Vietnam: WTO benefits emerge but potential not fulfilled
Since its admission to the World Trade Organization in January, Vietnam has seen foreign investment increase and commodity prices drop, but imports still heavily out-value exports.
Regarding the country’s economic growth in the past four months, former deputy Prime Minister Vu Khoan said, “It’s too early to fully evaluate the impacts of Vietnam’s commitments to the World Trade Organization (WTO), but we can say that the country has gained some forward momentum, though not in all arenas.”
Many experts said the most easily recognizable and active indicator of WTO-era Vietnam was the sharp increase of foreign direct investment (FDI).
The country attracted nearly US$3.52 billion in FDI over the first four months, up 54.6 percent year-on-year. In addition, a series of mega projects worth more than $35 billion are awaiting licenses.
Since early this month, many foreign business missions have arrived in Vietnam seeking business and investment opportunities, including a delegation of 18 leading US companies that plan to invest a total of $1 billion here.
Ex-deputy PM Khoan attributed this promising result to the country’s admission to the WTO, which has helped Vietnam improve its legal system and win the confidence of foreign investors.
Deputy Trade Minister Luong Van Tu said Vietnam was currently considered as a “rising star” in Asia. “If Vietnam can take full advantage of the opportunities brought from WTO, the FDI flow to the country this year may be higher than the targeted $12 billion.”
Furthermore, he added that WTO admission could help the country realize its aim of gaining $100 billion in export revenue by 2010.
Lower prices
The price of many imported commodities have decreased slightly recently. At Co.opMart, the largest supermarket chain in Vietnam, the prices of some foreign imported items like candies, cookies, cosmetics, household products, clothes and children’s products are currently down by 10 to 15 percent from late March.
In many other supermarkets, the prices of many imported commodities have also dropped by 10 to 20 percent.
Nguyen Thi Tranh, Saigon Co.op deputy director, said imported goods currently account for some 30 percent of the 20,000 items on sale at Co.opMart. Nearly half of these are sold with prices 10-15 percent lower than pre-WTO, but they are still not as low as they need to be in line with WTO commitments.
Tranh explained that high transportation costs were keeping the prices too high.
Other retailers have explained that it is not just the cut in tariffs associated with the WTO that has dropped prices. They said that better business strategies like finding better supplies, new storage units and improving payment methods have also helped Vietnamese retailers reduce their prices.
Trade deficit
Though Vietnam exports in the first four months of the year increased 22 percent year-on-year, the results did not meet the potential of WTO-era Vietnam, said the Ministry of Trade at a meeting in Hanoi May 7 to review Vietnam’s import-export activities.
The country’s spending on imported goods in the first quarter was up 33.6 percent year-on-year to nearly $11.8 billion, resulting in a Q1 trade deficit of $1.32 billion, 28 percent of the country’s total figure in 2006.
An economic expert told the meeting that only a short time after becoming a WTO member, Vietnam saw a 50 percent year-on-year rise in import spending but only an 18 percent increase in exports.
The Trade Ministry explained that the lack of equipment and machinery was blame to the trade deficit in the first quarter. For instance, the country imported $899 million worth of equipment, including three A321 aircraft worth $306 million, accounting for 30 percent of the total Q1 spending of $2.97 billion.
In the year’s first two months, the country spent $200 million than during the same period last year, mainly due to industrial material price hikes.
The ministry stressed this year’s trade deficit would be regulated in the scope of some $5.2 billion, down 1.58 percent from last year’s.
Source: thanhniennews.com
