Vietnam’s gross domestic product (GDP) grew 7.2 per cent in the first quarter of this year, 0.1 per cent lower than the same period last year and falling short of the 8 per cent targeted by the government.
Figures released last week by the General Statistics Office (GSO) revealed that the economy’s failure to shine as expected in the first three months of the year was mainly due to slow disbursement of construction investment, slow industrial production and lower-than-expected agricultural production.
According to the GSO report, the state spent more than VND64,000 billion on basic construction in the first quarter, realising only 17 per cent of the year’s total allotment for the industry.
Economic officials have said that slow disbursement of several large projects, particularly in the state-owned sector, stemmed from complicated procedures and regulations in raising capital.
“Harassment and complications in investment procedures are preventing us from fulfilling our investment schedule, causing us to miss business opportunities,” said Vu Van Hiep, general director of Vietnam Cement Corporation, late last month at the monthly meeting chaired by the Ministry of Planning and Investment.
“We have 50 investment projects scheduled to be finished by 2010, which are all facing risks of failing to fulfil if this situation continues.”
Concerning the economic outlook in the first three months, the sector’s production value scored a year-on-year increase of only 14.7 per cent, over 1 per cent less than targeted. Officials asserted that declines in production of high-value items like oil, natural gas, assembled autos, motorbikes, bicycles, televisions and construction materials, all impacted by macro-policy changes, trade barriers in export markets and stagnant domestic demand, were to blame.
“Predictions over policy changes in import taxes imposed on cars, especially used cars, electronic products, together with the country’s commitments on opening markets, are posing consumption hesitance among domestic consumers,” said Huynh Dac Thang, vice director of the Ministry of Industry’s Department for Planning and Investment.
“This has also discouraged our producers from expanding production volumes.”
The GSO’s report also shows that poor GDP in the agricultural sector, which rose by 2.1 per cent against 4.3 per cent for the previous period, drove down GDP growth across the board. Poor weather, pests, and bird flu, still unaddressed in some places, are mainly to blame for the low agricultural figures, analysts have also said. One MPI official revealed that farmers in the Mekong Delta were hit particularly hard by pests in rice, with more than 150,000ha affected.
Figures collected by the GSO on exports in the first three months of 2006 illustrated that the industry took the spotlight in the domestic economic picture. Export earnings on key items such as textiles and garments, electric cables, and plastic products, pushed first quarter growth over 20 per cent, generating an export revenue of nearly $9 billion.
However, officials warned that some key export items, particularly textiles and garments, which initially grew in turnover of more than 30 per cent during the past three months, might be on the decline. Hoang Thinh Lam, vice director of Ministry of Trade’s planning department said that almost all textile quotas exported to the US for this year had been allocated.
“In the last six months of 2006, there will be no quota to the US left. Thus, we can only accelerate textile and garment export by improving business performance in the non-quota markets,” said Lam.

Source: Vietnam Investment Review