VietNamNet Bridge –
The Ministry of Industry and Trade plans to raise the import tariffs in order
to control the importation of luxury goods which still have been flocking to Vietnam in big
quantities, despite efforts by the ministry to curb the trade deficit.

Luxuries still flocking to Vietnam

The government established
the goal of curbing the trade deficit at less than 18 percent in 2011.
According to the Ministry of Industry and Trade (MOIT), in the first three
months of the year, the total trade deficit value was over three billion
dollars, of which luxuries amounted to nearly 40 percent. In general, the
values of luxuries and the products subject to import control accounted to more
than 60 percent of the trade deficit value.

Also according to the
ministry, in the first quarter of the year, Vietnam exported 19.25 billion
dollars worth of products. Meanwhile, the total import turnover of the same
duration was 22.27 billion dollars, increasing by 23.8 percent in comparison
with the same period of 2010.

In the first quarter alone, Vietnam spent
46 million dollars to import sweets and cereal products. The imported
vegetables and fruits, which have been available more and more at supermarkets,
cost 55 million dollars. The imports of precious stones and metals also sharply
increased to 363 million dollars. Meanwhile, the sum of foreign currencies
spent to import car parts and motorbikes reached one billion dollars.

In the first three months of
the year the amount of foreign currencies needed to import luxury products, of which
Vietnam
does not encourage importation, was also high at 1.36 billion dollars, an
increase of 4.8 percent in comparison with the same period of last year,
accounting for 40 percent of the country’s trade deficit value. Meanwhile, 1.19
billion dollars were spent to import consumer products of different kinds.

In the first three months of
the year, car manufacturers and dealers imported 11,125 less-than-9-seat cars as
complete built units (CBU), an increase of 3900 cars over February. Meanwhile, only
5943 CBU cars were imported in the same period of 2010.

MOIT said that importation of products subject to import restriction, such as
consumer goods, CBU cars and car parts, CBU motorbikes and motorbike parts
increased by 4.8 percent. Meanwhile, the products subject to the import control
such as steel, precious stone and precious metal increased by 18.6 percent.

Raising import tariffs, encouraging use of domestic
products

Vu Dinh Anh, a well known
economist in Vietnam, said
that it is understandable that a developing economy like Vietnam imports
luxury products in large quantities. Though Vietnam does not encourage the
import of luxury products, it cannot prohibit the imports, because this may be
considered a behavior that violates WTO commitments.

Anh believes that where
there is demand, there will be supply. The high tariff imposition can only
partially restrict the demand of wealthy people. He believes that Vietnam
needs to restrict the importation of luxury products by strictly enforcing the regulations
on buying domestic products in public procurement projects.

Meanwhile, Hoang Tho Xuan,
an expert from the Trade Research Institute, said Vietnamese consumers always
follow the crowd in making purchases. A lot of people are not high income
earners, but still spend hundreds of millions dong to buy import scooters or
mobile phones. Therefore, Xuan believes the tariff increase will considerably
help restrict the demand for some luxuries.

Deputy Minister of Industry
and Trade Nguyen Thanh Bien said that though some industries had a high export
value in the first quarter, the import value of the industries was also very
high, because enterprises needed to import materials to make products for
exporting. Vietnam,
for example, exported computers and computer parts in big quantities, but it
had to import $5 billion worth of materials.

MOIT has released the list
of 93 products which Vietnam
does not encourage importing, which includes dairy products, clothes, pearls,
precious metals and wooden products.

Tuyet Ngan