Different from last year, the Vietnamese economy in the first month of 2006 had a new strength with encouraging results in export and foreign direct investment (FDI) attraction, even though these results were yet to be breakthroughs.
US$450 million in FDI
The Ministry of Planning and Investment stated that in January 2006, FDI inflow continued to increase sharply, especially newly-registered projects.
In January 2006, total registered capital of new projects and added capital of foreign investors were estimated at US$444 million, up by 12 per cent against the same period last year. Of the figure, US$419 million went to 58 newly licensed projects, up 12 per cent in registered capital and four per cent in number of projects over the same period last year. Also in January, 11 projects added US$25 million.
This growth rate of FDI had been predicted based on the result of FDI attraction in 2005. Vietnam maintains a high growth rate in FDI attraction from early this year, the target of US$6 billion in FDI for 2006 is realistic.
At the same time, with an approach to boost economic growth from early months of 2006 to achieve an economic growth rate of eight per cent, an amount of investment from domestic sources was disbursed in early days for the building of major works.
Also according to the Ministry of Planning and Investment, performing capital for construction from the State budget in January 2006 was estimated at VND 3,600 billion, equal to 6.5 per cent of the yearly plan.
Contracts signed to export one million tonnes of rice
The Ministry of Agriculture and Rural Development said that in January 2006, Vietnamese enterprises signed contracts to export one million tonnes of rice.
Accordingly, Vietnam won bids to export 400,000 tonnes to the Philippines, and over 200,000 tonnes to the Middle East and Africa.
Apart from signing contracts to export to these traditional markets, Vietnamese enterprises signed contracts to export rice to Indonesia, bringing total rice export volume to the market to 150,000 tonnes.
According to the Ministry of Agriculture and Rural Development, the world market’s demand for rice will continue to be on the rise and export prices may bounce back to US$290 per tonne. Vietnam’s target in 2006 is to export between 4 and 4.2 million tonnes of rice.
Export turnover of US$2.8 billion
Vietnam’s export turnover in January 2006 reached US$2.8 billion, up by 16 per cent over the same period of 2005. Of the figure, US$1.2 billion went to local enterprises and US$1.6 billion from foreign-invested enterprises.
US$2.8 billion is not a high figure as in some months of 2005, Vietnam’s export turnover was higher than US$3 billion. However, the result shows a good prospect for export activities in the coming months.
Textiles and garments, one of the commodities which saw an export stagnation in 2005, bounced back with export value to the US alone reaching US$152 million, up by 64 per cent against the same period of 2005. Crude oil earned the country US$640 million, up by US$100 million against the same period last year, despite a fall of 8.7 per cent in export volume. Export turnover of woodwork and coffee gained a high growth rate, 22 per cent and 37.6 per cent, respectively.
According to experts, the success of import and export activities in January 2006 is not only via the above mentioned figure but also via a better trade balance of Vietnam as import value increase in January was only 10.8 per cent against that of 16 per cent for export turnover. In the coming months, exports which are not major such as electric cables and wires, bicycle parts and plastics will make a breakthrough in their export value.
Alongside with exports, foreign investment attraction gained encouraging results. In the first 22 days of 2006, total registered capital of foreign invested projects reached US$440 million.
According to Nguyen Anh Tuan, deputy head of the Foreign Investment Department, when the Common Investment Law and the Unified Enterprise Law take effect on July 1, 2006, more investors from traditional partners such as Japan, Taiwan and the Republic of Korea will be attracted to Vietnam.
High price increase due to increased purchasing power
According to the Ministry of Trade, total retail sales of goods and services in January 2006, reached over VND 46,300 billion, up by 26.4 per cent against the same period of 2005. This means that the purchasing power of the 2006 Tet (Lunar New Year) holidays was up by VND 12,000 billion against last Tet. Total volume of goods was up by between 20 and 30 per cent against the Tet of the year of the Rooster. Even though the market did not face a goods shortage, it is easy to understand why prices increased sharply.
According to market experts, some goods after Tet will continue to see their prices rise and the consumer price index (CPI) in February will double that of January (2.3-2.5 per cent) and will gradually be reduced in the following months.
V.P
Vietnamese
