City boosts exports despite China trade difficulties
|HCM City.— File Photo
Compiled by Le Hung Vong
Despite the continuing economic turmoil, HCM City achieved significant growth in exports in the first half and targets more growth in the second.
Thai Van Re, director of the city Department of Planning and Investment, said exports were worth VND14.2 trillion, up 5.72 per cent year-on-year.
The highest increases were reported in pepper (100 per cent), rice (12.6 per cent), vegetables (57.9 per cent), seafood (21.5 per cent), footwear (23 per cent), and garments (10 per cent).
Companies strove hard to export to neighbouring countries such as Cambodia and Myanmar.
Exports of garments to the US were up by 14.5 per cent and to the EU by 11.3 per cent year-on-year.
The city also organised seminars and trade fairs in Cambodia and Myanmar to promote Vietnamese goods.
Imports in the first half were worth US$5.87 billion, down 2.2 per cent from a year earlier. In June imports were estimated at $2.3 billion, down 14.4 per cent.
In the second half the city's foreign trade, especially of major items with China (such as rice, vegetables, pesticides, and raw materials for the textile and leather and footwear industries), is expected to face a rocky situation.
To address these challenges, HCM City should seek to widen its import/export markets to become less dependent to one market, the Chairman of the city People's Committee, Le Hoang Quan, told a recent meeting with business executives in HCM City.
He was quoted by Vietnam Economic Times as saying that two-way trade with China, one of Viet Nam's largest trade partners, would reduce.
But the difficulties in trade with China should be seen not just as challenges but also as opportunities for the city's businesses to restructure their markets and bolster its competitiveness, he said.
He asked businesses to restructure their import markets to better exploit the customs incentives under the Trans-Pacific Partnership trade deal.
On their part city authorities need to focus on sourcing of raw material needed to manufacture for exports, improve value addition for the city's exports like textiles, furniture, and wooden products, and further invest in machinery and equipment for production.
The city should also focus on establishing a centre for producing feedstock and equipment for the textile and garment industry.
More VAT refunds
In addition to facilities at Tan Son Nhat and Noi Bai airports, more value-added tax (VAT) refund counters were opened at international airports and ports for foreign visitors on July 1.
The Ministry of Finance opened them at Da Nang and Cam Ranh airports, Da Nang and Nha Trang international ports, and Khanh Hoi international wharf in HCM City.
Foreign nationals can get 85 per cent of the 10 per cent VAT they pay on their purchases refunded while the remaining 15 per cent is the service charge to be paid to the paying banks Vietcombank, Maritimebank, VietinBank, and BIDV. Nearly 70 firms have registered more than 260 sales points in the scheme in the last two years, and more businesses and banks are expected to join when more international airports and ports are allowed to open refund counters.
Noi Bai and Tan Son Nhat had been chosen to pilot the refunds in July 2012.
Figures from customs show that as of the end of February more than 8,600 foreigners had obtained VAT refunds worth VND32.9 billion ($1.6 million) for more than VND425 billion ($20.2 million) worth of goods they had bought in Viet Nam.
Last year 7.57 million foreign visitors arrived, nearly six million by air, 1.4 million by road, and 193,200 by ship.
The country is expected to welcome 8.6 million international visitors this year.
Property sector thaws
While the Ministry of Construction and real estate experts have opined that the housing market is "warming up," demand has been rising only in some segments of the market.
In the first half of the year demand for low-priced, small apartments was up, persuading housing developers to relaunch projects that had stalled for years, bringing plenty of supply into the market.
According to the Ministry of Construction, in the first six months 4,000 successful transactions were reported in the capital, double the figure from the same period of last year.
In HCM City too the number of transactions rose, especially of apartments priced at under VND15 million per square metre.
Nguyen Vu Cao, chairman of Hoang Gia Real Estate Corp., told Vietnam News Agency's Tin Tuc newspaper: "The Government has launched ‘stimulus' policies for the property market. The credit packages launched in the past few years have positively affected the property market.
"Demand is increasing sharply after years."
However, the recovery has been restricted to some segments like apartments of less than 100sq.m and costing under VND2 billion per unit.
Pham Sy Liem, deputy chairman of the Viet Nam Construction Association, said: "In principle, the property market is a ‘barometer' of the country's economy. It indicates the growth or slump in the economy.
"In 2014 the economy has seen achievements and growth, but the growth has been low. Therefore, though sales remain low and are yet to reach the expectations, but the property market will be warming up."
The Government's policies, especially the VND30 trillion (US$1.4 billion) stimulus package, are the major reason for the revival in the property market.
According to the Ministry of Construction, credits pledged under the package rose from VND1.76 trillion on 31 December last year to VND3.95 trillion by the end of May, accounting for 13.2 per cent of the total package.
To make the VND30 trillion package more efficacious and useful for home buyers, more houses of less than 70sq.m and priced at under VND15 million per square metre should be launched for low-income people.
The supply of such houses is modest yet.
Meanwhile, in many places, provincial authorities have yet to create favourable conditions for building houses for low-income people and making over commercial housing projects into those meant for the poor.
Across the country 129 social housing projects are under progress, including 90 (with around 55,000 apartments) for poor people and 39 (27,000 apartments) for workers in industrial parks.
To support these projects, the Ministry of Construction has instituted various incentives for developers — they can get land use fees and rentals waived and a 50 per cent reduction in VAT and income tax on revenues from sales of housing for workers and low-income people. — VNS