VietNamNet Bridge – Hanoi’s Vice Chair Hoang Manh Hien on December 13 said that as of December 2010, government agencies and state-owned enterprises located in the capital city will temporarily stop buying imported cars.

The decision, Hien said, aims to realize Prime Minister Nguyen Tan Dung’s instruction to restrict trade deficit.

The decision will be effective until a new decision on this issue is released.

The decision is not applied for foreign-sponsored projects which have had specific agreements for purchasing cars, for importing specialized cars for security and defense purposes.

Government agencies and state-owned enterprises that signed contracts to buy imported cars prior to November 30, 2010 are allowed to continue with their contracts.

Vietnam’s trade deficit narrowed from US$18 billion in 2008 to $12.8 billion last year, and is likely to be $12 billion this year, or 17.02 percent of exports, Minister of Industry and Trade Vu Huy Hoang said recently.

This year, for the first time, exports were growing at a faster rate than imports – 24 per cent against 18.4 per cent – and were likely to top $70.8 billion, according to the Ministry of Industry and Trade.

Around 90 percent of the trade deficit was caused by the trade with China from whom Vietnam buys equipment and machinery and for infrastructure development, and raw materials for manufacture, Minister Hoang said.

Machinery and equipment, which are not manufactured in the country, account for a high proportion of imports. Many industries rely overwhelmingly on imported feedstock. The textile and garment sector, which is set to exceed an export value of $11 billion this year, for instance, imports nearly 60 percent of its inputs.

Inessential consumer goods like cars, cosmetics, and mobile phones represent less than 7 percent.

Under a five-year (2010-15) plan the ministry has drawn up, the trade deficit will be cut to 14 per cent of exports by 2015. To achieve this, the Ministry is promoting exports and trying to substitute imports of equipment, feedstock, and consumer goods through local manufacture.

The ministry also plans to restructure exports by speeding up export-processing projects to replace a number of traditional agricultural and mineral products with manufactured goods.

PV