At a recent economic workshop, Dr. Pham Dinh Anh, Deputy Head of the Market and Price Research Institute under the Ministry of Finance, observed that the GDP growth rate and inflation rate are not the biggest concerns, but rather the most significant challenge for Vietnam is the high trade gap, because it influences the dong.

Dr. Tran Du Lich, Deputy Head of HCM City Delegation of National Assembly’s Deputies and Member of the National Assembly’s Economics Committee, affirmed that the trade deficit is not due to over-importation of equipment and machines. Recent statistics reveal that firms have imported too many consumer goods. In other words, the demand for foreign consumer goods is too high.

“We are consuming more than we produce. The money we get from selling farm produce like cashew nuts, coffee and rice still cannot offset the money we spend to import other consumer goods,” Lich explained.

He went on to say that the trade gap will make the domestic currency unstable.

In the first six months of 2010, Vietnam’s trade gap reached $6.7 billion, which, according to Anh, is equal to ½ of that in the same period of 2008, but is three times higher than the first half of 2009. The trade deficit was equal to 20.9 percent of the total export revenue. If not counting gold exports, the trade deficit for the first half of 2010 was $8.1 billion, or 26.2 percent of the export revenue.

According to Anh, the trade deficit has become a chronic disease of the national economy growing more and more serious. The domestic economic sector imported more than exported by $7.8 billion, while foreign-invested enterprises by one billion dollars.

Trade with China created the most serious deficit, up to $6.1 billion, accounting for 94 percent of the total trade deficit. The import revenue from China in the first half of 2010 increased by 34 percent in comparison with the same period of the last year, reaching $9.1 billion, or 23.4 percent of the total import revenue. The import revenue from ASEAN countries reached $7.8 billion, an increase of 20.4 percent, and the import revenue from Japan was $4 billion.

Prime Minister Nguyen Tan Dung has asserted that that Vietnam needs to restructure the national economy soon. Dr. Nguyen Duc Kien, Member of the Economics Committee of the National Assembly, cautioned that the economy is losing its advantages of investment capital and low-cost labor and urged prioritization in any restructuring plans.

Dr. Tran Du Lich argued that the most urgent thing task is to set restructuring policies in place to create favorable business conditions. “If enterprises have a buoy, they will know how and where to go. In fact, companies do not State money,” he maintained.

Source: Nguoi lao dong