Vietnam spends too much money on imports

Mar 6th at 19:24

06-03-2013 19:24:47+07:00

The trade deficit, for a developing country like Vietnam is believed to be inevitable, because Vietnam needs to import machines and materials to make products for export. However, in fact, it has been not only importing the products it needs, but the products it can make as well.

Sugar, salt, poultry eggs are all key farm produce of Vietnam’s agriculture. However, the Ministry of Industry and Trade (MOIT) still has decided to grant quotas to import the products in 2013.

MOIT has informed that 102,000 tons of salt would be imported by quota in 2013, the same as 2012’s. The imports would be used as the materials for making chemicals and medicine and healthcare products.

A paradox exists that though being a big salt producer, Vietnam still needs to import salt. It has daily use salt in abundance, but has high quality salt for industrial and healthcare production in deficiency.

According to Le Van Thang, Chair of the Vietnam Salt Company Ltd, Vietnam only imports the salt products which cannot be made domestically. However, the salt import has been seriously threatening the domestic production due to the big gap in the production cost.

India offers the third class salt at $39 per ton, including the transport cost for carrying salt to the Hai Phong Port. Meanwhile, in the north, salt is priced at VND2.5 million per ton, or $125. The price is lower in the south, the main production base, but it is just a bit lower. Therefore, Vietnamese enterprises still prefer imports to domestic products, even though they have to pay the high import tariff of 50-60 percent if they import non-quota products.

MOIT has also decided to grant the quota to import 73,500 tons of sugar in 2013. Under the WTO commitments, in 2007, when it officially joined WTO, it must grant the quota to import 50,000 tons of sugar, while the import volume would be five percent higher year after year.

However, in fact, the volume of sugar Vietnam imports every year is much higher. Non-quota sugar and smuggled sugar still have been penetrating the Vietnamese market, especially from Thailand.

Import sugar still has been imported to Vietnam, not because Vietnam cannot make high quality sugar, but because imports are cheaper than domestic products.

Food manufacturers prefer using import products because this allows them to cut down the production costs. Meanwhile, consumers prefer the smuggled sugar from Thailand which is cheaper than domestic products.

Ha Huu Phai, Deputy Chair of the Vietnam Sugar and Sugar Cane Association, said the association has asked government agencies many times to stop smuggling and consider granting import quotas at reasonable moments so as to protect the local production. However, no proper solution has been found so far, while domestic manufacturers still keep complaining that the imports may kill domestic production.

Vietnam not only imports sugar and salt, but also meat and rice, even though it is now the biggest rice exporter in the world. Vu Vinh Phu, Chair of the Hanoi Supermarket Association, said Thai and Japanese rice products now amount to 5-10 percent of the total rice available at supermarkets. The imports have been increasing steadily, even though Thai rice is 50 percent higher than domestic products, while Japanese 70 percent higher.

Meanwhile, according to the Vietnam Poultry Livestock Association, Vietnam imported 82,000 tons of meat in 2012.