Report of Department of Industrial Economy – Ministry of Planning and Investment in May 24th 2012.
I. REPORT ONPRODUCTION, BUSINESS AND EXPORT ACTIVITIES OF THE INDUSTRY SECTOR IN MAY 2012
1/ Overall situation:
The Industrial Production Index (IPI) in the first five months of 2012 rose 4.2% year on year, of which the mining industry soared by 2.1% while the manufacturing industry and the electricity, gas and water production and distribution industry surged 3.8% and 14.3%, respectively.
Some industries recorded higher growth rates over the same period last year, including crude oil and natural gas, which increased by 5.9%; seafood and aquatic product processing and preservation by 10.8%; fruit and vegetable processing and preservation by 39.2%; butter and milk products by 18.2%; animal feed production by 13.8%; beer production by 6.4%; electricity production and distribution by 14.8%, drug, pharmaceutical and medicine production by 18.8%.
Certain sub-industries posted lower IIP rates as compared to the same period last year, including hard coal mining and collection, which dropped by 1.9%; textiles and fabrics by 7.3%; pulp, paper and paperboard by 2.2%; steel production by 5.8%; footwear by 5.7%; cement production by 7.2%;stone, sand, pebble, clay and kaolin by 22.9%.
2.The production of a number of major industrial products:
- Certain products saw higher growth rates over the same period last year, including crude oil, which totaled 6.6 million tons, up 9.4%; natural gas 4 billion m3, up 4.3% ; liquefied petroleum gas (LPG) 308 thousand tons, up 22.2%; processed seafood 692.7 thousand tons, up 17%; milk powder 30.7 thousand tons, up 20.9%; cotton textiles 104.7 million m2, up 7.6%; adult leather shoes, sandals and boots 22.6 million pairs, up 14.2%; and chemical fertilizers 1 million tons, up 7.3% while washing machines was up 33.7%; motorcycles up 1.7%, electricity production up 13.8%; and commercial water up 9.2%.
- A few products recorded lower growth rates over the same period last year, including coal, which reached 19.5 million tons, down 2.8% over the same period; chemical paints 121.3 thousand tons, down 9%; cement 22.5 million tons, down 7.2%; rebar 1.3 million tons, down 12.8%; automobiles down 10.6%; air conditioning down 44.1%.
- As of May 1st, 2012, the inventory index of the entire processing industry surged 29.4% over the same period last year but dropped as compared to March and April, 2012. However, most of processing sub-industries recorded higher inventory indexes over the same period last year. The inventory index of the cement, lime and mortar production sub-industry was up 52.3%; fertilizer and nitrogen production: up 39.7%; malt and beer production: up 29.1%; clothing production: up 40.7%; motor vehicle production: up 56.5%; motorcycle manufacturing: up 42.3%; drug, pharmaceutical and medicine manufacturing: up 9.6%; packaging and crumpled paper production: up 43.7%; and plastic products: up 89.1%.
3. Production activities of some main industries:
a. Electricity:
To meet the demand for electricity for socio-economic development and people's life, from March to June, the Ministry of Industry and Trade instructed the Vietnam Electricity Group to maintain water levels in major reservoirs before June 1 this year, especially reservoirs in the central region. Vietnam Electricity Group has worked with the Vietnam National Oil and Gas Group and the Vietnam National Coal Mineral Industries Group to have reasonable maintenance plans and shorten the time to maintain and repair of generator sets and at the same time accelerate the implementation of measures to save energy and use power in a proper and efficient manner.
The wind farm in Tuy Phong district, Binh Thuan Province was inaugurated (with the total capacity of 30MW) on April 18, 2012 and is expected to generate approximately 85 million kWh of electricity and reduce CO2 emissions by 58,000 tons per year.
The fifth generator set of Son La Hydropower Plant on April 25, 2012 began its no-load running and at the same time, the completion of the 500 kV power line between Son La and Hiep Hoa has contributed significantly to meeting the load demand for the North and unifying the national 500 kV grid.
b. Oil and gas:
Exploration activities were actively carried out and the drilling progress of exploratory/appraisal wells ensured monthly work plans. The Offshore Construction Division, a member of Vietsovpetro on April 20, 2012 erected the base for White Bear oil rig platform; the Vietnam National Oil and Gas Group signed a joint venture agreement with Russia’s Gazprom to exploit gas in Blocks 05.2 and 05.3 in the East Sea of Vietnam.
c. Steel:
As the steel market is narrowed when the policy to cut public spending and debts and the real estate market has not been showing signs of recovery, the construction demand is not high. Currently, many steel factories must reduce production and only run at 50-60% of their capacity. Steel producers have been actively seeking export markets and therefore, the export value of iron and steel products reached US$533 million, up 35.6%, which shows signs of year on year on year growth.
Steel prices in recent months do not fluctuate much. The ex-factory price of rebar and rolled steel at plants of Vietnam Steel Corporation is currently at VND16.155 - 17 million/ton, and VND16.15 - 17.1 million/ton.
d. Fertilizers and chemicals:
To serve the summer-autumn rice crop, fertilizer production in the four months of the year and the first 15 days of May is relatively stable in order to meet the demand for fertilizers. In addition to Phu My Fertilizer Plant, which is operating at full capacity, Ca Mau Fertilizer Plant also started selling urea products to the market.
e. Garments and textiles and footwear:
Producers have been facing difficulties due to the change in import policies and increasing requirements on quality standards and environmental standards, etc. of major markets such as the EU, the U.S. and Japan. As a result, it is difficult to look for export orders in the second and third quarters. In the future, garments and textiles producers need to continue seeking export orders to the South American market, taking the initiative in ensuring sources of raw materials for production, and collaborating in research and investment in production and supply of leather and footwear materials with potential countries such as India and Brazil.
f. Paper:
Paper manufacturing enterprises continued to face fluctuations in prices of materials, fuel and raw materials such as wood, pulp and chemicals and at the same time had to compete with imported paper products. In the near future, in order to enhance competitiveness in the market, businesses need to reduce the proportion of inputs, increase the use of local wood materials, expand pulpwood plantations to ensure stable sources of raw materials and expand product distribution system.
4. Export-import in the first five months of 2012:
a. Export
Total export turnover in the first five months of 2012 was estimated at US$ 42.86 billion, up 24.1% year on year; of which, export revenues generated by foreign-invested enterprises (exclusive of crude oil) was estimated at US$23.1 billion, representing a year on year increase of 43.7%.
The export volume of main industrial commodities in the first five months of 2012 as compared with the same period last year: the export volume of coal reach 5.8 million tons, down 14.4%; crude oil: 3 million tons, down 9.8%; petroleum and oil of all types: 957 thousand tons, up 12.5%; chemicals: US$184 million, up 119%; chemical products US$256 million, up 12.8%; plastic products: US$624 million, up 23.6%; garments and textiles: US$533 billion, up 7.7%; footwear US$2.71 billion, up 14.3%; iron and steel: 729 thousand tons, down 4%; steel products: US$533 million, up 35.6%; computers, electronic products and components: US$2.7 billion, up 99.3%; machinery, equipment, tools and spare parts: US$2.1 billion, up 57.9%; vehicles and spare parts: US$1.9 billion, up 150.1%; telephones and components: US$3.6 billion, up 110.9%.
Thus, the export value was largely contributed by some items such as: garments and textiles, footwear, computers, electronic products and components; machinery, equipment, tools and spare parts; telephones and components; vehicles and spare parts (the export value of these products hit over US$1 billion each).
b. Import
Import turnover in the first five months of 2012 was estimated at US$43.4 billion, up 6.6% year on year, of which, the import value of foreign-invested enterprises reached US$22.2 billion, representing a year on year increase of 25.3%. Trade deficit hit US$1.6 billion, equivalent to 3.7% of the export turnover.
Import volume and value of some main industrial items in the first five months of 2012 as compared to the same period last year are as follows: petroleum and oil of all types: 3.9 million tons, down 23.2%; liquefied natural gas: 223 thousand tons, up 27.2%; chemicals: US$1.18 billion, up 10.2%; chemical products: US$958 million, up 2.1%; pharmaceutical raw materials: US$113 million, up 36.1%; fertilizers: 1.1 million tons, down 27.1%; urea: 130 thousand tons, down 60.6%; plastic products: US$792 million, up 25.5%; paper of all types: 475 thousand tons, up 9.7%; iron and steel: 3.1 million tons, up 6.4%; computers and electronic components: US$4.5 billion, up 103.4%; machinery, equipment and spare parts: US$6.2 billion, up 6.3%; automobiles: down 56.8%; automobile spare parts and components: down 25%; CKD and IKD motorcycle components: down 32.8%.
II. FORECASTS ON PRODUCTION, BUSINESS AND EXPORT ACTIVITIES OF THE INDUSTRY SECTOR IN THE FIRST HALF OF 2012
1/ Overall situation:
The index of industrial production (IIP) in the first six months of 2012 is expected to increase 4.4% over the same period last year, of which, the mining industry is estimated to rise by 1.7%; the processing by 4.2%; the electricity, gas and water production and distribution industry by 14.6%.
2.The production of a number of major industrial products:
- Some products are anticipated to record higher growth rates over the same period last year, including crude oil, which is estimated to total 7.83 million tons, up 8.7%; natural gas: 4.85 billion m3, up 4.9% ; liquefied petroleum gas (LPG): 363 thousand tons, up 18.2%; refined vegetable oil: 286.8 thousand tons, up 16%; milk powder: 36.5 thousand tons, up 20.4%; electricity: 54.8 billion kWh, up 14%; commercial water: 770 million m3, up 8.9%.
- A few products are expected to post lower growth rates over the same period last year, including coal, which is estimated at 23.5 million tons, down 2.1% over the same period; cement: 27 million tons, down 7.5%; rebar: 1.62 million tons, down 12.5%; automobiles: down 11.2%, of which passenger cars and trucks are expected to drop by 11.6% and 10.1%, respectively.
- By June 1, 2012, the inventory index of the entire processing industry is estimated to increase 26.4% over the same period last year. Most of processing sub-industries are expected to record higher inventory indexes over the same period last year as follows: The inventory index of the cement, lime and mortar production sub-industry is estimated to climb by 61.2%; fertilizer and nitrogen production by 20.3%; malt and beer production by 30.3%; clothing production by 47.1%; motor vehicle production by 90.7%; drug, pharmaceutical and medicine manufacturing by 9.5%; packaging and crumpled paper production by 72.2%; plastic products by 77.7%; motorcycle manufacturing by 46.8%.
3. Export-import value by June 2012
Export turnover of the first six months of 2012 is estimated at about US$52 billion, up 20.8% as compared to the same period last year while import value is expected to reach US$53.5 billion, representing a year on year increase of 8.1%. Trade deficit in the first six months is estimated at US$1.5 billion, equal to 2.89% of the total export turnover.
Export turnover in 2012 is forecast to hit about US$109 billion, up 12.5% from 2011; import value is estimated at about US$115 billion, an increase of 7.7%. Trade deficit is expected to reach US$6 billion, equal to 5.5% of the total export value [1]. If compared to the target set by the National Assembly, a trade deficit ratio of below 10% may be achieved, however, what concerns is the ability to achieve a growth rate of 13% in 2012.
[1] The target of the National Assembly: Total export turnover increases by 13%. Trade deficit is equivalent to about 11% - 12% of the total export turnover. If it is possible, striving to reduce the trade deficit ratio to below 10% of the total export value.
4. Implementation results of the Resolution NO. 91/NQ-CP dated January 3, 2012 of the Government:
With a view to implementing the Resolution No. 01/NQ-CP of the Government, the Ministry of Trade and Industry has issued the Action Plan of the Ministry of Industry and Trade together with the Decision No. 433/QD-BCT dated January 18, 2012 and the Directive No. 04/CT-BCT dated February 22, 2012 to implement the resolution.
In order to find out implementation results of the Resolution 01/NQ-CP recorded by Ministry of Industry and Trade, please refer to the Official Letter No. 2814/BCT-KH dated April 4, 2012 of the Ministry of Industry and Trade reporting its implementation of the Resolution No. 01/NQ-CP of the Government (ca copy of this document was sent to you by the Administration Department of the Ministry).
On the other hand, in order to implement the Resolution No. 01/NQ-CP dated January 3, 2012 on key measures to direct the implementation of the 2012 socio-economic development plan and the State Budget Estimate and cut 5-10% of management costs and reduce product prices, a number of economic groups have committed to the following cuts: Vietnam Electricity Group targets its spending by VND1,800 billion; the Vietnam National Oil and Gas Group: VND3,715 billion; the Vietnam National Coal Mineral Industries Group: VND986 billion; Vietnam National Textile and Garment Group: VND178.6 billion.
III. Solutions and recommendations:
- To continue to monitor closely the progress of investment projects and the disbursement of projects. Projects, which have received funds in 2012 (including the State budget and Government bond capital), should quickly follow their schedule to meet the demand for funds of projects to be completed in 2012 and get prepare for the next year.
- To implement the State owned enterprise restructuring plan and strengthen management to improve the efficiency of state-run enterprises.
- Businesses need to maximize their production capacity and market demand in order to meet the economy’s demand for necessities such as power, coal, petroleum, fertilizers, construction steel, etc.; some consumer products, such as garments, footwear, milk, vegetable oil, and export products such as crude oil, garments, footwear, mechanical products, electrical wire and cable...
- To continue to promote technological innovation, strengthen management, research on the use of locally produced raw materials, supplies, machinery and equipment and at the same time drastically implement the National Energy Efficiency Program to reduce costs and lower product prices in order to improve investment, production and business efficiency.
- To continue introducing policies to reduce lending interest rates to encourage enterprises to make investments, produce and trade goods to meet local consumption and export demand./.
Ministry of Planning and Investment