Vietnam\'s increasing reliance on imports of goods and materials from foreign countries, especially China, is a risky move, according to experts.
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| Imported fertiliser is unloaded from ships at Sai Gon Port. The country‘s increasing reliance on imports of goods and materials is risky. — VNA/VNS Photo Thanh Phan |
Vietnam imports large quantities of fertiliser, machinery, equipment, electronic parts and material for leather, footwear, garment and textile production from China, along with petrol and oil from Singapore and home appliances from Thailand.
According to the General Department of Customs, Vietnam trade deficit with China increased during the first half of this year, as imports from China to Vietnam rose sharply.
The nation imported 1.84 million tonnes of fertiliser in the first half of the year, including 713,000 tonnes from China; USD7.09 billion worth of machinery and equipment, including USD2.4 billion from China; USD2.75 billion worth of computer and electronic components and products, including $897 million from China; and USD6 billion in material for leather, footwear, textile and garment industries, including USD2 billion from China.
Pham Xuan Hong, general director of Sai Gon 3 Garment Company, said Vietnam had to import 70 percent of material used for the local textile and garment production, including 20 percent from Thailand, Indonesia and India. Only 30 percent of material used for production was sourced domestically.
"Domestic textile and garment producers can\'t get enough material for production locally, so they have appointed foreign firms as material providers especially Chinese firms," Hong said.
The textile and garment industry registered a growth rate of 30 percent in export value for the first months of this year, he said. But, export value had a real increase of 10 percent due to high import prices for cloth.
For instance, the whole sale price of a shirt had increased from USD10 per unit to USD12 due to high production costs. So if local producers make their products with only local materials, they would gain a higher export value, Hong said.
Truong Thi Thuy Lien, director of the Lien Phat Ltd Company, said that since early this year, prices of materials imported from China had increased by 40 percent against the end of last year.
The greatest risk from importing the material from China was a sudden increase in the price of the imports, she said.
Economic expert Le Dang Doanh said local producers had to import a large quantity of material from China because the country was nearby, so transport costs were low, and added incentive for domestic exporters.
However, if local producers rely too heavily on imports from other countries, the risks they face are high.
To deal with the risk, the Binh Tan Consumption Goods Company (Bita\'s) had sought new suppliers in Thailand, South Korea, Malaysia and Italy, in addition to its Chinese partners, said Do Long, Bita\'s general director.
Hong said the Sai Gon 3 Garment Company had ordered material from ASEAN countries and even bought material from joint ventures in Vietnam.
But, the amount of material was still not enough to satisfy demand and producers were finding it difficult to reduce imports of material from China, Lien said, adding that Vietnam was not a centre for producing materials used for leather, footwear, textile and garment industries. Local producers have had to depend on material imported from China.
Huynh Van Minh, chairman of the HCM City Enterprises Association, said domestic producers could not diversify their sources of material, machinery and equipment due to financial limitations.
Vietnam should develop a centre for making the material to meet domestic demand, creating favourable conditions for the local producers in improving their competitiveness on the world market, Minh said.