year. Tourism services yielded US$2.8 billion (up 23.3 percent) and transport services brought in US$700 million (up 8.5 percent). Service imports reached an estimated US$4.3 billion during the same period, up 7.8 percent from the same time last year, with transport service imports reaching US$2 billion (up 11.1 percent) and tourism service imports totaling US$1.4 billion (up 9.2 percent). Vietnam imported US$391 million more in services than it exported in the first quarter of this year, representing 10 percent of the country’s service export value.

Associate Professor Dr. Pham Tat Thang, a senior researcher from the Ministry of Industry and Trade, said with an interlacing seaport network and its growing international integration, Vietnam should have developed its logistics industry and become a logistics center in the region, but this sector has not developed strongly and logistics services are still bought from foreign enterprises.

Vietnam ranked 67th among 136 countries and territories worldwide in terms of the 2017 Global Tourism Competitiveness Index by the World Economic Forum (WEF). However, according to the Vietnam National Administration of Tourism (VNAT), Vietnam’s tourism development remains incommensurate with its potential.

Data from the Ministry of Labor, Invalids and Social Affairs show that in 2017, 134,751 Vietnamese were sent abroad to work, up 6.7 percent from 2016. However, most of them were hired for simple jobs in construction, engineering, textile and garment, seafood processing, and shipping. On the other hand, insufficient attention has been focused on training human resources for information technology (IT), software, financial and logistics services.

Solutions

Dr. Le Dang Doanh, Former Director of the Central Institute for Economic Management (CIEM), said increasing the export of services that are Vietnam’s strengths is important to shrink the trade deficit in services. Vietnam is fully capable of diversifying its range of services. For example, Vietnam could develop hot mineral spring healthcare services, and should develop and modernize its software, IT and banking services in pace with other countries in the region and the rest of the world, Doanh said.

Economist Luu Bich Ho says it is important to not only increase the number of visitors but also diversify and improve the quality of tourist services.

Vietnam should develop its logistics service industry, as logistics service import and export value has reached more than US$420 billion and is expected to further increase.

The Ministry of Industry and Trade is promoting the implementation of Prime Ministerial Decision 200/QD-TTg dated February 14, 2017 on an action plan to develop and improve the competitiveness of Vietnam’s logistics industry.

Phuong Lan