First Eight Months of 2004: Positive Progress in Industrial Production and Export

First Eight Months of 2004: Positive Progress in Industrial Production and Export

Vietnam’s economic development in the first eight months of this year saw positive progress with significant results in some economic targets, especially in industrial production and export. This was achieved despite some difficulties, including a high increase in market prices and the negative impacts of bird flu.

In industrial production, when the prices of some major imported materials, including steel ingots, clinker, oil and petrol, colour metals, textile and garment materials, and chemicals, soared early this year, the Vietnamese Government and relevant agencies and ministries reduced import tax, regulated and stabilised prices of some industrial products and services, which use these imported materials. As a result, the industrial sector continued maintained a high growth rate. At the same time, manufacturers and project developers adjusted their plans and budget estimates to complete their programmes and achieve their targets for this year. This has resulted in a bounce back in the consumption of industrial products, stimulating the local industrial sector’s development. An increase in the demand for industrial products in foreign countries also drove the high growth rate of industrial production in Vietnam. The expansion in export of footwear, coal, electronics, PCs, electric goods and electric wire and cable and plastic products contributed to the high growth rate.

In the first eight months, industrial production value (according to the fixed price of 1994) reached more than VND 240,000 billion (about US$15.286 billion), up by 15.4 per cent against that of the same period last year. This growth was comprised of an increase of 11.8 per cent in the State-owned sector, 21.6 per cent in the private sector and 14.9 per cent in the foreign-invested sector.

Meanwhile, agricultural production continued to remain stable. By August 15, 2004, the winter crop area had grown to 1.524 million hectares, equal to 109 per cent from the same period last year. Of this figure, 1.213 million hectares are in northern localities while 311,000 hectares are in the south. While growing the winter rice crop, southern localities continued to harvest the summer-autumn crop. The area for this crop had reached 1.146 million hectares by mid-August, equal to 99.9 per cent of that of the same period last year.

Trade and services continued to see rapid development. Total retail sale of goods and services in the first eight months reached more than VND 241,000 billion (about US$15.35 billion), up by 18 per cent on-year. The number of foreign arrivals in Vietnam in the first eight months reached 1.89 million, or an increase of 33.1 per cent against that of the same period last year.

Total export turnover reached US$16.8 billion, rising by 25.7 per cent on-year. Non-oil export turnover was put at US$13.32 billion, increasing by 22.9 per cent. A rapid increase in the volume and value of some major export items led to a high export turnover in the first eight months, such as crude oil, coal, rice, rubber and cashew nuts, which enjoyed high export prices. Export turnover of four items in particular - crude oil, textiles and garments, footwear and seafood was put at US$9.75 billion, thus contributing about 50 per cent alone to the export growth rate of Vietnam.

Import turnover in the first eight months reached US$19.7 billion, up by almost 20 per cent against the same period last year. The value of goods imported for use in domestic production increased sharply due to an increase in import prices. In terms of import volume, only petrol and oil, steel ingots and cotton saw a higher increase than that experienced in the first eight month period on-year. Import volume of other goods was lower than the same period last year. This may produce a negative impact on domestic production in the coming months. Trade deficit in the first eight months was put at US$2.89 billion, equal to 17.2 per cent of export turnover. This figure is more positive than that of 25 per cent in 2003.

Foreign investment saw positive signs with 450 licensed projects, valued at US$1.245 billion, or up by 8 per cent in the number of projects and just over 21 per cent in registered capital. The industrial and construction sector led with 316 projects, capitalised at US$735.1 million. It was followed by agriculture, forestry and fisheries with 58 projects, capitalised at US$256.6 million, and services with 76 projects, valued at US$254.2 million.

While economic development experienced problems and challenges, the results were still significant for Vietnam. This will become a favourable premise for the country to achieve its economic targets for this year.

• Phuong Hien