Despite a decrease of 0.6 percent in June, the retail sales value of goods and services in the first half of the year surged 6.5 percent against the same period last year to 1,137 trillion VND (54.2 billion USD), according to the General Statistics Office (GSO).

However, the rise is lower than the 7-10 percent recorded in the same period in recent years.

Among the total, trade made up 880.7 trillion VND (41.93 billion USD), followed by the hotel-restaurant sector, which is worth 132.8 trillion VND(6.32 billion USD).

GSO expert Vu Manh Ha attributed the decline to slow economic growth, high interest rates and stagnancy in production, which have affected spending power.

Ha forecast that the sale of goods and services will improve in the second half of the year thanks to the Government's stimulus programmes. To boost production and consumption, the Government recently cut interest rates and approved a 29 trillion VND (1.4 billion USD) tax break package to support businesses.

Though Vietnam is no longer among the 30 most attractive retail markets in the world as listed by A T Kearney, experts said the domestic market still has great potential in the eyes of retailers.

Nguyen Thi Anh Hoa, owner of the CitiMart chain, said the report by A T Kearney will in no way affect foreign investors' plans to penetrate the Vietnamese market.

Hoa said some foreign distributors have attempted to penetrate the Vietnamese market through CitiMart, as have occurred with a number of retailers in Singapore .

The Vietnamese market is one of the most dynamic among newly emerging economies in Southeast Asia and has a number of attractive advantages, Hoa said. The country has seen average economic growth of 7.3 percent over the last 20 years, which has led to improved living standards. That has resulted in increased purchasing power, she said.

Pascal Billaud, general director of Big C Vietnam, told Saigon Economic Times that modern retail channels hold just 20 percent of the total distribution market. That means there are great opportunities ahead for investors, he said.

This is why Big C, Parkson, Metro Cash&Carry, Lotte Mart, and Family hava been trying to expand their chains, while new distributors such as Aeon and E-Mart, are looking to move into Vietnam, Billaud said.-VNA