Vietnam Records First Trade Surplus

With the early two-month export turnover reaching US$5.56 billion, or an average of nearly US$2.8 billion per month, now is the first time Vietnam has recorded a trade surplus for more than 10 years. Although the surplus is modest (about US$170 million), it has an important meaning. Of most significance are agricultural items (except rubber), up 80 per cent and industrial and handicraft products growing 45 per cent on year.

 

Import turnover reached US$5.4 billion, only increasing by 4 per cent over last year due to decreased imports of petrol and oil, steel and rough steel and finished cars. A rather high export rise and moderate import growth resulted in a piece of good news: a positive trade surplus recorded for the first time in more than 10 years. Despite the modest surplus, it is a significant achievement.

 

The sharp growth of the trade for many years was an alarming phenomenon for the national economy. Only by promoting exports, limiting imports and gradually balancing the import-export market by area have we found a thorough solution to the trade deficit. Import and export achievements and particularly trade surplus in the first two months is evidence of this. This phenomenon also reflects the fact that the domestic market has actively participated in controlling imports and exports, especially imports. Import items quality and price don’t depend on importers but the domestic market. To reduce our trade deficit in the long term will require an import strategy focusing on imports to boost export and enhancing State management, struggling against monopoly control over imports.

 

Foreign investments for the first two months of 2006 reached US$1.42 billion, up 25 per cent on year, of which there is a US$700 million project producing electronic chip by an US company located in HCM City. Both freshly registered capital, supplementary and disbursed capital, the number of licensed projects as well as the size of projects increased by 10 to 40 per cent compared with the same period last year. If this level is maintained, the total foreign investments will reach about US$7.7 billion by the end of the year, exceeding the year’s set target of from US$6 billion upwards. This year sees the commencement of the five-year plan (2006-2010), with the goal of developing the national economy on a large-scale.

 

Accordingly, capital mobilised for development will rise by 1.5 times over the past five years. A good start from the beginning of the year signals a good prospect for investment capital attraction from now to the end of 2006. It is also a result of our good preparations during the year 2005. Such works should be further improved because there are more and more investors regarding Vietnam as a safe and effective destination for their investment capital. Third, the stock market underwent a sudden change. The total value of shares posted on the stock market reached nearly VND9,400 billion (US$591 million) by the end of 2005, or 1.2 per cent of GDP.

 

Perhaps because of that, the State Stock Committee only dared set this year’s target of 2 to 3 per cent of GDP. However, on February 22, the total value of posted shares reached VND 21,200 billion (US$ 1.3 billion), or 2.7 per cent of GDP, up 2.26 times over last year. The sudden acceleration of the stock market is due to the presence of several special items. Those are shares of joint-stock companies that have made profit for many years, of which the most significant are Vinamilk’s shares.

 

Vinamilk’s share value alone is equal to the total value of the shares posted in the past. Therefore, the participation of this company at the beginning of the year is very meaningful, proving the great potential of the capital market, both the present capital of enterprises and the people’s capital. Vinamilk used to be a State-owned enterprise, being equitised and participating in the stock market with success, which is a sign that the Government and Party’s guidelines in State owned enterprise restructuring should be further promoted this year and over the next years. In the short term, it is essential that 15 to 20 post-equitised SOEs with high-quality goods take part in the stock market this year, then we can attract not only the great capital from the people but also call on the participation of foreign investors. This indirect investment capital in cases is equal to or larger than direct investment if we have a suitable operation mechanism for our stock market.
P.V