How to deal with thorny problems for industry and trade sector

In order to reach the country’s target GDP growth rate of 6.5 percent in 2010, the industry and trade sector needs to meet other important targets: There must be increases in the industrial production value of 12 percent, in total export turnover, 7 percent and for total retail turnover, 22 percent while trade deficit is kept to less than 20 percent of export turnover.
To control inflation under these Government targets, the industry and trade sector should ensure the supply of essential goods to avoid price fevers.

Keeping import growth lower than export

According to the Ministry of Industry and Trade (MoIT), keeping import growth lower than export growth, and the trade deficit not higher than 20 percent will be an uphill battle in 2010 as Vietnam mostly imports materials for production to serve national industrialisation and modernisation. As a result, demand for imports of machines and spare parts will be on the rise this year as turnover is predicted to hit US$72.66 billion, a 56- percent- increase over 2009.

Limiting imports will focus on luxury consumer goods and foreign equivalents of locally-made machines and equipment. However, such products only account for a small proportion of Vietnam’s imported product structure.

The imports facing limits include consumer goods, fully-assembled cars of fewer than 9 seaters and their spare parts, and motorbike spare parts.  The percentage of total import turnover they make up will drop from 8.8 in 2009 to 8.7 in 2010 and growth for these goods will drop from 4.4 percent to 3.8 percent.

The MoIT plans to put products made of steel, gemstones and precious metals under import control. However, it is essential to pair such reductions with effective exploitation of domestic resources to replace the imported products and reduce the trade deficit. This group accounts for more than 83 percent of total import turnover.

Making the most of the domestic market

In 2010, the industry and trade sector will focus on exploiting the domestic market to bolster socio-economic development, creating a foundation for boosting export and international economic integration.

According to the Domestic Market Control Department, this year’s trade promotion programmes will also concentrate on different forms of sales to stimulate domestic consumption and expand distribution channels to every area throughout the country, particularly to rural and mountainous areas. To effectively implement the campaign ” Vietnamese people use Vietnamese goods”, MoIT will encourage businesses to raise the competitiveness of their products and the quality of distribution services to attract more domestic consumers and increase total retail turnover by 18 percent more than that of 2009.

In addition, priority will be given to the development of goods distribution networks, as well as the production activities of some key sectors. In 2010, trade infrastructure development and management will receive special attention, with a focus on developing trade centres, supermarkets, warehouses and logistics and trade fairs in provinces and cities across the country. Furthermore, pilot models on consumption of agricultural products and the supply of industrial materials in 12 representative provinces, as well as models for cooperative markets and multi-function cooperatives will also be built and developed.

To provide better consultancy for the Government, it is essential to propose measures to stabilize the domestic market, ensure the balance between supply and demand, prevent price hikes and maintain the inflation rate at under 7 percent. The Domestic Market Control Department under the MoIT will increase its forecasting capacity and adjust prices on several essential products.

Considering issues of coal and electricity prices

The Government will continue to implement market mechanisms on a wide range of products and services in 2010. This is the Government’s consistent policy in order to ensure balance between input and output. Implementing market price mechanisms will help increase the quality of products, encourage consumers and producers to participate in thrift practices, ensure economic effectiveness and attract more investment in the production of electricity and other essential goods.

It is predicted that in the first quarter of this year, the Government will consider proposals on the prices of materials, including coal and electricity. However, Minister of Trade and Industry, Vu Huy Hoang, says that the prices of these commodities – the two strategic products – will make a strong impact on people’s daily lives and business operations. Consequently, it is important to implement market price mechanism while taking flexible measures to prevent drastic fluctuations.

“We should be cautious in adjusting the prices of electricity and coal. We successfully maintained the coal price at a low level for a long period of time. If we adjust the coal price following the coal sector’s requirements, the price would increase sharply, thus strongly affecting the price of electricity as well as the whole national economy and people’s daily lives,” he states.

Minister Hoang also elaborates that the electricity group has reasons to adjust the coal price in line with the real situation of the electricity sector. The coal group also proposes to adjust the coal price in accordance with its exploitation and production costs. To deal with such problems, MoIT will conduct research and carefully calculate the adjustment of the coal price in order to follow market price principles and avoid negative impacts on business and society.

VietNamNet/VOV

Tags: Vietnam economy news

Posted by VBN on Jan 17 2010. Filed under Economy News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry