Positive signs of economic rebound

Exports hit snags

According to Bui Ha, an official from the Ministry of Planning and Investment (MPI), Vietnam’s major exports fell sharply to US$27.6 billion, or 10.1 percent lower than the figure a year ago. Notably, the price of crude oil fell by 53 percent, rubber 44 percent, coffee 28.3 percent and rice 21.6 percent. However, the volume of exported farm products increased dramatically, rice 56.2 percent, pepper 40.4 percent, coffee 22.3 percent and tea 10.9 percent and cassava tripled.

 Although seafood has seen a positive growth during this period, its export value only fetched US$1.7 billion, down by 10.7 percent. The US, Japan, China, Australia and the European Union remain Vietnam’s biggest importers, with the value hitting more than US$1 billion.

The MPI attributes the sharp fall to difficulties in export markets. “However, this is an encouraging result, given the shrinking global market,” says Ha.

Vietnam imported US$29.7 billion worth of commodities between January-June, down by 43 percent against the same period last year. This means the country ran a trade deficit of US$2.1 billion in the reviewed period.

“This is good news in terms of the import-export balance, but it should be taken into account in terms of growth, because 85 percent of locally-made products rely on imports,” Ha notes.

The major products that obtained the highest import growth rates included wheat (up 61.6 percent), pharmaceuticals (27.6 percent), rubber (24.5 percent), fibres (16.5 percent) and liquefied gas (15.1 percent). Meanwhile, steel dropped by 54.7 percent, automobiles 47.9 percent, wooden products 40.3 percent, fodder 23.3 percent, chemicals 19.8 percent, spare machine parts 19.2 percent and milk 10.4 percent.

Growth rate down
The major economic targets of almost all provinces and cities were much lower than the figures recorded a year ago. However, Bac Lieu, Bac Giang and Vinh Phuc provinces and Hai Phong City recorded significant falls in their economic growth rates, industrial and agricultural production and tax revenues. They will find it difficult to fulfil the targets they have set for this year. Vinh Phuc province, for instance, decided to slash its GDP growth rate down to just 4-5 percent from the 10 percent plus set earlier this year.

The capital city of Hanoi, which has been one of the nation’s leading economic powerhouses, only achieved a GDP growth rate of 3.6 percent, or 0.3 percent lower than the national average level. The value of its agricultural production was down by 12 percent while only 30 foreign direct investment projects were licensed. It is believed that it is difficult for the city to meet its target for budget collection this year.  

Upswing in FDI, ODA disbursement
In the past six months, Vietnam has attracted US$8.87 billion from newly licensed and existing projects, of which around US$4 billion was disbursed, equivalent to 22.6 percent of the figure a year ago.

“These positive figures show that investors trust the national economy will recover in the future and its prospects for development are bright,” says Mr Ha.

According to the MPI, Vietnam signed ODA agreements worth US$1.78 billion with foreign donors in the first six months, a year-on-year increase of 15.9 percent. Of this total, US$1.7 billion was in loans and the remainder was in non-refundable aid. About US$1.27 billion was disbursed.

One of the biggest donors, Japan committed US$852 million, the Asian Development Bank US$482 million and the World Bank US$265 million.

MPI statistics also show that 40,000 businesses were licensed to operate in the reviewed period, up by 14 percent, but their registered capital fell by 40 percent to VND170,000 billion.