Vietnamese industrial and farm suppliers are not expected to be affected much by the tariff cuts on thousands of products that will be effected over the next three years under the ASEAN-Australia-New Zealand Free Trade Agreement and the ASEAN-China Free Trade Agreement.

Under AANZFTA, many items imported directly from Australia, New Zealand, Brunei, and Singapore began to get tax preferences from January 1, 2010 provided they satisfy regulations on origin.

Almost all items imported from these countries have their tariffs gradually reduced between 2010 and 2012. For instance, the tariff on unsweetened milk powder will be lowered from 10 per cent in 2010 and 2011 to 7 per cent in 2012.

The tariffs on apples, grapes, and kiwi are also slashed from 18 per cent, 19 per cent, and 18 per cent respectively.

Thousands of commodities will also continue to see tariffs cut under the deal with mainland China.

More importantly, the tariff cuts are not likely to send import volumes skyrocketing since their main consumers are affluent people, who remain a small minority in most parts of the country.

In HCM City, for instance, beef and lamb are imported from Australia and New Zealand. But Pham Hong Long, director of the Import and Export Joint Stock Company No 2, said these meats are expensive and so used mainly by luxury restaurants and hotels.

The 5 to 10 per cent cuts in their tariffs are not enough to make them competitive, he explained.

But independent analysts warn that fruits imported from China can upend the market for Vietnamese fruits because they are not only reasonably priced but also have an attractive appearance and packaging.

On the other hand, the tariff cuts are likely to benefit Vietnamese exports.

Many rubber and fruit exporters said they hope to expand their business to many new overseas markets, particularly China, thanks to the cuts.

Huynh Quang Dau, director of the An Giang Agricultural Technical Service Company, said his company recently signed two large contracts with Chinese partners to export canned fruits after a one-year hiatus.

The country’s export of rubber latex to China using quotas will also increase in 2010 thanks to the tax cuts, according to Nguyen Thi Thuy Hoa, general secretary of the Viet Nam Rubber Association.

City goes on shopping spree

Since mid-December Nguyen Kim Shopping Centre in HCM City has welcomed at least 400,000 customers, with sales skyrocketing to five or six times the normal figure. Its best-selling items have been television sets, rice cookers, washing machines, refrigerators, and mobile phones.

At Thien Hoa Electronics Appliance Centre, the number of customers as well as sales has gone up by three or four times.

Ngo Quang Vinh, a manager at Ideas Electronic Appliance Centre, said his shop is full of customers through the day and sales is up three times.

Duong Thi Quynh Trang, public relations director for Big C supermarket chain, said retail sales is expected to increase by 30 per cent during the festival season.

Promotions by large shopping centres, including price cuts of up to 50 per cent, and payment of Tet bonuses to workers are the main reasons for the shopping boom.

Vinh of Ideas said the prices of most goods have been cut by up to 50 per cent. For instance, a 40-inch Sony LED television, usually costing VND79.7 million, is being sold at just VND44.9 million.

Le Le Nga of Cong Quynh Street in District 1 said she bought a set of Happy Cook cookers at Nguyen Kim Centre for just VND1.2 million, VND600,000 less than before.

Big C also offers discounts of 2 to 50 per cent on 800 items.

Banks lack cash to lend

As 2009 wound to a close, most commercial banks were in a bind because of a serious shortage of cash for lending and regulations to curb credit growth to make sure they do not exceed the central bank’s 37.7 per cent cap on it.

As a result, analysts are concerned there may be less money flowing into the stock market.

Their fears have worsened after the State Bank of Viet Nam announced a new, lower cap on credit growth in 2010 – 25 per cent against an earlier 37.7 per cent. The central bank has also said banks can use no more than 30 per cent of its short-term deposits for medium – and long-term loans.

This credit tightening would reduce the funds flowing into the stock market, they said.

Vu Huu Dien, Chief of Portfolio Management for the Dragon Capital Fund, said the Government might continue with the monetary tightening next year to reduce the budget deficit and ward off inflation, continuing to keep the pressure on funds flowing into the markets. — VNS

Source: Viet Nam News