Vietnam - Local firms exhausted on home ground

HCMC – Domestic firms were badly affected by economic woes last year while foreign-invested enterprises (FIEs) were largely unscathed, as evidenced by their starkly-contrasted export performances, the Ministry of Industry and Trade said.

A report by the Ministry of Industry and Trade at an online conference last Friday shows that goods consumption at home and abroad went down in 2012, affecting production and business. Therefore, domestic enterprises recorded smaller volumes of import and export.

Meanwhile, FIEs with financial strength and available markets achieved high growth in both export and import, outperforming domestic firms.

Specifically, while FIEs recorded a 23.5% rise in imports last year, domestic enterprises suffered a drop of 6.7%. As for export, FIEs enjoyed a robust growth of 31.2%, versus a 1.3% increase in exports of local firms.

These results indicate a decline in production of domestic enterprises given the current difficult situation.

Overall, Vietnam exported US$114.6 billion worth of products in 2012, up 18.3% against 2011, exceeding the target of 13%. FIEs brought in some US$72.3 billion, or 63.1% of the total export turnover, while domestic firms contributed US$42.3 billion, accounting for less than 40%.

The nation recorded a fall in Africa turnover, while all other export markets generated higher turnovers.

As for import, the total import turnover of the country is estimated at US$114.3 billion, in which imports of FIEs made up 52.3%, equivalent to US$60.3 billion, a growth of 23.5% year-on-year. Meanwhile, imports of local businesses reached US$54 billion, down 6.7% compared to 2011 and standing at 47.2% of the nation’s total import turnover.

FIEs exported most of the country’s major manufactured products and occupied high proportions in exports of many items, especially apparels, footwear, mobile phones and accessories, and computers, electronic products and components.

Speaking at the conference, Prime Minister Nguyen Tan Dung said an export growth of 18% reflected the competitiveness of the economy, describing it as a “bright spot” of the economy in 2012. However, he admitted production slowdown had led to a decrease in import of raw materials last year.

The decline in material import explained why Vietnam had a trade surplus of US$284 million for the first time last year.

In foreign trade, foreign investors outperformed local firms in both import and export, but they also made a strong presence in goods sale in the domestic market.

According to the trade ministry, existing distributors like Metro, Big C, Lotte and Parkson continued to expand their consumer goods distribution networks and set up new outlets. Two new retailers from Japan, Aeon and Takashimaya, entered the local market last year.

The total export turnover of Vietnam in 2013 is forecast at US$126.1 billion, a growth of 10% against 2012, while imports are predicted to reach US$136 billion, up 19%.

As such, trade deficit will stand at US$10 billion, or 8% of the total export turnover, said deputy minister of industry and trade Nguyen Cam Tu.

He informed the inventory index was gradually falling. The inventory index of the manufacturing-processing sector stood at 34.9% on March 1, 2012, then dropped to 26% on June 1 and 20.1% on December 1, versus 23% at the same time in the preceding year.

Van Nam - The Saigon Times Daily

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