The economic picture of quarter I 2012 showed many positive signs. Economic growth, though not high, is acceptable under the circumstance that the country is sparing no effort to deal with the most important objective, containing inflation. Consumer price index growth tends to slow, and industrial production increases by 4.1 percent against the same period last year, but still, light industry is facing many difficulties.
Textile, footwear and leather face difficulties
During quarter I/2012, textile industry face with more difficulties over the same period in 2011 due to the influence of international market and the reduction of domestic consumption. Import of raw material for the textile industry during the early months decreased in terms of volume and value (eg. The value of cotton, fiber, cloth fell by 36.5 percent, 13.4 percent, 11.1 percent respectively)
Although textile industry reached exports value of US$3.23 billion in quarter 1 of 2012 and is currently the only export industry in Vietnam with turnover of over US$1 billion in March, it is still facing with many difficulties. The number of orders drops significantly especially in EU markets suffering a decline of 25-30 percent over the same period in 2011. The reason lies in the fact that the EU importers have shifted the orders from Vietnam to Cambodia, Laos and Bangladesh so as to avoid import tax rate of 10 percent in Vietnam and get entitled to MFN tariff rate of 0 percent applied to the latter to save the cost.
Footwear businesses face the same difficulties in quarter I due to the shortage of labor force. The output of footwear products, artificial leather boosts for adults was estimated at 13.9 million pairs, increasing by 15.7 percent and sport shoes was estimated at 73 million pairs over the same period.
Dairy and plastics more stable
Compared with other industries, the dairy remains stable due to high consumption demand and market expansion efforts. As of end quarter I/2012, production of the dairy industry is relatively stable, estimated at 17.5 billion ton, up 15.5 percent over the same period. Milk price in the early months of 2012 continues to increase, affecting consumers. Despite this, the purchasing power does not decrease due to the increased milk demand.
In addition, the dairy industry enterprises of Vietnam always attach importance to market expansion with the special focus on some emerging markets like Thailand, Philippine…Many Vietnamese milk brand are now able to compete with other brands of multinational company in the world markets.
The export of plastics in quarter I, 2012 is quite stable. In traditional markets such as Japan, America, Germany...Vietnam’s plastics products still win the trust of customers. Export volume in other markets increase significantly as well. According to the Electronic Customs, Vietnam Plastic Association (VPA), export businesses of VPA have signed the export contract as to the end of quarter II, 2012, up 10 percent over the same period in 2011 and it is estimated that plastics product export turnover in 2012 will reach 1.7 billion, increasing from 25 percent to 28 percent compared to 2011. Plastic products of Vietnam were exported to 28 markets with a turnover of US$798 million in January 2012. Among these, Japan is still the main import market whose market share accounts for 61 percent. According to many sources, the demand of plastic products worldwide is growing robustly, particularly in South East Asia. To seize this opportunity, Vietnam plastic industry need to further improve to face with fierce competition from China and India. In European markets, the demand for plastic products in Vietnam especially the pipe is always remains high. It is expected that the European markets will consume US$ 275 million of plastic products, up 36.5 percent over 2011
Expectation for quarter II
Unveiling the reason for the above-mentioned shortfall, Ministry of Industry and Trade says that: The low industrial production growth and high inventory volume especially the processing industry in quarter I is attributed to long holiday, decreased demand for industrial processing products. Besides, economic difficulties and people‘s reduction in non-essential items consumption make the consumption of these products decrease. In addition, input price increase, limited access to the capital, high interest rate...has brought about various difficulties to businesses in production investment.
To address this situation, businesses should pay attention to technology advance, management enhancement, material utilization (ie. use material that can be domestically produced to reduce the unit cost, increase effectiveness and expand the market with greater number of orders.
Industrial and commercial activities are gradually recovering its status and is expected to operate well in the next months. Quarter II is usually the peak season of consumption and shopping. Previously, when the export markets are in good operation, businesses are often busy with numerous orders. With the positive changes of the world in general and macro economy of Vietnam in particular, it is expected that the light industry will have more positive changes in quarter II.
Thu Ha
Vietnamese
