Speaking at a recent Vietnam-Singapore Business Forum in Ho Chi Minh City, Doan Duy Khuong, vice chair of the Vietnam Chamber of Commerce and Industry (VCCI) said the trade shortfall for the first half of the year widened by US$1.07 billion.
Exports out of Vietnam to Singapore registered US$1.076 billion for the six-month period, while imports from the world’s only sovereign island city-state were more than double that figure, tallying in at US$2.57 billion, said Mr Khuong.
This gives us a pretty good indication the deficit may swell at least another US$1 billion by year’s end bringing the total deficit for 2016 to in excess of US$2 billion, a level it has stood at for the past four years.
Although Singapore is the largest trading partner of Vietnam within ASEAN, the deteriorating trade balance represents a drag on the overall GNP growth of Vietnam and is a discouraging sign for the economy, said Mr Khuong.
There needs to be a seismic change in the strategy to increase exports, he said and a more "methodical and comprehensive strategy" to reach every corner of the Singaporean market and build a credible consumer base.
In an effort to tame the ballooning deficit, business forums like these are held in order to identify and isolate areas for which we can get the trade balance, which is drenched in red, more on an even keel.
Our goal at meetings like these is to revisit our strategy for exports of traditional merchandise of clothing, footwear, leather, seafood, and ag and food items to Singapore, he added, and find access for other markets such as pharmaceuticals and information technology.
Unless we can chart out a long-term strategy to counter the influx of Singaporean goods into Vietnam markets, the trade deficit will continue to mushroom.
Meanwhile, he said, the lopsided trade figures between the two countries is further aggravated by the uneven investment flows.
The Foreign Investment Agency statistics show that Singaporean businesses have become one of the nation’s leading investor groups having registered investment of more than US$36 billion in numerous local business ventures.
Notably, there is little by way of foreign direct investment by Vietnamese domestic businesses in Singapore, which in large part accounts for the significant trade deficit, said Mr Khuong.
Singaporean businesses have established five industrial parks in Vietnam. The parks are located in Binh Duong, Hai Phong, Bac Ninh and Quang Ngai and have attracted close to 500 tenants from 23 countries.
These industrial parks have created more than 140,000 jobs in Vietnam.
