The trade deficit may be narrowing year after year but remains a concern, a minister has said.
The deficit narrowed from 18 billion USD in 2008 to 12.8 billion USD last year, and is likely to be 12 billion USD this year, or 17.02 percent of exports, Minister of Industry and Trade Vu Huy Hoang said.
The Import-Export Department said this year, for the first time, exports are growing at a faster rate than imports – 24 percent against 18.4 percent – and were likely to top 70.8 billion USD.
However if the trade deficit persists in the coming years, it can cause economic instability, a fall in the dong's value, and inflation, Hoang warned.
Around 90 percent of the trade deficit is caused by the trade with China from whom Vietnam buys equipment and machinery and for infrastructure development, and raw materials for manufacture, he said.
Machinery and equipment, which are not manufactured in the country, account for a high proportion of imports.
Many industries rely overwhelmingly on imported feedstock.
The textile and garment sector, which is set to exceed an export value of 11 billion USD this year, for instance, imports nearly 60 percent of its inputs.
In all, import of machinery and equipment and raw materials and feedstock accounts for up to 93 percent of total import, Hoang said.
Non-essential consumer goods like cars, cosmetics, and mobile phones represent less than 7 percent.
Under a five-year (2010-15) plan the ministry has drawn up, the trade deficit will be cut to 14 percent of exports by 2015.
To achieve this, the Ministry is promoting exports and trying to substitute imports of equipment, feedstock, and consumer goods through local manufacture.
It is trying to expand exports to Asian markets, especially China .
An agreement to develop trade between Vietnam and China in the next five years would be signed soon, Hoang said. Under the pact, China will promote import of 18 products from Vietnam .
The ministry also plans to restructure exports by speeding up export-processing projects to replace a number of traditional agricultural and mineral products with manufactured goods./.
The deficit narrowed from 18 billion USD in 2008 to 12.8 billion USD last year, and is likely to be 12 billion USD this year, or 17.02 percent of exports, Minister of Industry and Trade Vu Huy Hoang said.
The Import-Export Department said this year, for the first time, exports are growing at a faster rate than imports – 24 percent against 18.4 percent – and were likely to top 70.8 billion USD.
However if the trade deficit persists in the coming years, it can cause economic instability, a fall in the dong's value, and inflation, Hoang warned.
Around 90 percent of the trade deficit is caused by the trade with China from whom Vietnam buys equipment and machinery and for infrastructure development, and raw materials for manufacture, he said.
Machinery and equipment, which are not manufactured in the country, account for a high proportion of imports.
Many industries rely overwhelmingly on imported feedstock.
The textile and garment sector, which is set to exceed an export value of 11 billion USD this year, for instance, imports nearly 60 percent of its inputs.
In all, import of machinery and equipment and raw materials and feedstock accounts for up to 93 percent of total import, Hoang said.
Non-essential consumer goods like cars, cosmetics, and mobile phones represent less than 7 percent.
Under a five-year (2010-15) plan the ministry has drawn up, the trade deficit will be cut to 14 percent of exports by 2015.
To achieve this, the Ministry is promoting exports and trying to substitute imports of equipment, feedstock, and consumer goods through local manufacture.
It is trying to expand exports to Asian markets, especially China .
An agreement to develop trade between Vietnam and China in the next five years would be signed soon, Hoang said. Under the pact, China will promote import of 18 products from Vietnam .
The ministry also plans to restructure exports by speeding up export-processing projects to replace a number of traditional agricultural and mineral products with manufactured goods./.
