Vietnam trade deficit more than triples in first 15 days

By Dat Nguyen   January 23, 2019 | 01:58 am PT
Vietnam trade deficit more than triples in first 15 days
Shipping containers are seen at a port in Ho Chi Minh City, Vietnam. Photo by Shutterstock/Igor Grochev
With FDI firms’ exports plunging, Vietnam's trade deficit more than tripled year-on-year in the first 15 days of 2019, approaching $1 billion.

The country recorded exports of $9.2 billion from January 1-15, but imported goods worth $10.19 billion in the same period, according to Vietnam Customs. Over two-thirds of Vietnam’s exports come from FDI firms.

Economist Ngo Tri Long, former head of the Price and Market Research Institute under the Ministry of Finance, told VnExpress International that Vietnam heavily depends on FDI businesses, therefore whenever exports decrease or imports increase in FDI firms, the country’s trade balance will be affected. 

In the first 15 days this year, phone component exports, one of Vietnam’s strongest export items, dominated by FDI companies, dropped by 39 percent to $1.3 billion compared to the same period last year, official data shows. 

Computer components exports, also largely dependent on FDI firms, fell 4.7 percent over the same period last year.  

Economist Nguyen Tri Hieu warned that the trade deficit is a sign that Vietnam needs to reduce its dependence on FDI businesses as it will suffer badly if they pull out of the country. 

"Other Southeast Asian countries have higher labor productivity than Vietnam, and FDI companies can always pull out of Vietnam to focus on those countries," he said. 

Vietnam should pay more attention to domestic companies and help them improve their export capabilities, Hieu added. 

Another reason for the deficit was that local businesses placed large import orders to prepare for Tet, Lunar New Year Festival, which falls February 2-10 this year. 

"There is a high demand for goods around Tet, that’s why firms import a lot," Hieu said.

Meanwhile, it is still too early for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force in Vietnam on January 14, to bring in any notable impacts on Vietnam’s exports, he noted.

Vietnam could face a trade deficit of $3 billion this year, after achieving the highest trade surplus in a decade in 2018.

Export turnover in 2019 is expected to reach about $265 billion, down 17.4 percent from 2018. However, imports are expected to rise by 13.2 percent, reaching $268 billion, meaning a trade deficit of $3 billion, the Ministry of Industry and Trade has predicted.

Vietnam had an export surplus of $7.2 billion in 2018, three times higher than that of 2017 and the highest in the past decade.

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