Last updated: Wednesday, February 22, 2017
Domestic Trade: Underpinning of the EconomyPosted: Wednesday, February 15, 2017
In 2016, domestic trade continued to serve as an important pillar for economic growth. The proportion of total retail sales of consumer goods and services compared to GDP in 2016 reached 86 percent, higher than 77.3 percent of 2015.
Commodity prices in Vietnam are generally stable; supply and demand are guaranteed, especially for essential commodities such as petroleum, electricity and food. Ministry of Industry and Trade continued to closely cooperate with the Ministry of Finance in the administration of fuel prices to ensure domestic fuel prices are consistent with the world’s gas price fluctuations, guaranteeing the principle of market operation mechanism, with the control of the State, taking into account the support for business production and people's lives.
The total retail sales of goods and consumer services revenue is estimated at VND3,530 trillion, up 10.2 percent compared to that of 2015 (higher than the rate of 9.27 percent of the same period in 2015). In terms of sectors, retail sales turnover in 2016 was estimated at VND2,670 trillion, accounting for 75.9 percent of the total and up 10.2 percent over the previous year. The highest growth rate is in food sector (up 13.6 percent) and furniture, tools, household equipment (11.4 percent).
E-commerce plays an increasingly important role for the retail trade. Sales of e-commerce retail B2C in Vietnam in 2016 was estimated at US$5 billion, more than doubled from US$2.2 billion in 2013 and accounting for over 3 percent of total retail sales and services nationwide in 2016.
Average CPI in 2016 rose by 2.66 percent compared with 2015. The average CPI in 2016 compared to the average CPI in 2015 was higher than the previous year, but lower than the average CPI increase in recent years. CPI in December 2016 rose 4.74 percent compared to December 2015, reaching the target of 5 percent set by the National Assembly.
The market control is focused right from the beginning of the year to strengthen the inspection and handling of smuggling, trade fraud in all areas, especially in key areas and items. The protection of consumer interests, handling unfair competition, management of multi-level marketing activities, the application of trade remedy measures, etc are particularly focused on to promote and innovate management practices, contributing to protecting and supporting domestic market.
The campaign "Vietnamese people use Vietnamese goods” continues to be expanded and deepened, helping to support and promote the development of manufacturers in the country, creating a solid market for Vietnamese goods in the domestic market.
However, growth in domestic trade is not as high as expected. Excluding factors such as price increase, total retail sales of the country the whole year increased by only 7.8 percent, lower than the 8.5 percent of 2015. In particular, food and garment sectors, which have large proportions in the retail group did not increase as high as expected shows the decline in domestic demand.
The commodity distribution system, particularly of a number of essential goods has gradually been strengthened but not yet sustainably developed. Commercial infrastructure on the whole remains weak and outdated, not yet to meet the requirements of domestic trade and market development.
Region and market planning is unbalanced due to dispersion in agricultural products. On the other hand, unplanned production is quite common so the management and development of infrastructure investment remains difficult; crop production layout does not focus so it leads to changing in supply such as overproduction or deficiency in certain time (typical for cases of watermelon, onion, dragonfruit).
Market information work is not really well organised. The coordination between the ministries, branches and localities has yet to work closely in the propaganda, leading to no real impact on consumers’ behaviour.
The control of the domestic market has been strengthened but is still not satisfactory, and cannot prevent trade fraud on the market as well as respond to the potential negative factors. Counterfeiting goods, shoddy goods, smuggling and violations of law in the business are still complicated. The methods and tricks of smuggling, production and trading fake goods are increasingly sophisticated, making it difficult for market management. Electronic commerce is not well controlled on both the legal status and the quality of goods traded through the network.
In addition, unsafe foods, pesticide abuse in agricultural products is still common. Market management forces still face many difficulties due to the increasingly sophisticated methods of the violators and sanctions are not deterrent enough.