Mr Hoang emphasised this at an online conference held by the Ministry of Trade and Industry (MoIT) on March 8.

Industrial sector rebounds with a sharp increase

According to the MoIT, the domestic market was busy in February, with its industrial value reaching approximately VND114.1 trillion, up 13.6 percent over the same period last year. The State sector saw an increase of 8.1 percent, the non-State sector, 15.1 percent, and the foreign-invested sector, 15.4 percent.

Most industrial products experienced increases, such as electricity (19 percent), coal (8.7 percent), gas (12.3 percent), cigarettes (13.3 percent), and beer (18.8 percent), thus helping to stabilise production and ensuring an adequate supply of essential goods.

However, export activity in the first months of this year faced difficulties due to a sudden rise in goods prices on the world market and a sharp increase in input prices for petrol and electricity.

Le Quoc An, Chairman of the Vietnam Garment and Textiles Association, said that in February alone, Vietnam earned an export revenue of more than US$1.5 billion. At present, there is a fluctuation in world market prices that may have a strong impact on Vietnam’s target to earn US$10.5 billion from exports in 2010, he added.

In the first two months, the country’s import value hit US$10.66 billion, up 4.46 percent year-on-year. The trade deficit is likely to increase in 2010, whereas last year it decreased. Deputy Minister of Trade and Industry Nguyen Thanh Bien attributed this to a sharp increase in the prices of key import products.

The import value of foreign direct investment (FDI) businesses grew by more than 50 percent, while the competitiveness of Vietnamese products lags well behind, he said.

Businesses need more investment capital

Local businesses are facing difficulties in accessing loans to boost production. Deputy Director of the Bac Ninh provincial Department for Trade and Industry, Hoang Huy Tap, said that some businesses have to borrow from individuals at an interest rate that is two or three times higher than bank loans.

A representative from the Ba Ria-Vung Tau provincial Department for Trade and Industry said some local businesses also have to borrow at an interest rate of 20 percent.

Deputy Minister of Trade and Industry Nguyen Thanh Bien asked banks to offer soft loans to export businesses. Currently, most businesses earn a profit rate of 25 percent. If they borrow loans at an interest rate of 20-pecent, they cannot make a profit and remain competitive, he elaborated.

Trade and Industry Minister Vu Huy Hoang said he would make a report to the Government and relevant agencies to create better conditions for businesses to access loans.

As scheduled, the Prime Minister will hold a working session with representatives from major groups and corporations this week, with a focus on meeting the urgent need for investment capital.

Controlling price hikes and import surplus

Vietnam’s economic growth continues to rise in 2010 despite the negative impact caused by loose monetary policy in the previous year.

In February, the CPI surged by 3.35 percent compared to December 2009 – the highest figure in the past 10 years.

State management agencies are put under considerable pressure when the Government sets a target to keep the import surplus under 20 percent. They find it difficult to control CPI below 7 percent in accordance to the National Assembly’s Resolution.

At a recent meeting, Minister Hoang emphasised that we should reduce the trade deficit to stabilise the macro-economy and arrive at balanced monetary, foreign exchange and banking policies.

Currently, the trade deficit stands at 16.9 percent, he said, therefore it is important to increase investment, control the import surplus and boost export activity in order to achieve a GDP growth rate of 6.5 percent in 2010.

According to Mr Hoang, groups and corporations should work more closely with localities to intensify inspection and management of goods prices.

Regarding a 6.8-percent increase in electricity price, Minister Hoang said there would be no strong impact on people’s daily lives and business operations.