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NEWS UPDATES Asean Affairs        7   June 2011

Foreign trade deficits in Vietnam

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The Ministry of Industry and Trade has drawn attention to a sudden spurt in the trade deficit run up by foreign firms, and urged relevant agencies to investigate the reasons.

In the first five months, excluding US$3 billion from oil exports, they racked up a deficit of US$1.6 billion, Deputy Minister of Industry and Trade Nguyen Thanh Bien told a recent meeting. The average whole-year deficit was only $2 billion before 2009.

The Saigon Times quoted Bien as saying that the deficit had jumped last year to $2.7 billion and to $1.6 billion in just the first five months this year.

The government's opening of the domestic retail market under World Trade Organisation commitments is one of the main reasons for this since this allowed foreign companies to import and directly sell in the country.

Economist Pham Chi Lan said misuse of transfer pricing - the nominal prices companies report when buying or selling from their overseas units - to evade taxes could be another reason.

More than two-thirds of foreign firms have consistently been reporting losses in recent years while Vietnamese firms of the same size in the same industry have been profitable at home and abroad, she said, adding "this is bizarre."

Le Thi Thu Huong, deputy director of the HCM City Tax Department, conceded that the global economic downturn made life difficult for businesses in Vietnam. However, the government allowed tax deferment to help them during the tough times, she pointed out.

But some FIEs are believed to take advantage of transferring pricing to shift their revenues and profits to markets where taxes are lower than in Vietnam. Many FIEs imported machinery and materials from their parent company abroad at high prices but sold their finished products at prices below market level, she added.

The lack of support industries - and thus the need to import feedstock - was also a cause for the trade deficit, another ministry official said.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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