WTO brings more imports than exports

Imports have increased by 50% while exports have seen a modest increase of 18% in the three months since Vietnam joined the WTO, according to Nguyen Van Lich from the Trade Research Institute.
Mr Lich said that the trade gap in the last few years was 15% – within the safety line. However, as Vietnam has joined the WTO and had to cut tariffs, paving the way for more imports into Vietnam, the trade gap is likely to increase sharply if Vietnam cannot find ways to boost exports.

In principle, the trade balance will improve thanks to higher exports to be brought about by the expanded export markets during international economic integration. However, this will not become reality if Vietnam-made products are not competitive and Vietnamese enterprises cannot find ways to reduce raw material exports and increase value added products.

According to the Ministry of Trade (MoT), import turnover in the first quarter of the year reached $11.79bil, an increase of 33.6% over the same period last year. With the import increases, the excess of imports over exports has increased to VND1.316bil, or 12.5% of the total export turnover in the first quarter, and 28% of the 2007’s forecast trade gap at $4.66bil. This proves to be a worrying sign, as Vietnam saw a trade surplus in the first quarter of 2006.

According to MoT, the increase of $2.97bil worth of import turnover in the first quarter of 2007 over the first quarter of 2006 included $889mil worth of machinery and equipment imports. The biggest import deal was the import of three A321s worth $306mil.

Statistics show that the import items which saw the biggest import turnover were all input materials for domestic production, such as steel, ingot steel, fibre and wood materials. Meanwhile, consumer product imports did not see a sharp increase.

Therefore, while experts see the big trade gap of the first quarter of the year a worrying sign, MoT does not think this way, saying that the trade gap mainly served investment and local production.

The ministry has stressed that the excess of imports over exports should not be seen as the result of the market opening and the implementation of the tax cuts under WTO commitments. The increased trade gap is the indispensable result of increased domestic investment and production as Vietnam has joined the WTO.

Source: VNE