Vietnam’s economy & Pakistan-Vietnam economic relations

Vietnam’s economy

&

Pakistan-Vietnam economic relations

1/ Vietnam’s economy:

2009:

GDP Growth

Following the impetus of economic recession in months of 2008 year-end, GDP growth gained only 3.14% in the first quarter of 2009-the quarter of lowest growth rate in recent year; however, it gradually increased to 4.46%, 6.04% and 6.9% in the second, third and fourth quarters respectively. Generally for the whole year of 2009, GDP increased by 5.32%, of which the agriculture, forestry and fishery sector rose by 1.83%; the industry and construction by 5.52%; and the services by 6.63%.

Agriculture, forestry and fishery

The production value of this sector at 1994 constant prices in the first six months of 2009 was estimated at VND 97.1 trillion, increasing by 2.76% as against same period last year, but it was VND122.8 trillion in the second half of 2009, rising by 3.16% as against same period in 2008. The production value of this sector at 1994 constant prices in 2009 was estimated increasing by 3% as against 2008, of which, agriculture grew by 2.2%, forestry by 3.8% and fishery by 5.4%.

The yield of grains food in 2009 was estimated at 43.3 million tons, growing by 24.4 thousand tons as compared to 2008, of which rice yield was 38.9 million tons, increasing by 165,700 tons; maize: 4.4 million tons, reduced by 141.3 thousand tons.

The cultivated area for tea in 2009 was 128,100 ha, growing 2,600 ha; coffee: 537,000 ha, growing 6,100 ha; rubber: 674,200 ha, going up by 42,800 ha; pepper: 50,500 ha, up by 600 ha as against last year. The yield of several perennial plants was increasing well, of which the tea-bud yield was estimated at 798,800 tons, increasing by 7% as against 2008 (the area of which tea-bud was cut rose by 2.7%; productivity rose by 4.2%); rubber: 723,700 tons, up by 9.7% (the area of which rubber plant gave latex rose by 5.6%; productivity rose 3.8%); pepper: 105,600 tons, up by 7.2% (the area that gave products rose by 4.5%; productivity rose 2.6%).

Animal husbandry, particularly the concentrated and large-scale breeding continued developing. According to the farming survey at 01/7/2009, the number of farms rose by 18.5% as against same period last year.

According to the animal husbandry survey at 01/10/2009, the country had 27,627.7 thousand pigs, growing by 3.5%; 280.2 million heads of poultry, growing by 12.8%; 2,886.6 thousand buffalos, decreased by 0.4%; 6,103.3 thousand oxen, reduced by 3.7%. The decrease was mainly in draught animals (draught buffalos reduced by 4.7% and draught oxen by 15.6%). However, the animal husbandry production in 2009 was still good, of which, the live-weight buffalo meat for slaughter was estimated at 75,000 tons, rose by 4.8%; beef: 257,800 tons, up by 13.7%; pork: 2,931.4 thousand tons, up by 4.5%; poultry meat: 502,800 tons, up by 12.2%; and 5,952.1 million poultry eggs, going up by 9% as against same period in 2008.

The concentrated forestation area over the country in 2009 was at an estimate of 212,000 ha, growing by 5.9%;  replantation area was 1,032,000 ha, rising by5.2%; there were 180.4 million dispersed plants, reduced by 1.8%; forest area under care was 486,000 ha, rose by 4.3%. Woodcut production was 3,766,700 m³, increasing by 5.7% as against same period last year.

Total forest damaged area in 2009 was 3,221 ha, decreased by 18.8% as against 2008, of which there were 1,658 ha of forest fire, fell by 1.2% and 1,563 ha of chopped-down forest, reduced by 30.3%.

The total estimated fishing production in 2009 was 4,847,600 tons, rising by 5.3% as against same period last year, of which, there were 3,654,100 tons of fish, rose by 5.3%; 537,700 tons of shrimp, rose by 7.2%.

Farmed production in 2009 was at an estimate of 2,569,900 tons, rose by 4.2% as against last year. Generally, the number of cages for aquaculture in 2009 was 98,400, grew by 12,600 cages (14.7%) as against 2008.

The fish caught production in 2009 was estimated at 2,277,700 tons, grew by 6.6% as against last year (the highest rate since 8 last years), of which sea caught production gained 2,086,700 tons, increasing by7.2%.

Industry

Generally for the whole year of 2009, the industrial production value was estimated at VND 696.6 trillion, grew by 7.6% as against 2008, of which, the state sector rose by 3.7%; the non-state sector by 9.9%; the FDI sector by 8.1% (petroleum and gas by 9.2%, others by 8%).

Services

Total retailed sales of consumer goods and services

The total retailed sales of consumer goods and services in 2009 at current prices were at an estimate of VND 1,197.5 trillion, rose by 18.6%; If the factor of price rising was excluded, the increase was 11% as against 2008.

Of the total increased rate, the individual sector rose by 20.3%; the private sector by 22.9%; the state sector by 1.4%; the FDI sector by 9.5% and the collective sector by 18.8%. If it was considered by business, the trade rose by 18.6%; the hotel and restaurant by 18.4%; the service by 20.3 and the tourist by 1.9%.

Investment and development

Total realized investment capital in 2009 at current prices was estimated increasing by 15.3% as against 2008 and equal 42.8% of GDP, of which the state sector rose by 40.5%; the non-state sector by 13.9%; the FDI sector decreased by 5.8%. Of the capital investment from the state sector, the funding from the state budget took 21.8% of the country’s total investment, equaling 106.8% of the yearly estimate.

Exports

The export turnovers in 2009 were at an estimate of USD 56.6 billion, showing a drop of 9.7% as against 2008.

Imports

The import turnovers in 2009 were at an estimate of USD 68.8 billion, down by 14.7% as against 2008. Of which, the domestic economic sector gained USD43.9 billion, fell by 16.8%; the FDI sector: USD 24.9 billion fell by 10.8%.

Although the decreased rate of the import turnovers was higher than that of the export turnovers, the trade deficits in 2009 was still at an estimate of USD 12.2 billion, reduced by 32.1% as against 2008 and equal 21.6% of 2009’s total export turnovers.

International visitors to Vietnam in December and 12 months of year 2009

International visitors to Vietnam in December estimated 376,400 arrivals. Totally, international visitors in 12 months reached 3,772,359 arrivals, 10.9% lower than those in the same period of year 2008.

Inflation

The 2009’s average CPI increased by 6.88% as against 2008- the lowest rate since last six years (CPI average growth was 7.71% in 2004, 8.29% in 2005, 7.48% in 2006, 8.3% in 2007 and 22.97% in 2008).

First half 2010

Gross Domestic Products (GDP) Growth

GDP in 1st Quarter of 2010 rose by 5.83% as against the same period in 2009, and in 2^nd quarter it was estimated increasing by 6.4% as against the same period last year and equaling 109.8% of 1^st quarter’s growth. Generally in 6 months, GDP increased by 6.16% as against in the same period last year and for all the three sectors. The agriculture, forestry and fishery rose by 3.31%, contributed 0.59 point percent; the industry and construction by 6.50%, contributed 2.63 points percent; and the service by 7.05%, contributed 2.94 points percent to the general growth.

Agriculture, forestry and fishery

The production value of this sector at 1994 constant prices in 1^st half of 2010 was estimated at 103.4 trillion VND, increasing by 5.3% as against in the same period last year, of which the agriculture gained 75.9 trillion VND, rose by 5.4%; the forestry: 3.4 trillion VND rose by 4% and the fishery 24.1 trillion VND rose by 5.3%.

Agriculture

The cultivated area of winter-spring rice of the country in 2010 was estimated at 3,086,100 ha, increased by 25,400 ha compared to last year ‘same crop; the productivity was 6,220 kg/ha, rose by 110 kg/ha; the yield was 19.2 million tons, rose by 495,000 tons.

The reaping for other spring crops was basically completed, of which the yield for maize was 2.3 million tons, increasing by 12.1%; sweet potato: 837,500 tons, rising by 12.9%; soybean: 164,400 tons, up by 121.9% as compared to the same crops last year. Together with the winter-spring crop harvest, to the middle of June 6, provinces over the country sowed summer rice seeds for 1,940,400 ha, equal to 95.7% of the same period last year.

According to the animal husbandry survey results at 01/4/2010, the country had 2.9 million buffalos, rose by 0.5%; 6 million oxen, decreased by 1.4%; 27.3 million pigs, rose by 3.1%; and 277.4 million fowls, up by 8.1% as against the same period last year. Feeding products in 6 months increased considerably as the epidemic diseases had been timely controlled, of which pork (live weight) gained 1.79 million tons, rose by 4.7%; fowl meat (live weight) 330,700 tons, up by 17%; 3,278.8 million eggs, up by 7.1%.

Forestry

The concentrated forest area over the country in 6 months was estimated increasing by 4% compared to the same period last year; dispersed planted trees rose by 0.1%; the forest area under care by 6.6%; the replantation area by 6.3%; and wood-cut production by 6%. In 6 months, there were 7,384.2 ha of forest burnt and damaged, of which 6,348 ha were burnt, 4.5 times higher than in the same period in 2009 and 1,006.2 ha were destroyed, equal to 84.2% of those in the same period last year.

Fishery

The total estimated fishing production in 6 months was estimated at  2,429,800 tons, rising by 4.9% as against in the same period last year, of which there were 1,883,800 tons of fish, up by 4.8%; 204,9000 tons of shrimp, up by 5.8%.

The aquaculture area in 6 months was 972,500 ha, going up by 3.2% compared to the same period last year, of which 312,000 ha were for fish, up by 8%; 623,500 ha for shrimp, up by 3%. Due to increase in the farming area, the aquaculture production in 6 months had a considerable growth, estimating at 1,206,700 tons, up by 5.2% compared to that in the same period last year.

The catching production in 6 months was estimated at 1,223,100 tons, increasing by 4.7% as against in the same period last year, of which sea catching gained 1,143,700 tons, up by 5.7%.

Industry

The industrial production value (at 1994 constant prices) in 6 months of 2010 was estimated increasing by 13.6% as against in the same period last year, of which the manufacturing rose by 14.7%; the mining decreased by 4%; the electricity, gas and water rose by15.7%.

The increase in the production value of the electricity, gas and water in 6 months was mainly due to high growth of 15.5% of power generated (in the same period in 2009 it was 7.9%). The mining’s production value in 6 months decreased by  4% compared to that in the same period in 2009, which was mainly due to decrease in the crude oil production (16.2% reduced) and low growth (5.4%) of coal production. Overcoming difficulties in production in 6 months of 2010, the manufacturing continuously had a considerable growth; many main products had higher growths.

Service

Retailed sales of consumer goods and services

The total retailed sales of consumer goods and services in months of 2010 at current prices were at an estimate of increasing by 26.7% as against in the same period last year; if the factor of high price was excluded the growth was 16.4%. Of the total, the trade rose by 27.6%; the hotel and restaurant by 22.1%;the service by 23.9%; and the tourism by 32.6%.

International visitors to Viet Nam

International visitors to Viet Nam in 6 months of 2010 were at an estimate of 2,510,500, rose by 32.6% as against in the same period last year. Of which visitors coming for tourist purposes were 1,595,200, increasing by 40.3%; for business purposes: 502,000, up by 44.6%; for visiting relatives: 288,900, up by 2.9%. There was a rapid increase in visitors from various countries coming to Viet Nam.

Investment and development

The social realized investment capital in 6 months of 2010 at current prices was estimated at 390.1 trillion VND, rose by 13.4% as against in the same period last year, of which capital from the state sector was 166.8 trillion VND, up by 17.8%; the non-state sector: 120 trillion VND, up by 9%; the FDI sector: 103.3 trillion VND, up by 11.8%. Of the state investment, the realized investment capital from the state budget in 6 months of 2010 was estimated at 63 trillion VND, equaling 50.4% of the yearly estimate.

The attracted FDI from 1/1-20/6/2010 gained 8.4 billion USD, equal to 80.9% of that in the same period in 2009. Of which, the registered capital of 438 newly licensed projects was 7.9 billion USD; the additional registered capital of 121 times of projects licensed from previous years was 525 million USD. Realized FDI in 6 months of 2010 was estimated at 5.4 billion USD, rose by 5.9% as against in the same period in 2009. Among fields having FDI, the manufacturing took 34% of the total registered capital in 6 beginning months of 2010; the electricity, gas and water occupied 25.5%; the real estate business got 21.2%.

Exports

The export turnovers in 6 beginning months were estimated at 32.1 billion USD, rose by 15.7% compared to those in the same period last year (if the exportation of gold and gold products was excluded, the growth was 22.4%). Of which, the domestic economic sector gained USD 14.9 billion, rose by 5.7%;the FDI sector (including crude oil): USD 17.2 billion, rising by 26.2%. If the cost factor was excluded, the export value in 6 months rose by 5.4%. The structure of export turnovers in 1st half of 2010 had changes compared to that in the same period last year.  The proportion of heavy industrial goods increased from 29.2% to 30.2%; the proportion of light industrial and handicraft goods rose from 37.7% to 43.3%; while the proportion of agricultural and forestry goods slightly decreased.  

The United States was still Viet Nam’s biggest export market with estimated export turnovers in 6 months of 6.2 billion USD, rose by 22% compared to the same period last year; next came to ASEAN with 5.3 billion USD, up by 21%; EU: 4.8 billion USD, up by 5.9%; Japan 3.5 billion USD, up by 31%; China 2.8 billion USD, up by 44%; Republic of Korea 1.2 billion USD, up by 35%.

Imports

The general import turnover in six months was at an estimate of USD 38.9 billion, showing a rise of 29.4% as compared to the same period in 2009 (if the price rising factor was excluded, it rose by 8.7%), of which the domestic economic sector gained USD 22.7 billion, rose by18.3%; and the FDI sector with USD 16.2 billion rose by 48.9%. Of the total import turnovers, consumer goods accounted for 7.2%, reduced as compared to the rate 9.7% in the same period in 2009; raw materials rose from 61% to 65.2% and accounted for 81.5% of the import growth in 6 months; machinery and equipment slightly went down from 29.4% to 27%.

The import value in 6 months from main import markets increased compared to the same period last year, of which import from China valued 9.1 billion USD, up by 34%; from ASEAN: 7.8 billion USD, up by 20.4%; from Japan 4 billion USD, up by 31%; from EU 2.9 billion USD, up by 20.4%; from Taiwan 3.2 billion USD, up by 11%.

The trade deficit in 6 beginning months was estimated at 6.7 billion USD, equal to 20.9% of the total export value, of which the import surplus came mainly from Chinese market with over 6 billion USD. If the export of gold and gold products was not considered, the import surplus in 6 beginning months was 8.1 billion USD, equal to 26.2% of the total export value.

inflation

CPI in 6/2010 rose 0.22% compared to the previous month. Groups of goods and services having higher growth than the general rate were: drinks and tobacco by 0.62%; postal and communication service by 0.49%; family appliances by 0.48%; catering service by 0.37% (grain food reduced by 0.83%; foodstuff rose by 0.71%); culture, entertainment, tourist by 0.36%; textile, hats, shoes and sandals by  0.33%. Groups of goods and services having lower or decreased CPI compared to the general rate were: medicine and health care by 0.21%; education by 0.09%; housing and building materials by 0.01%; and transport decreased by 0.7%.

CPI in 6/2010 rose by 8.69% compared to the same period last year and by 4.78% compared to 12/2009. Average CPI in 6 months rose by 8.75% compared to that in the same period in 2009.

2009 was considered a successful year for the Government in guiding to prevent high inflation from returning by keeping a fair inflation rate, so the CPI  in each month of first and second quarters increased by 0.44% on average. Entering 2010, although the CPI in first quarter had a symbol of  rising again with an average growth per month of 1.35%, but in second quarter the  average growth per month decreased to 0.21%, equal to 15.6% of the  average growth per month in first quarter  of 2010 and a half of that in second quarter of 2009. This showed that the Government’s policies to stabilise prices have initially proved their effects.

2/ Pakistan-Vietnam Economic relations:

The two countries had modest economic ties since the 1970s. Pakistan imported Vietnamese cement and exported fertilizers, jute bags and the Sind cow breed of Pakistan to Vietnam. However, since 1995, both countries expressed their wishes to push up the economic ties and explore other areas for bilateral cooperation, such as culture and education. Pakistan wanted to export knitting machines, thread spinning machines, sugar refinery machines to Vietnam as well as to send Pakistani experts in the petroleum sector to work in Vietnam. Vietnam and Pakistan also exchanged lists of export and import products.

In early 1998, Vietnam sent a group of businessmen to Pakistan. The group had a meeting with the Ministry of Commerce of Pakistan and visited various factories and companies to study the economic environment and opportunities to do business with Pakistani companies.  

Deputy Trade Minister Do Nhu Dinh visited Pakistan in October 2003 and November 2006. Deputy Minister of Agriculture and Rural Development Bui Ba Bong led a delegation to Pakistan in April 2004.

The two countries signed MOU on the Establishment of the Joint Commission between Vietnam and Pakistan in April 2002. The first JC was held in Hanoi co hosted by Deputy Trade Minister Do Nhu Dinh from 8-9 July 2003.  

Deputy Minister of Industry and Trade Le Duong Quang visited Pakistan in June 2010 and co-hosted with Pakistan Secretary of Economic Affairs and Statistics Sibtain Fazal Halim the 2^nd Joint Committee Meeting between Vietnam and Pakistan.

From the Pakistani side, Deputy Trade Minister Waqar Masood Khan in July 2003 visited Vietnam and co-hosted with Deputy Trade Minister Do Nhu Dinh the 1^st Joint Committee Meeting between Vietnam and Pakistan.

 Pakistan supported Vietnam’s accession to WTO . Vietnam is request Pakistan to recognize Vietnam as a market economy.

Agreements signed between Pakistan and Vietnam:

1. Trade Agreement (May 2001);

2. MOU on the Establishment of the Joint Commission between Vietnam and Pakistan (April 2002);

3. Joint Declaration between the governments of the Socialist Republic of Vietnam and the Islamic Republic of Pakistan (March 2004);

4. Agreement on the Avoidance of Double Taxation (March 2004);

5. Framework Agreement on Scientific and Technological Cooperation (March 2004);

6. MOU on Consultation between the two Ministries of Foreign Affairs (March 2004);

7. MOU between the State Bank of Vietnam and the State Bank of Pakistan (March 2004).

8. Agreement on Fisheries and Aquaculture Cooperation (June 2006); and

9. Agreement on Visa Exemption for Holders of Diplomat and Official Passport (January 2007)./.

The bilateral trade turnover between Vietnam and Pakistan considerably increased in the recent years. From the total amount of US$ 10 million in 1999, the trade turnover increased to US$ 27 million in 2000, US$ 30 million in 2001, US$ 47 million in 2002, US$ 50 million in 2003, US$ 69 million in 2004, US$ 75 million in 2005 and over US$ 90 million in 2006, US$ 134.1 million in 2007 and US$ 149.7 million in 2008.

The most popular Vietnamese export goods to Pakistan are tea, pepper, fabrics, rubber, cashew nuts, ceramics, steel, etc. Vietnam mainly imports from Pakistan garment and textile materials, fabrics, medicines, wheat flour, cattle foodstuff, cotton, etc. However, there are still great potentials for Vietnamand Pakistan to further enhance the multifaceted cooperation, such as in the areas of trade and investment, IT and software industry, agriculture, culture and education.

          Pakistan – Vietnam trade figures 2009:

Total: 191,871,077 USD (28 % increase compared to 2008)

Vietnam exported to Pakistan: 110,057,421 (16 % increase compared to 2008)

Pakistan exported to Vietnam: 81,813,656 (49 % increase compared to 2008)

Export items:

Import items:

            Pakistan – Vietnam trade figures first half 2010:

Total: 107,833.239 USD (100 % increase compared to first half 2009)

Vietnam exported to Pakistan: 47.112.430 (68 % increase compared to first half 2009)

Pakistan exported to Vietnam: 60.720.809 (135 % increase compared to first half 2009)

Export items:

Import items:

3/ Pakistan-Vietnam future cooperation:

The Second Session of Vietnam-Pakistan Joint Ministerial Commission (JMC) held in Islamabad during 2&3 June 2010 set future cooperation between Pakistan and Vietnam:

- Early signature of the cooperation agreements on public security, promotion and protection of investment, finance, banking.

- Pakistan to recognize Vietnam as a full market economy and to not apply paragraph 255 of the Report of the Working Party on the Accession of Vietnam to the World Trade Organization (WTO).

The government of Sindh has made two proposals:

- Vietnam to invest in mining of Thar Coal mines and building coal-fired power plants.

- Vietnam to send experts of shrimp & fish farming to Sindh province and train local people on shrimp & fish farming, or Sindh government to give free land to Vietnam for pilot projects on shrimp & fish farming, or even for commercial shrimp & fish farming.

Vietnam is an excellent destination for Pakistani tourists, honey-moon makers, and holidays makers. Vietnam currently has 5,239 hotels including 33 5-star hotels, 90 4-star hotels, 176 3-star hotels, 850 2-star hotels, 990 1-star hotels and 3,100 guest-houses. Tourists and holidays makers can enjoy leisure tourism, culture tourism, historical tourism, and venture tourism with trekking, potholing, caravan, jungle tours and countryside tours. Vietnam has more than 3,000 km of sea beach with the world best beach resorts built by local and foreign investors.