Circular No. 2409/TC/TCT regarding the implementation of the Directive No. 910/CP-NN dated October 5, 2001 of the Prime Minister

MINISTRY OF TRADE ********	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ********
NUMBER: 1280 TM/XNK	Hanoi, July 23, 2002

 

MEMORANDUM ON THE RESULTS OF THE MEETING TO STRENGTHEN EXPORTS IN THE LATTER PART OF 2002

 

Respectfully submitted to: The Government Prime Minister

 

Pursuant to the directive of the Prime Minister in Document No. 3302/VPCP-KTTH dated June 14, 2002 of the Government Office regarding the organization of meetings to promote production and exports, on July 12, 2002, the Ministry of Trade organized an export coordination meeting in Ho Chi Minh City. The meeting was attended by representatives from several relevant ministries and sectors such as the Ministry of Agriculture and Rural Development, the State Bank, the Ministry of Fisheries; representatives from some provinces and cities like Ho Chi Minh City, Ba Ria-Vung Tau, Dong Nai, Binh Duong; General Companies 90 and 91 and some industry associations; however, the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Industry, and the General Department of Customs did not have representatives present. At the meeting, the Ministry of Trade reported on the import and export situation for the first six months, assessed the possibility of achieving the 2002 plan, reviewed the implementation of export promotion measures approved by the Prime Minister and the Government, and proposed specific recommendations to boost the export of key products. The meeting generally agreed with the report of the Ministry of Trade. In addition, representatives from various ministries, enterprises, and industry associations also raised additional recommendations, mainly aimed at addressing difficulties in implementing the measures approved by the Prime Minister.

Based on the opinions expressed at the meeting, the Ministry of Trade hereby compiles and reports to the Prime Minister as follows:

A. REGARDING THE IMPLEMENTATION OF THE IMPORT-EXPORT PLAN FOR 2002:

1. Exports:

The export turnover for the first six months is estimated to reach 7.25 billion USD, a decrease of 5.9% compared to the same period in 2001. The decline is due to the many challenges and difficulties that exports faced in 2002, especially in the early months of the year.

Based on the export results for the first six months, considering the prospects for the world and domestic economic and trade situation in the last few months of the year, the Ministry of Trade forecasts that the export turnover in the third and fourth quarters of this year will show a more significant growth rate compared to the same period in 2001. The cumulative growth rate will gradually increase and is expected to start reaching positive growth by the end of the third quarter or the beginning of the fourth quarter of 2002. However, the annual export growth rate is likely to be lower than the target set by the 10th National Assembly. After reviewing the export potential of key products in the second half of 2002 with relevant ministries and sectors, it is anticipated that the export growth target for 2002 will need to be adjusted to 6.8% (total export turnover reaching 16.05 billion USD). Although this is lower than the planned target, achieving this goal still requires extraordinary efforts from all industries, levels, enterprises, particularly for key export products such as aquatic products, crude oil, rice, textiles, footwear, etc.

Product	Export Turnover for Six Months (million USD)	Estimated for the whole year 2002 (million USD)
1. Aquatic products	816	2.100
2. Crude Oil	1.482	2.958
3. Textiles	990	2.400
4. Footwear	877	1.900
5. Rice	343	626
6. Coffee	137	274
7. Steel	170	300
8. Fruits and Vegetables	107	330
Total Turnover	7.250	16.050

2. Imports:

The import turnover for the first six months reached 8.4 billion USD, an increase of 8.1% compared to the same period, with raw materials and intermediate goods for production and foreign-invested enterprises showing a rapid increase, while domestically-owned enterprises saw a decrease similar to exports. The main reasons were the stable exchange rate of the domestic currency and the reduction in global import prices. Due to negative export growth, the trade deficit for the first six months was 1.154 billion USD, equivalent to 15.9% of the export turnover. This is a relatively high trade deficit in recent years. It is hoped that the trade deficit will improve in the last few months of the year due to the expected higher growth rate in exports.

B. REGARDING THE MECHANISMS AND POLICIES TO ENCOURAGE EXPORTS:

Since late 2001, the Government and the Prime Minister have provided thorough and decisive guidance on import and export activities. On December 13, 2001, the Prime Minister issued Directive No. 31/2001/CT-TTg on enhancing and improving the effectiveness of import and export operations in 2002. Resolution No. 05/2002/NQ-CP dated April 24, 2002 of the Government on certain measures to implement the socio-economic plan for 2002 also paid special attention to measures to boost exports. At the meeting, delegates reviewed the implementation of these measures and proposed recommendations to address remaining issues, some of which were immediately addressed by the Ministry of Trade and relevant ministries and sectors within their authority. Other recommendations require further study and implementation by relevant ministries and sectors or reporting to the Prime Minister for instructions, specifically as follows:

I. REGARDING TRADE:

Following the directives of the Prime Minister in Directive No. 31/2001/CT-TTg and Resolution No. 05/2002/NQ-CP, the Ministry of Trade has strengthened the implementation of trade promotion and market work since the beginning of 2002. Specifically, four inter-ministerial delegations were organized to survey import and export situations in the United States, China, Russia, and Africa, and another delegation to Japan is being organized with the participation of numerous industry enterprises. Simultaneously, active cooperation with relevant ministries and sectors has been maintained to monitor and identify new non-tariff barriers and complex situations arising, such as the export of aquatic products to the EU and the US, fruits and vegetables to China, and textile products to the US and Japan. Regarding import management mechanisms, the Ministry of Trade has developed proposals for new import control tools such as tariff quotas and absolute tariffs, which have been reported to the Prime Minister for guidance.

In the future, the Ministry of Trade will continue to implement the following specific tasks:

1. Coordinate with the Government's Organizational and Cadre Affairs Board and relevant ministries and sectors to implement the pilot dispatching of specialized trade attachés according to Directive No. 31/2002/CT-TTg, and develop a proposal to supplement personnel for Vietnam's commercial representatives in some promising states in the US as directed by the Prime Minister in Document No. 3531/VPCP-KTTH dated June 28, 2002.

2. Continue to direct trade transactions to strengthen support for our enterprises in searching for customers and markets.

3. Promptly issue mechanisms for managing textile and garment exports in 2003 to markets with quota regulations so that enterprises can proactively sign export contracts.

4. Accelerate the establishment of product introduction centers for Vietnam in the US, Russia, and the United Arab Emirates (Dubai) as directed by the Prime Minister in Document No. 301/CP-KTTH dated March 22, 2002.

5. Work with some border provinces to continue implementing certain tasks following participation in the Kunming Fair as requested by the Commerce Department of Ho Chi Minh City.

6. Work with the Vietnam Food Association on export rice mechanisms to concentrated markets to propose solutions to report to the Prime Minister.

II. ON FINANCE AND BANKING:

Pursuant to Directive No. 31/2001/CT-TTg and Resolution No. 05/2002/NQ-CP, the Ministry of Finance has issued several documents to concretize financial policies and support exports, such as Decision No. 63/2002/QD-TTg dated May 21, 2002 on rewarding export turnover for 2002; documents guiding the exemption and reduction of certain costs related to exports in 2002, including the exemption of fees for quota export licenses, customs fees, certificates of export footwear to the EU, and certificates of origin for exported goods, as well as the exemption of inspection fees for animals and plants for export. The Development Support Fund also issued Document No. 167/HTPT-VNN on expanding the scope of short-term credit loans for export support under Decision No. 133/2001/QD-TTg to include all traders exporting rice, coffee, tea, peanuts, meat from various livestock and poultry, canned fruits and vegetables, fresh fruits and vegetables, dried fruits and vegetables, pepper, cashew nuts, seafood, ceramics, porcelain, furniture, rattan and bamboo products, textiles, shoes to all markets.

In the future, it is proposed that the Ministry of Finance and the State Bank of Vietnam continue to coordinate with relevant ministries and sectors to study and implement the following measures:

a. On finance

:

1. Decision No. 63/2002/QD-BTC on rewarding export turnover for 2002 has made some improvements, specifically expanding the beneficiaries of rewards and decentralizing the review of application files to provinces. However, to further facilitate businesses, the Ho Chi Minh City Department of Trade suggested that the review of application files should be conducted by the Department of Trade and the disbursement of the Export Support Fund should be carried out by the Department of Finance. In this way, business reward applications would not need to be transferred to Hanoi, and localities could consider additional bonus rewards for businesses beyond those stipulated in Decision No. 63/2002/QD-BTC.

Additionally, the Tea Corporation proposes applying rewards for goods exported under Government contracts (such as tea exports to Iraq due to high war surcharges).

The Ministry of Trade requests the Ministry of Finance to study the above opinions and propose appropriate handling methods.

2. It is proposed that the Ministry of Finance continue to improve the procedures for VAT refunds and promptly issue regulations to adjust the deduction of VAT for exported agricultural and aquatic products: provide guidance on collecting VAT on imported fertilizers and plant protection chemicals in accordance with their specific circulation characteristics;

3. Study and submit to the National Assembly for the unified application of a single income tax rate for domestic and foreign-invested enterprises with the same level of export turnover.

4. Strengthen coordination with relevant ministries and sectors to promptly implement the improved regime for market development and trade promotion expenses according to the spirit of Resolution No. 05/2002/NQ-CP of the Government.

5. Strengthen coordination with relevant ministries and sectors to review input service costs for exported goods to quickly develop a proposal to report to the Prime Minister on reducing these costs to a reasonable level.

6. According to feedback from some enterprises, accessing export credit support funds remains inconvenient due to complex procedures. It is proposed that the Ministry of Finance and the Development Support Fund organize a meeting to summarize and draw lessons from past export credit support, develop a proposal to establish an Import-Export Bank to be submitted to the Prime Minister in accordance with the spirit of Resolution No. 05/2002/NQ-CP of the Government.

7. It is proposed that the Ministry of Finance promptly settle the implementation of rice export contracts with the Philippines and Cuba executed in 2001; propose financial support measures for these contracts in accordance with the Prime Minister's directive in Document No. 35/CP-KTTH dated June 27, 2002 of the Government.

8. The Ministry of Finance will cooperate with some ministries and sectors to research and build insurance mechanisms for certain agricultural products, initially focusing on those with large export values.

b. On banking

1. Resolution No. 05/2002/NQ-CP allows for the full exemption of interest on bank loans for farmers in the Central Highlands provinces who borrow to care for coffee gardens during the 2001-2002 crop season. The State Bank will compensate the interest. It is proposed that the State Bank and the Ministry of Finance promptly provide detailed guidance.

2. Regarding the payment mechanism through banks with the Russian Federation, the State Bank has instructed several commercial banks to sign memorandums of understanding on payments with Russian commercial banks. It is proposed that the State Bank issue a specific announcement to Vietnamese enterprises to facilitate their selection of transaction banks and ensure payment safety.

3. As for the payment mechanism with China, the State Bank of Vietnam has signed an agreement on payments with the People's Bank of China. It is proposed that the State Bank promptly provide detailed guidance on implementing the agreement.

4. Resolution No. 05/2002/NQ-CP assigns the State Bank of Vietnam to direct commercial banks to continue lending for ongoing state investment and development projects that have been appraised and are currently being financed. For new projects appraised by the Development Support Fund, lending should follow current regulations. It is proposed that the State Bank promptly provide detailed guidance.

III. OTHER ISSUES:

1. On June 24, 2002, the Prime Minister issued Decision No. 80/2002/QD-TTg on policies to encourage the consumption of agricultural products through contracts. Ministries, sectors, and localities need to quickly implement the tasks assigned in Article 8 of Decision No. 80/2002/QD-TTg, and promptly put the government's policy into practice.

2. Directive No. 31/2001/CT-TTg assigned the Government Organizational and Cadre Affairs Office to lead and coordinate with the Ministry of Trade and relevant ministries and sectors to study and rectify the operations of industry associations to enhance their role in promoting trade, ensuring the rights of members and national interests.

It is proposed that the Government Organization-Cadres Department coordinate with relevant ministries and sectors to soon issue a Decree on industry associations.

C. RECOMMENDATIONS

All ministries and sectors recognize that in the context of exports in 2002 facing many challenges, the encouragement measures for exports permitted by the Prime Minister in Directive No. 31/2001/QD-TTg and Resolution No. 05/2002/NQ-CP are relatively comprehensive and effective. When implemented, they will serve both as immediate solutions and long-term measures for exports. The remaining issue is to continue to focus on effectively implementing these measures, quickly putting mechanisms and policies into practice. Therefore, in the coming time, the Ministry of Trade will actively coordinate with relevant ministries and sectors to implement measures within its authority. For measures within the authority of other ministries and sectors, the Ministry of Trade suggests that the Prime Minister continue to instruct relevant ministries and sectors to promptly implement them, quickly put mechanisms and policies into practice, contributing to enhancing the effectiveness and export value in the last six months of 2002 to approach the target set by the National Assembly for 2002, laying a foundation for export growth in subsequent years.

Above is the Memorandum of the Ministry of Commerce based on the synthesis of opinions from the Export Coordination Meeting held in Ho Chi Minh City on July 12, 2002. Attached to this Memorandum is the Report of the Ministry of Commerce regarding certain policies and measures to boost exports in the last months of 2002 for the Export Coordination Meeting. The Ministry of Commerce respectfully submits this to the Prime Minister for consideration and guidance.

 

DEPUTY MINISTER OF TRADE DEPUTY MINISTER Mai Văn Dâu

 

 

 

MINISTRY OF TRADE ********	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ********
	Hanoi, July 8, 2002

 

REPORT

ON SOME POLICIES AND MEASURES TO BOOST EXPORTS IN THE LAST MONTHS OF 2002
(Document serving the July 2002 Coordination Meeting)

A. ON THE SITUATION OF EXPORTS AND IMPORTS IN THE FIRST HALF OF 2002 AND ASSESSMENT OF THE ABILITY TO IMPLEMENT THE EXPORT PLAN FOR 2002:

I. RESULTS OF EXPORTS AND IMPORTS IN THE FIRST HALF OF THE YEAR:

1. Exports

The export turnover for the first six months is estimated at 7.25 billion USD, a decrease of 5.9% compared to the same period in 2001. Commodities with increased turnover include rubber (25.5%), tea (31.7%), roasted peanuts (62.7%), coal (45.3%), textiles (3%), footwear (10.6%), and handicrafts (49%). Commodities with decreased turnover include crude oil (-16.7%), aquatic products (-2.4%), rice (-1.3%), coffee (-45.4%), fruits and vegetables (-38%), pepper (-12.5%), and electronic components and computer parts (-28.4%).

The main reasons for the decrease in export turnover are:

- The volume of exports of some key commodities has decreased, such as rice by 26.6%, coffee by 34%, and crude oil by 1.9%. One reason is due to ongoing programs to adjust crop structures, while another is due to widespread drought. Although the production of aquatic products has increased by nearly 5%, the main product shrimp has decreased by more than 3%.

- The world economy and trade remain sluggish, with weak purchasing power causing prices to recover slowly, and even continuing to decline in some commodities compared to the same period in 2001. Estimated losses due to low export prices amount to approximately 400 million USD. Due to price reductions, some commodities have seen significant increases in volume such as rubber, roasted peanuts, and tea, but their turnover has not correspondingly increased.

- The global trading environment remains unfavorable, with many trade barriers emerging. Issues such as labor, the environment, food safety, etc., are being raised excessively, affecting our exports, particularly seafood and textiles, while we lack experience in dealing with such issues.

2. Imports:

The total turnover for the first half of the year is estimated at 9.544 billion USD, an increase of 7.4%, of which goods account for 8.404 billion USD, an increase of 8.1%.

Import turnover mainly increased in enterprises with foreign investment capital, with machinery, equipment, and spare parts accounting for 18.1%; raw materials for production and processing of export goods accounting for 30.4%; and industrial zones importing 13%.

Some major commodities saw a significant increase in volume compared to the same period in 2001, such as yarn by 43.9%, fertilizer by 39.1%, automobiles in kit form by 31.9%, finished steel by 31%, machinery, equipment, and spare parts by 28.8%, various types of paper by 28.4%, plastic raw materials by 24.1%, chemical raw materials by 21%, steel billets by 10.8%, refined oil by 7.6%, and pharmaceuticals by 10%. Meanwhile, some commodities saw a significant decrease in imports, such as motorcycles by 65.8%, complete vehicles by 15.5%, cotton by 4.6%, etc. Consumer goods were similar to the same period in 2001.

Specifically, the import situation of some major commodities is as follows:

Fertilizers: The volume of imported fertilizers in the first six months was 1.8 million tons, an increase of 39.1% compared to the same period in 2001. The increase in imports is mainly due to low fertilizer prices on the global market (urea around 110 USD/ton), enterprises preparing for the summer-autumn season and domestic production decreasing by about 13% (depending on the type of fertilizer, phosphate fertilizer alone decreased by 21% due to higher costs by 10-12 USD/ton compared to imported goods).

Gasoline and diesel: The volume of imported gasoline and diesel in the first six months was 4.9 million tons, an increase of 7.6% compared to the same period in 2001, including: Q1 increased by 5.4%, April decreased by 10.2%, May increased by 27.9%, and June increased by 2.7%.

In the first half of the year, the price of oil on the global market continued to rise (except for a slight decrease in June), affecting production and business operations. However, with four adjustments to the import tax rate, the state ensured efficiency for businesses engaged in oil trading and supply.

Currently, a matter of concern is that oil-importing businesses are unable to purchase foreign currency, making imports very difficult. It is recommended that relevant ministries and sectors actively implement measures to support them.

Motorbike assembly components: The volume of imports in the first six months was 332 thousand units, a decrease of 65.8% compared to the same period in 2001. Among which, imports from China decreased by 93% (due to new government decisions strictly managing motorcycle component imports):

Although the import volume has decreased, there has not been a sudden price increase on the domestic market.

Paper: The volume of imports in the first six months increased by 28.4% compared to the same period in 2001 due to increased demand while prices on the global market decreased (approximately 9.7%) and since May 1, 2001, there has been no quota management, printing paper had its VAT reduced to 5%.

Salt: According to the Ministry of Agriculture and Rural Development, in 2002, favorable weather conditions for production are expected, with the annual salt production forecasted to reach 880 thousand tons, an increase of 300 thousand tons compared to 2001. The price of salt purchased from farmers is about 350-400 dong/kg in the North, 200-300 dong/kg in Central Vietnam, and 250-300 dong/kg in the South - only half of the sharp increase in prices in 2001 but sufficient to cover production costs and ensure profit for salt producers.

The total national demand for salt is approximately 1.25 million tons (for consumption, chemical industry, preservation, seafood processing, other production, national reserves, reserve stocks...); while the total supply is about 1.26 million tons (including carryover stock from 2001 of 283 thousand tons, domestic production of 880 thousand tons, and 90 thousand tons imported). With current domestic salt prices and a 30% import tariff on salt, importing salt is not efficient.

On October 29, 2001, the Government issued Circular No. 975/CP-KTTH temporarily placing table salt under specialized management and importing according to permits from the Ministry of Agriculture and Rural Development. Currently, relevant ministries and sectors are coordinating to implement pilot quantitative tariffs on imported salt in accordance with the spirit of Government Circular No. 1160/CP-KTTH dated December 24, 2001.

Sugar: Imports remain suspended to protect domestic production. However, more stringent measures are needed to combat illegal sugar imports through borders.

In summary, the prominent feature of the first six months is: rapid growth in imports of raw materials for production, especially in foreign-invested enterprises; domestic enterprises' imports remained stable or slightly decreased. The main reasons are stable domestic currency exchange rates, lower prices of imported goods globally, and particularly negative export growth. Therefore, during the first six months, the trade balance deficit in goods and services was 969 million USD (with service exports having a surplus of 185 million USD and goods imports having a deficit of 1.154 billion USD, equivalent to 15.9% of goods export turnover, a relatively large deficit in recent years). For the remaining months of the year, it is hoped that the trade deficit will improve due to projected higher export growth.

II. EVALUATION OF THE CAPABILITY TO IMPLEMENT THE 2002 EXPORT PLAN:

Export activities in 2002 faced numerous challenges and difficulties, particularly in the first months of the year. Compared to the end of 2001, there was no significant improvement in the global economic and trade situation, with overall purchasing power remaining weak, prices slow to recover, and new barriers emerging. Issues such as labor, environment, food safety, and brand disputes were excessively raised by importing countries, affecting our exports, especially seafood and textiles. Domestically, export supplies also encountered some limitations, partly due to the impact of structural changes in agriculture and partly due to droughts occurring in many areas. Therefore, although monthly export turnover increased continuously from March onwards, reaching approximately 1.42 billion USD in June (the highest monthly turnover since the beginning of 2001), the total export turnover for the first six months of the year still decreased by 5.9% compared to the same period last year. Excluding crude oil, other goods had a lower decrease rate (-2.7%). The situation requires significant efforts and endeavors from all sectors, levels, and enterprises to approach the target set by the tenth National Assembly for 2002.

	Growth after two months (%)	Growth after three months (%)	Growth after four months (%)	Growth after five months (%)	Growth after six months (%)
Total Turnover	-16,0	-12,2	-9,0	-6,8	-5,9
Crude oil	-27,5	-22,3	-20,3	-17,7	-16,7
Non-crude oil	-12,3	-9,2	-5,6	-3,5	-2,7
- Vietnam block	-19,6	-15,6	-13,8	-11,7
- FDI block	3,9	5,4	14,5	16,8

Based on the export results for the first six months of 2002, and considering the forecasted economic and trade situations both globally and domestically in the remaining months of the year, after reviewing the export potential of each major product, the Ministry of Trade forecasts that the export turnover in the third and fourth quarters of this year will show a more noticeable growth compared to the same period in 2001. The cumulative growth rate will gradually increase and is likely to start achieving positive growth at the end of the third quarter or the beginning of the fourth quarter of 2002. On this basis, it is forecasted that the export turnover for 2002 could reach 16,051 million USD, increasing by 6.8% compared to 2001, equivalent to 96.69% of the plan. To achieve this goal, the average monthly export turnover in the last six months of 2002 must reach 1,467 million USD (for detailed specifics, please refer to the attached Appendix).

B. REGARDING THE GENERAL MECHANISM TO ENCOURAGE EXPORTS:

To achieve the export growth target of 10-13%, as proposed by the National Assembly, the Government and the Prime Minister have provided thorough and resolute guidance. On December 13, 2001, the Prime Minister issued Directive No. 31/2001/CT-TTg on intensifying and enhancing the effectiveness of import-export activities in 2002. Resolution No. 05/2002/NQ-CP dated April 24, 2002, of the Government on several measures to implement the socio-economic plan for 2002 also paid special attention to measures to boost exports. This section reviews the implementation of these measures.

I. SOLUTIONS THAT HAVE BEEN IMPLEMENTED BY MINISTRIES AND SECTORS ACCORDING TO DIRECTIVE NO. 31/2001/CT-TTG AND RESOLUTION NO. 05/2002/NQ-CP.

1- Bonus based on export turnover:

Directive No. 31/2001 of the Prime Minister and Resolution No. 05/2002 of the Government allowed the expansion of beneficiaries eligible for export turnover bonuses in 2002. On May 21, 2002, the Ministry of Finance issued Decision No. 63/2002/QD-BTC announcing bonus rates for certain products. Among the 13 groups of products eligible for bonuses, 11 groups belong to the agricultural and rural economy sector.

It is recommended that enterprises use these bonuses effectively and strive to pass a portion of the bonuses to farmers through increased purchase prices.

To maximize the positive effects of the bonus system and facilitate traders, the review of application files has been delegated to provinces, and provincial People's Committees need to provide thorough guidance to ensure compliance with national procedures and regulations. Specific timeframes for processing applications should be established and applied uniformly across all levels involved in the review process. For example, if additional information is required, all requests must be made within five working days of receiving the application. Once a complete application is received, it must be processed conclusively within fifteen working days, etc.

2- Signing contracts for product consumption with farmers:

Resolution No. 05/2002/NQ-CP of the Government clearly states: "encourage enterprises to sign contracts for product consumption with farmers."

On June 24, 2002, the Prime Minister issued Decision No. 80/2002/QĐ-TTg on policies to encourage the consumption of commercial agricultural products through contracts. Ministries and sectors need to promptly implement the tasks assigned in Article 8 of Decision No. 80/2002/QĐ-TTg mentioned above.

3- Reducing costs related to exports:

Directive No. 31/2001/CT-TTg of the Prime Minister allowed the continued application in 2002 of direct support measures implemented for exports in 2001. Resolution No. 05/2002/NQ-CP of the Government also permitted the continuation of the mechanism exempting export quota fees and customs duties on exported goods until the end of December 2002. Recently, the Ministry of Finance issued specific guidelines as follows:

- On March 20, 2002, the Ministry of Finance issued Circular No. 2409/TC-TCT regarding the non-collection of inspection fees for animals and plants when exporting, applicable to all organizations and individuals exporting animals, plants, and their products.

- On June 3, 2002, the Ministry of Finance issued Circular No. 5337 TC/TCT regarding the exemption of export quota fees and customs duties on all exported goods until December 31, 2002.

- On June 27, 2002, the Ministry of Finance issued Circular No. 7128 TC/TCT regarding the exemption of fees for issuing certificates of footwear exports to the EU and certificates of origin for exported goods (C/O) until December 31, 2002.

4- Market work and trade promotion:

- In accordance with the Prime Minister's directive in Directive No. 31/2001/CT-TTg, the Ministry of Trade organized four inter-ministerial teams to survey import-export activities in the United States, China, Russia, and Africa, and is currently organizing a team to visit Japan with the participation of many enterprises in various industries. Through these trips, businesses gained a clearer understanding of the market and specific customer needs, dozens of businesses established relationships with partners, and some signed memorandums of understanding and contracts worth millions of USD.

- The Ministry of Trade is actively coordinating with relevant ministries and sectors to monitor and identify new non-tariff barriers and complex situations arising, such as for seafood exports to the EU and the US, fruit and vegetable exports to China, and textile exports to the US and Japan.

5- Expanding the scope of credit support for exports according to point d, part 4 of Directive No. 31/2001/CT-TTg:

On January 24, 2002, the Development Support Fund issued Document No. 167/HTPT-VNN regarding the expansion of short-term credit loan beneficiaries for export support under Decision No. 133/2001/QĐ-TTg dated September 10, 2001 of the Prime Minister, including all exporters of goods such as rice, coffee, tea, peanut kernels, meat from livestock and poultry, canned vegetables and fruits, fresh vegetables and fruits, dried vegetables and fruits, pepper, cashew nuts, aquatic products, ceramics, furniture, rattan and bamboo products, textiles, shoes to all markets.

II. MEASURES THAT MINISTRIES AND SECTORS NEED TO CONTINUE IMPLEMENTING ACCORDING TO DIRECTIVE NO. 31/2001/CT-TTG AND RESOLUTION NO. 05/2002/NQ-CP:

1. Financial and banking solutions:

1.1 Improving the process of VAT refund and repayment:

Resolution No. 05/2002/NQ-CP assigned the Ministry of Finance:

Given the significant importance of this measure for exports, it is recommended that the Ministry of Finance strengthen coordination with relevant ministries and sectors to implement it.

1.5 Exempting interest on bank loans for households in the Central Highlands who borrowed for coffee cultivation in the 2001-2002 crop season.

Resolution No. 05/2002/NQ-CP allows: "exempting all interest on bank loans for households in the Central Highlands who borrowed for coffee cultivation in the 2001-2002 crop season. The State budget will cover the interest."

It is recommended that the State Bank and the Ministry of Finance issue specific guidelines soon.

1.6 Providing loans to implement state investment development credit projects.

Resolution No. 05/2002/NQ-CP assigned the State Bank of Vietnam to direct commercial banks to continue providing loans for ongoing state investment development projects that have been appraised and are currently being financed by the banks. For new projects appraised by the Development Support Fund, loans shall be provided in accordance with current regulations.

It is recommended that the State Bank issue specific guidelines soon.

2. Solutions for market work and trade promotion:

2.1 Improving the system of funding for market development:

Resolution No. 05/2002/NQ-CP assigned the Ministry of Finance to cooperate with the Ministry of Trade and relevant ministries to study improvements to the market support expenditure system and trade promotion measures to be submitted to the Prime Minister by May 2002. It is recommended that the Ministry of Finance strengthen cooperation with relevant ministries and sectors to promptly implement these measures.

2.2. Trade promotion work and market information in provinces and cities:

Resolution No. 05/2002/NQ-CP assigned provinces and cities to establish trade promotion support funds to assist enterprises in developing markets and promoting exports for certain products; constructing infrastructure such as warehouses, wharfs, trade centers for product introduction, trade and investment consulting, and disseminating information based on local budgets.

Currently, some provinces and major cities such as Ho Chi Minh City, Hanoi, Da Nang, Hai Phong, etc., have begun implementing this policy. It is suggested that other provinces and cities refer to the experiences of these provinces and cities to draw lessons and promptly establish suitable models in their respective areas.

- Continue to improve the process of VAT refund and issue within June 2002 regulations to correct the deduction of VAT for agricultural and aquatic export goods.

- Guide the collection of VAT for imported fertilizers and plant protection chemicals in accordance with the specific circulation characteristics of these two items;

- Provide detailed guidance on tax incentives in the field of processing or producing export goods for satellite enterprises.

- Study and propose to the National Assembly to apply a unified income tax rate for foreign-invested enterprises and domestic enterprises with the same export turnover.

It is requested that the Ministry of Finance implement the Prime Minister's directives and promptly provide specific guidelines.

1.2 Review input service costs for export goods:

Resolution No. 05/2002/NQ-CP assigned the Ministry of Finance to cooperate with the Government Price Control Board, the Ministry of Trade, and related ministries to review input service costs for exported goods to submit specific recommendations to the Prime Minister by June 2002 to reduce these costs to a reasonable level.

At present, the Ministry of Finance and the Government Price Control Board are reviewing these costs. The Ministry of Trade has issued documents to provide comments to the Government Price Control Board (regarding prices and shipping fees for telecommunications services; port service prices; bridge and road fees). It is recommended that the Ministry of Finance and the Government Price Control Board strengthen cooperation with relevant ministries and sectors to promptly develop proposals to report to the government.

1.3 Establishing insurance mechanisms for certain agricultural products:

Resolution No. 05/2002/NQ-CP assigned the Ministry of Finance to cooperate with relevant ministries and sectors to establish insurance mechanisms for certain agricultural products, initially focusing on those with significant export value, to be submitted to the government by June 2002.

It is suggested that the Ministry of Finance urgently coordinate with relevant ministries and sectors to implement this.

1.4 Studying the establishment of an import-export bank to support production loans for export goods, deferred payment, and installment sales:

Resolution No. 05/2002/NQ-CP assigned the Ministry of Finance to work with the Development Support Fund to summarize past experiences in supporting export credit, and to cooperate with the State Bank of Vietnam to develop a proposal for establishing an import-export bank to be submitted to the Prime Minister by September 2002.

2.3 Enhancing the role of industry associations:

Directive No. 31/2001/CT-TTg assigned the Government Organization and Cadre Management Department to lead and coordinate with the Ministry of Trade and relevant ministries and sectors to study and regulate the activities of industry associations to enhance their role in promoting trade and protecting the interests of members and national benefits.

It is suggested that the Government Organization and Cadre Management Department strengthen coordination with relevant ministries and sectors to implement this policy and promptly issue a decree on industry associations.

2.4 Implementing pilot programs for appointing economic counsellors specialized in industries:

To strengthen trade promotion efforts, the Prime Minister approved the pilot dispatch of specialized economic attachés for certain industries. Directive No. 31/2001/CT-TTg assigned the Government Organization and Cadre Management Department to lead and coordinate with the Ministry of Foreign Affairs, the Ministry of Trade, and production-related ministries to supplement relevant regulations for implementation.

It is suggested that the Government Organization and Cadre Management Department strengthen coordination with relevant ministries and sectors to implement this policy.

2.5 Accelerate the establishment of bonded warehouses, storage facilities, and product exhibition centers abroad.

Based on the Ministry of Trade's proposal, the government issued Document No. 301/CP-KTTH on March 22, 2002, agreeing to pilot the establishment of several Vietnamese Product Introduction Centers in the United States, Russia, and the United Arab Emirates (Dubai). The Ministry of Trade is now leading coordination with the Government Organization and Cadre Management Department, the Ministry of Finance, the Ministry of Foreign Affairs, and the Ministry of Planning and Investment to unify the model, content, operational methods, funding, and staffing of these centers to promptly implement the pilot centers according to the Prime Minister's directives.

It is hoped that relevant ministries and sectors will actively consider the proposals of the Ministry of Trade to promptly implement them.

C. REGARDING CERTAIN SPECIFIC EXPORT ITEMS:

1- Aquatic Products:

Estimated total export value for 2002 is 2.1 billion USD, an increase of 18.1% compared to 2001.

Export revenue for the first six months reached 816 million USD, a decrease of about 2.4% compared to the same period last year due to reduced selling prices, unstable supply sources, stringent antibiotic residue checks by EU countries on shrimp products, sluggish US and Japanese economies leading to decreased purchasing power... Certain products like catfish and tra fish faced delayed export schedules due to trademark disputes in the US.

In the coming months, exports to the US, China, and Hong Kong are expected to increase significantly due to the shrimp season. Exports to the EU will still face many difficulties due to increased antibiotic residue inspections. To address this issue effectively, relevant ministries and sectors need to closely coordinate with provincial governments and enterprises to implement market strategies, ensure food safety, secure raw materials for processing, promote exports, provide production and procurement credit, and regularly inform the EU about the situation to prompt the lifting of enhanced inspection orders for shrimp products. It is necessary to leverage geographical advantages to boost exports to the Chinese market, particularly southern and southwestern provinces. With signs of recovery in the US economy, efforts should be intensified to increase exports to this market while also striving to counter the US Catfish Institute's lawsuit against Vietnamese companies for dumping catfish and tra fish in the US market.

Although seafood products are currently facing difficulties, efforts must be made to achieve the export target of 2.1 billion USD for the year 2002 to compensate for the decline in other product categories.

2- Rice:

Exports for six months were approximately 1.59 million tons, achieving a value of about 343 million USD. Although the average price compared to the same period increased by about 21-23 USD/ton FOB, due to a decrease in export volume of about 19.6%, the value decreased by approximately 1.4%. The rice price in the Mekong Delta region currently fluctuates between 1750-1850 VND/kg, depending on quality and locality. At this price level, the production cost of 5% broken rice will be around 195-197 USD/ton, while 25% broken rice will be around 173-175 USD/ton. Meanwhile, the price of rice on the world market remains relatively stable, without signs of significant increases (25% broken rice from Thailand is 173 USD/ton, from Pakistan is 158 USD/ton, and from India is 130 USD/ton).

According to the Ministry of Trade, the reason for the continuous high price of rice during the peak harvest period of the Winter-Spring crop this year is that there was no carry-over rice from last year. From March onwards, a large amount of rice from southern provinces has been sold in the northern region. Preliminary calculations suggest that this quantity could reach over 500 thousand tons. In addition, unlike last year, since the beginning of this year, we have signed more than 1 million tons for export to concentrated markets, allowing enterprises to proactively purchase to await export. As of April 30, 2002, only enterprises under the Vietnam Food Association still had stockpiles of about 700 thousand tons. Furthermore, the National Reserve Agency also purchased in April and May.

Essentially, the commercial rice of the Winter-Spring crop 2001-2002 has been fully consumed, with the remaining amount insignificant, mainly serving domestic consumption. Therefore, the rice export volume this year will likely not exceed 3 million tons. In this context, efforts should be focused on implementing government contracts and advising enterprises to be cautious when signing additional trade contracts. Regarding the market, it is possible to export over 3 million tons of rice. However, due to the higher domestic rice price compared to the export price and the calculation of domestic supply, according to the Ministry of Trade, the export volume in 2002 is expected to be at the level of 2.8-2.9 million tons of rice, meaning that there is still a plan of about 1.1-1.3 million tons for the second half of the year. Contracts signed after July 1, 2002, total about 950 thousand tons (government contracts totaling about 650 thousand tons including Iraq: 300 thousand tons, Indonesia: 300 thousand, Cuba: 50 thousand; other trade contracts totaling about 250-300 thousand tons), excluding 250 thousand tons already signed with Iraq without specific delivery times. Additional export contract signings need to be carefully calculated to avoid situations where the rice price rises too high and there is no inventory to fulfill the contracts.

3- Coffee:

Export volume for six months reached approximately 359 thousand tons, valued at 137 million USD, a reduction of 33.8% in volume and 45.4% in value compared to the same period in 2001.

The coffee market recently exhibited complex performance, notably with instances where domestic prices were higher than export prices. The main cause is concern over Vietnam's production volume and the risk of El Niño combined with the psychology of holding onto coffee when prices show signs of recovery. In response, the Ministry of Trade issued a circular urging enterprises not to participate in speculative activities. To date, the domestic market has become relatively stable, with domestic prices around 6500 VND/kg, while export quotations range from 460-470 USD/T. Price recovery is unlikely to occur quickly due to the lack of significant improvement in global supply-demand balance.

Due to the reduced yield of the 2001-2002 crop, it is anticipated that the entire year of 2002 will process approximately 680-700 thousand tons, achieving a value of about 274 million USD, a reduction of 27% in volume and 30% in value compared to the previous year. The average export price nationwide is estimated at about 403 USD/ton, a decrease of 4% from 2001. To enhance export efficiency, apart from medium and long-term measures such as continuing to adjust production structure under strict supervision by the provincial People's Committee, improving quality, diversifying products..., enterprises need to maintain the discount rate relative to the London price as in recent periods (approximately 50 USD/T), and increase the export of high-quality coffee to boost export value. On the part of the Association, it is necessary to strengthen the quality of production volume forecasting and trade promotion work, and guide enterprises to comply with new coffee standards starting October 1, 2002.

Regarding the market for coffee consumption, it is generally well assured, with major markets being the EU, USA, and Japan. In the future, greater attention should be given to the Russian, Eastern European, and southern Chinese markets. Enterprises need to strive to deliver goods according to the schedule agreed upon with foreign customers.

According to coffee businesses, the current cost of state-owned coffee is too high, at around 11-12,000 VND/kg, nearly double the cost of privately owned coffee. This situation arises because state farms bear many infrastructure costs such as electricity, roads, schools, and health facilities. Currently, the electricity infrastructure is being transferred back to the power sector. For other areas, the government is requested to consider creating conditions for state farms to reduce costs.

4- Vegetables and fruits:

Export value for the first six months of the year reached 107 million USD, a decrease of 38.2% compared to the same period in 2001. The main reason is that exports to China, the primary market for Vietnamese fruits and vegetables, slowed down for some time due to certain procedural issues from the Chinese side.

Regarding the fruit and vegetable market, it is possible to achieve the planned target of 350 million USD set at the beginning of the year, but there are difficulties with supply sources, especially the raw materials primarily pineapple for processing plants, so the actual value may only reach 330 million USD, close to the actual achievement of the previous year. However, in the long term, it is necessary to form centralized raw material regions to better manage product quality and eliminate the use of banned plant protection chemicals. Post-harvest technology, particularly fruit preservation technology, needs to be invested in to reduce short-term sales pressure at the start of the season.

5- Rubber:

Export volume for the first six months reached 172 thousand tons, valued at 89 million USD, increasing by 39.8% in quantity and 25.4% in value compared to the same period in 2001. The increase in rubber export volume was mainly due to a temporary reduction in global rubber supply, with Japan's rubber inventory at its lowest level since 1968, while there were signs of a recovery in rubber demand. However, due to the long-term imbalance between supply and demand, prices could not significantly increase this year. It is expected that Vietnam's rubber exports in 2002 will reach 322 thousand tons, valued at 579 million USD, increasing by 4.5% in quantity and 12.4% in value.

To boost exports, it is necessary to continue focusing on diversifying products to gradually reduce dependence on the Chinese market, strengthen exports to EU markets, Singapore, Japan, the United States, Russia, etc., without expanding rubber plantation areas. For existing areas, efforts should be concentrated on care to improve productivity and lower costs. Areas that have exceeded their exploitation period should be cleared, land rehabilitated, and high-quality varieties replanted to ensure high-quality latex.

6- Cashew nuts:

Cashew nut exports for the first six months reached 24 thousand tons, valued at 80 million USD, increasing by 26.3% in quantity and 17.6% in value. The main export markets are China and the United States.

The world cashew market in 2002 remained sluggish as in 2001, mainly due to slow demand recovery while supply remained stable. Estimated export volume for 2002 is 42 thousand tons, valued at 150 million USD, approximately the same level as in 2001. To boost exports, it is recommended to provide support in capital, technology, and seeds to renovate current low-yielding cashew gardens, replacing them with new drought-resistant varieties with higher yields. Credit support and improvements in tax exemption and refund policies should be provided to facilitate the import of raw materials for processing and export. Efforts should also be made to enhance the production of high-end products for export while paying attention to trade issues.

In terms of markets, it is necessary to maintain and strengthen exports to the US and China markets. Additionally, Hong Kong, the Netherlands, Australia, and other new markets should be focused on.

7- Pepper::

In the first six months, exports amounted to 46 thousand tons, with a turnover of 64 million USD, increasing by 1.8% in volume but decreasing by 12.3% in value compared to the same period in 2001. Since mid-April, prices showed signs of recovery following news that Vietnam's production would decrease by about 20% this year due to drought (current domestic prices have exceeded 20,000 VND/kg). It is forecasted that full-year 2002 exports will amount to around 50,000 tons, a decrease of about 12-13% from 2001, but the value may not decrease, possibly even slightly increasing.

To boost and improve the effectiveness of exports, striving to bring our pepper prices closer to the world average, it is necessary to renovate varieties, techniques, and encourage enterprises to invest in post-harvest stages to ensure product uniformity and quality.

In terms of markets, it is necessary to continue strengthening exports to the EU (mainly the Netherlands and Germany), the United States, Russia, and China, and limit the re-exporting of Vietnamese pepper through intermediary markets for reprocessing.

8- Electronic goods and computer components::

As of June 2002, the export value of electronic goods and computer components reached 230 million USD, achieving 30% of the 2002 target (750 million USD).

This result is very low, of course, there are many related factors, but three main reasons can be attributed: saturated market, unstable product quality, and insufficient development of industrial electronics, computers - software compared to consumer electronics. From now until the end of 2002, monthly estimated exports are expected to range from 45 to 50 million USD, reaching up to 60 million USD in November and December, which would only achieve 300 million USD, totaling 530 million USD for the whole of 2002, equivalent to only 70% of the plan.

Overall, electronic goods do not lack consumption markets, beyond Southeast Asia and Europe, we are also approaching Africa, the Middle East, and America. The main issue is that our exported electronic goods lack competitive ability (mainly price, quality, and delivery conditions).

It is suggested that the Ministry of Industry and Viettel Electronics Corporation quickly discuss measures to address difficulties and increase the export value of electronic goods.

9- Textiles and garments:

Export turnover in June 2002 is expected to reach 200 million USD. The estimated export turnover for the first six months of 2002 is about 990 million USD, increasing by 3% compared to the same period in 2001 and achieving 41.25% of the 2002 plan (2.4 billion USD).

The 3% growth rate for the first six months of 2002 is a low growth rate compared to the same period in 2000 (7.6%) and 2001 (19%), and much lower than the planned growth rate for 2002 of 15.4%. The reasons include a decline or trend towards decline in exports to some major markets such as:

The Japanese market is the largest export market, accounting for 34% in 2001, decreasing by 25% in the first six months of 2002, equivalent to 55 million USD, due to Japan's continued economic downturn, with a projected growth rate of (-1%) in 2002 leading to reduced purchasing power and unclear signs of recovery in 2002.

The EU market accounted for 33% in 2001, increasing by only 3.3% (equivalent to 8 million USD) in the first six months of 2002, due to: Goods exempted from quotas in phase 3 among WTO member countries (including China and Taiwan) under the ATC Agreement implemented from October 1, 2002, competed with Vietnam's exports, reducing Vietnam's export value to these markets. Additionally, textile and garment quantities increased by about 16% compared to the same period last year, but export value did not increase significantly due to a 10% price reduction.

Forecast for exports in the second half of 2002:

In 2002, the production capacity of textiles and garments increased significantly. Some factories expanded their production scale by 2-3 times, and many new factories were established, but they did not fully meet partner orders from the US. Most factories are currently operating at full capacity, and trained workers are insufficient, leading to competition among factories for workers. While job shortages and factory closures have not occurred, export efficiency has not been high due to low US export prices and difficult-to-complete orders.

With the joint efforts of all levels and sectors, along with the implementation of the Vietnam-US Trade Agreement from late 2001 and the fact that Vietnamese textiles and garments exported to the US are not yet subject to quotas, Vietnamese textiles and garments have the opportunity to grow rapidly. Specifically, regarding the market and production capacity of textiles and garments for export in 2002, it is possible to strive to achieve the set target of 2.4 billion USD, increasing by 19% compared to 2001 (1.975 billion USD). Therefore, the remaining export task for the last six months is 1.41 billion USD. An average of 230 million USD must be exported each month in the last quarter to complete the plan.

To achieve such figures, according to the Ministry of Commerce, in the future, it is necessary to implement the following matters well:

- Negotiate with the EU to increase quotas and abolish certain goods that WTO member countries applied from January 1, 2002.

- Strengthen measures against fraud.

- Promptly establish management and utilization mechanisms for quota allocations for textile and garment exports to the EU, Canada, and Turkey in 2003 to allow enterprises to sign contracts and receive raw materials for production and export immediately in the fourth quarter of 2002.

- Request the Ministry of Finance to promptly issue a decision on export incentives based on export turnover for textile and garment products (excluding those exported to the EU, Canada, and Turkey with quota restrictions) and footwear, in accordance with the conclusion of Deputy Prime Minister Nguyen Manh Cam in Notification No. 132/TB-VPCP dated October 3, 2001.

- Provide financial support for the construction of specialized wholesale and retail centers for textile and garment products and footwear (both domestically and in potential foreign markets) including warehouses and stores in major import markets such as the United States, the EU, Japan, etc.

- Urgently implement policies to reduce input costs (without increasing electricity, water prices; telecommunications service fees; transportation and port charges; and supporting infrastructure investment for production such as technological research...) to lower export costs, thereby enabling textile and garment products to compete effectively with those from other countries, given that our export prices are still trending upwards.

- Financially support vocational training institutions for garment making (clothing, footwear), particularly in training technical workers and workshop supervisors to meet current sudden increases (increasing land and tax incentives, expanding vocational training institutions, providing preferential loans to purchase training equipment...).

- Enterprises themselves must:

+ Find every means to reduce costs, improve product quality, and enhance the competitiveness of goods.

+ Gradually apply ISO standards: 9001, 14000, SA 8000 to enhance reputation and product quality, thereby attracting new customers and retaining existing ones. Proactively seek new markets and customers.

+ Implement business linkages within the region to expand production scale and improve capacity to fulfill large orders - this is particularly significant for the U.S. market due to its large orders and short delivery times.

+ Pay utmost attention to industrial hygiene and environmental factors to maintain traditional markets, especially the EU and Japan markets.

+ Expand in-house training to meet worker needs and improve skills, applying advanced technology.

- The role of the Textile and Garment Association needs to be enhanced further in providing information, coordination, and preventing unfair competition among enterprises that reduces export prices...

10- Footwear:

Export value in the first six months is estimated to reach 892 million USD, increasing by 10.6% compared to the same period in 2001, accounting for 46.2% of the annual plan.

The main markets are Western European countries, which have seen high growth in quantity but not in value; the second largest market is the United States, with a high growth rate of 18-20% in trade turnover, yet still not commensurate with production capacity. Export turnover to the U.S. is expected to increase rapidly in the coming months, reaching a projected $200 million in 2002 (up 75.43% compared to 2001).

Considering the market and production/export situation of the leather and footwear industry in 2002, it is possible to achieve the plan of 1.9 billion USD. From now until the end of the year:

- Enterprises must strictly comply with the Anti-Smuggling Trade Agreement signed between the Government of Vietnam and the EU (issues related to export prices, origin of raw materials and finished products...) and adhere to international trade laws to prevent investigations into unfair trade practices such as dumping or misrepresentation of origin. (Currently, the Ministry of Trade, together with the Ministry of Industry and relevant sectors, is addressing a Dumping Investigation by the Canadian Government against six Vietnamese enterprises exporting shoes and non-waterproof shoe soles to the Canadian market.)

- Maintain and improve the quality and reputation of Vietnamese footwear products in export markets.

- Invest in technology, increase the value of exported products, enhance the competitiveness of Vietnamese footwear, and shift from processing to selling FOB.

- Vigorously develop new markets, especially the US market, which is a large purchasing market, and restore traditional markets such as the Russian Federation and Eastern Europe./.

This is the report of the Ministry of Commerce on measures to promote exports in the last six months of 2002, submitted for the conference to consider and discuss./.

MINISTRY OF TRADE