Vietnam trade deficit hits 17-month high

TUOITRE

Vietnam's trade deficit in May is estimated at $1.7 billion, the highest level since January 2010, taking the deficit so far this year to $6.59 billion, according to the General Statistics Office.

The deficit, which has been rising every month this year, was up 17.3 percent year on year in May.

In May imports rose 3.02 percent month on month and 28 percent year on year to $9.2 billion.

The major import items in May were oil and gas ($934 million), iron and steel ($642 million), fabric ($750 million), and animal feed and materials ($160 million).

Imports of luxury goods like automobiles, motorbikes, and electronics were all slightly up at $292 million, $80 million, and $500 million.

Exports were up 0.85 percent from the previous month and 18.74 percent year on year to $7.5 billion.

Apparel exports were up 11.9 percent at $1.19 billion, seafood fetched $520 million, a 12.3 percent rise, and rice exports were worth $317 million, down 14.3 percent.

So far this year imports have been worth $41.3 billion, a 29.7 percent rise, with domestic firms accounting for $23.7 billion.

It included $5.75 billion worth machinery and equipment, $4.53 billion worth oil, $2.86 worth steel, $2.85 billion worth fabric, and $2.3 billion worth electronics.

Total exports this year have topped $34.7 billion, 32.8 percent up year on year, with foreign firms accounting for more than half.

Key items included apparel, seafood, crude oil, coffee, and rice.

Rubber exports were up 113 percent at $1.52 billion; coffee was 121.7 percent up at $1.77 billion; crude oil was up 37 percent at $2.98 billion for; textiles were up 35.6 percent to $5.1 billion; and footwear was up 31.8 percent at $2.37 billion.

The state sector saw year-on-year growth of 31 percent to $15 billion while the foreign sector’s exports were up 34.2 percent to $19.01 billion.

The government devalued the dong for the 4th time in 15 months on February 11 to help curb the trade gap which was eroding its foreign-currency holdings.

The deficit and size of reserves were about the same as at end-2010, raising the specter of a hard-currency shortage causing a financial crisis, the Heritage Foundation in Washington said May 23.

“Watch out for the trade deficit,” Tai Hui, the Singapore-based head of Southeast Asian research at Standard Chartered Plc, warned in a note.

It “deserves close monitoring in case it gains further momentum in the months ahead,” Bloomberg quoted him as saying.

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Cooking gas prices out of control

TUOITRE

Many distributors in Ho Chi Minh City have been increasing the price of cooking gas without permission from their suppliers, a violation of government regulations.

In the last few weeks many retailers in Phu Nhuan, Binh Thanh, and Go Vap Districts hiked the price of liquified petroleum gas (LPG) by VND4,000-VND6,000 (20-30 US cents) for a 12-kilogram cylinder.

They justified this by saying many companies increased prices in mid-April but refused to sanction a hike in retail prices.

“I don’t see any reason for increasing retail prices,” Hoang Anh, deputy chairman of the Southern Gas Sub-association, a member of the Vietnam Gas Association, said, adding that gas import prices have been falling.

Le Phuc Dai, general director of Dai Viet Energy Joint Stock Company (Vinagas), said companies reduced commissions for agents due to the increase in costs.

Saigon Petro Co Ltd too cut commissions for its agents, many of whom then increased prices. But it not only did not haul them up but also announced an increase in retail prices to legalize their action.

But other gas companies have warned their agents about possible penalties for unauthorized price increases.

The latest round of hikes is the seventh since February, which have taken the price of a 12-kg canister up from VND303,000 to VND382,000.

Some retailers, instead of hiking the price, now ask customers to pay transport costs. 
The director of a gas company said companies want to cut commissions for their agents since the latter enjoy high profits but are not strong enough to do it.

The director of another company said retailers have a margin of nearly VND40,000 per cylinder.

But an analyst said gas companies do not have any leverage with their retailers since they do not know costs at lower levels. As a result, retail prices are controlled by retailers rather than the companies, he said.

It is also unclear why different brands cost different prices when they all have the sources of supply, cylinders, and components. For instance a 12-kilogram bottle of SP gas costs VND382,000 while for Saigon Gas it is VND388,000 and for Shell GAS, VND424,000.

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