Circular No. 5337/TC/TCT regarding the exemption of fee collection for exported goods

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

 

In accordance with the directive of the Prime Minister in Document No. 3302/VPCP-KTTH dated June 14, 2002 from 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, State Bank of Vietnam, 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; the Ministry of Planning and Investment, Ministry of Finance, Ministry of Industry, and General Department of Customs did not have representatives present. At the meeting, the Ministry of Trade reported on the import-export situation for the first six months of the year, 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 key export products. The meeting generally agreed with the report of the Ministry of Trade. In addition, representatives from various ministries, sectors, enterprises, and industry associations raised additional recommendations mainly aimed at addressing difficulties in implementing measures already 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 estimated export turnover for the first six months reached 7.25 billion USD, a decrease of 5.9% compared to the same period in 2001. The reasons for this decline were due to many challenges and difficulties faced by exports in 2002, especially in the early months of the year.

Based on the results of the first six months' exports, considering the prospects for the world and domestic economic and trade situations in the latter part 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 showing positive growth towards the end of the third quarter or beginning of the fourth quarter of 2002. However, the annual export growth rate is likely to be lower than the target set by the National Assembly's tenth session. After reviewing the export potential of each key product 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 16,050 million 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 last year, with raw materials and components for production and foreign-invested enterprises increasing rapidly, while domestically-owned enterprises decreased slightly, similar to the export trend. The main reason was the stable exchange rate of the domestic currency and the reduction in prices of imported goods worldwide. Due to negative export growth, the trade deficit for the first six months was 1.154 billion USD, accounting for 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 latter part of the year due to higher projected export growth rates.

B. REGARDING THE MECHANISMS AND POLICIES TO ENCOURAGE EXPORTS:

Since late 2001, the Government and the Prime Minister have provided very detailed and resolute guidance on import-export activities. On December 13, 2001, the Prime Minister issued Directive No. 31/2001/CT-TTg on strengthening and enhancing the effectiveness of import-export activities 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. Additionally, there are other recommendations that require further study and implementation or reporting to the Prime Minister for guidance, 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 activities since the beginning of 2002. Specifically, four inter-ministerial delegations have been organized to survey import-export activities in markets such as the United States, China, Russia, and Africa, and another delegation is being organized to Japan with the participation of a large number of enterprises from various sectors. 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 for seafood exports to the EU and the US, fruit and vegetable exports to China, textile exports to the US and Japan. Regarding import management mechanisms, the Ministry of Trade has developed a proposal to apply new import management 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 Cadre Board and relevant ministries and sectors to pilot the dispatch of specialized economic attachés for each sector according to Directive No. 31/2002/CT-TTg, and develop a proposal to supplement staff for the Vietnamese Commercial Representative Offices 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. Quickly promote the establishment of centers to introduce Vietnamese products in the United States, Russia, and the United Arab Emirates (Dubai) as directed by the Prime Minister in Circular 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:

Implement 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 regarding rewards for export turnover in 2002; guidance documents on exempting and reducing certain costs related to exports in 2002, including exemption from collection of quota export fee, customs fee, certification fee for exporting shoes to the EU, and export origin certificate fee, exemption from inspection fees for animals and plants exported. The Development Support Fund also issued Document No. 167/HTPT-VNN regarding expanding short-term credit loan recipients supporting exports under Decision No. 133/2001/QD-TTg to include all traders exporting goods such as rice, coffee, tea, peanut kernels, livestock meat, poultry meat, canned vegetables, fresh vegetables, dried vegetables and processed vegetables, pepper, cashew nuts, seafood, porcelain, pottery, furniture, rattan and bamboo products, textiles, footwear 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 in 2002 has made some improvements, specifically expanding the reward recipient group and decentralizing the review of application files to provinces. However, to further facilitate businesses, the Commerce Department of Ho Chi Minh City suggests that the review of application files should be conducted by the Commerce Department and the Export Support Fund disbursement should be handled by the Finance Department. Under this approach, business reward application files do not need to be transferred to Hanoi, and localities may consider adding supplementary rewards for businesses in addition to 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 refund process for VAT and promptly issue regulations to standardize the tax deduction mechanism for agricultural and aquatic products exported: guide the collection of VAT on imported fertilizers and pesticides 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 quickly implement improvements to the export market development support and trade promotion system 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 is still not convenient due to complex procedures. It is suggested that the Ministry of Finance and the Development Support Fund organize a meeting to summarize experiences in export credit support over the past period, and develop a proposal to establish an Import-Export Bank in accordance with the spirit of Resolution No. 05/2002/NQ-CP of the Government.

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

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

Resolution No. 05/2002/NQ-CP allows: "exemption of all interest on loans for farmers in the Central Highlands provinces for caring for coffee gardens during the 2001-2002 crop season. The State Bank will cover the interest." It is suggested 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 some commercial banks to sign memorandums of understanding on payments with Russian commercial banks. It is suggested that the State Bank issue specific notifications 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 suggested that the State Bank promptly provide specific guidance on implementing the aforementioned agreement.

4. Resolution No. 05/2002/NQ-CP assigns the State Bank of Vietnam to instruct commercial banks to continue providing loans 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, loans should be provided according to current regulations. It is suggested that the State Bank promptly provide specific guidance.

III. OTHER ISSUES:

1. On June 24, 2002, the Prime Minister issued Decision No. 80/2002/QĐ-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/QĐ-TTg, promptly bringing the State's policy into practical life.

2. Directive No. 31/2001/CT-TTg assigned the Government Organization-Cadres Department to take the lead, coordinating with the Ministry of Trade and relevant ministries and sectors to study and rectify the activities 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 export situation in 2002, they must face many challenges. The solutions to encourage exports permitted by the Prime Minister in Directive No. 31/2001/QĐ-TTg and Resolution No. 05/2002/NQ-CP are relatively comprehensive and when implemented will serve both as short-term measures and as measures effective in the medium term for exports. The remaining issue is to continue to focus on implementing these measures well, 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 recommends that the Prime Minister continue to direct relevant ministries and sectors to promptly implement them, quickly putting mechanisms and policies into practice, contributing to improving the effectiveness and export value in the last six months of 2002 to approach the target set by the National Assembly for 2002, laying the foundation for export growth in subsequent years.

Above is the Memorandum of the Ministry of Trade 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 Trade on some policies and measures to boost exports in the last months of 2002 for the Export Coordination Meeting. The Ministry of Trade 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 estimated export turnover for the first six months was 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%), peanut kernels (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 (-38%), pepper (-12.5%), and electronic components (-28.4%).

The main reasons for the decrease in export turnover are:

- The quantity of exports of certain 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 increased by nearly 5%, the main product shrimp decreased by more than 3%.

- The world economy and trade remain sluggish, with weak purchasing power causing prices to recover slowly, and in some commodities, prices even continued to decline compared to the same period in 2001. Losses due to low export prices are estimated at around 400 million USD. Due to price reductions, some commodities saw significant increases in volume such as rubber, peanut kernels, and tea, but turnover did not increase accordingly.

- The global trade environment is 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 have little 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 foreign-invested enterprises with machinery, equipment, and spare parts accounting for 18.1%; raw materials for production and processing of export goods at 30.4%; and industrial zones importing at 13%.

Some major commodities saw significant increases in volume compared to the same period in 2001, such as yarn by 43.9%, fertilizers by 39.1%, automobile kits and assembly 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%, gasoline by 7.6%, and pharmaceuticals by 10%. Meanwhile, some commodities saw significant decreases in imports such as motorcycles by 65.8%, complete automobiles 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 of various types, an increase of 39.1% compared to the same period in 2001. Imports increased mainly due to low fertilizer prices on the international 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, phosphorus fertilizer 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 six months, the price of gasoline and diesel on the international market continued to rise (except for a slight decrease in June), affecting production and business operations. However, with four adjustments in import tax rates, the State ensured benefits for businesses engaged in the supply of gasoline and diesel.

At present, a matter of concern is that enterprises engaged in importing gasoline and diesel are unable to purchase foreign currency, making imports very difficult. It is recommended that relevant ministries and sectors actively implement measures to support.

Motorbike assembly components: The import volume for six months was 332 thousand sets, a decrease of 65.8% compared to the same period in 2001. Among which, the quantity imported from China decreased by 93% (due to new State decisions strictly managing the importation of motorbike components):

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

Paper: The import volume for six months increased by 28.4% compared to the same period in 2001 due to increased demand while world market prices decreased (approximately 9.7%), and since May 1, 2001, paper for printing newspapers has been subject to a reduced value-added tax of 5% without quota management.

Salt: According to the Ministry of Agriculture and Rural Development, favorable weather conditions in 2002 are expected to result in a salt production of approximately 880 thousand tons, an increase of 300 thousand tons compared to 2001. The price of salt purchased from households ranges from 350 to 400 dong per kilogram in the North, 200 to 300 dong per kilogram in Central Vietnam, and 250 to 300 dong per kilogram in the South – only about 50% of the sharp increase in price 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, etc.). While the total supply is around 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, importing salt is not economically viable.

On October 29, 2001, the Government issued Circular No. 975/CP-KTTH temporarily placing edible salt under specialized sector management, with imports requiring permits from the Ministry of Agriculture and Rural Development. Currently, relevant ministries and sectors are coordinating to implement pilot application of tariff quotas for imported salt based on the spirit of Circular No. 1160/CP-KTTH dated December 24, 2001, issued by the Government.

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

In summary, the notable feature of the first six months is: rapid increases in imports of raw materials for production and in foreign-invested enterprises; domestic enterprises' imports have decreased, nearly matching the overall import levels. The main reasons are stable domestic currency exchange rates, lower global import prices, and particularly negative export growth. As a result, during the first six months, trade in goods and services recorded a trade deficit of $969 million (with service exports having a surplus of $185 million and goods imports having a deficit of $1.154 billion, equivalent to 15.9% of goods export turnover, a relatively large deficit in recent years). In the remaining months of the year, the trade deficit is expected to improve due to higher projected export growth.

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

Exporting in 2002 will face many challenges and difficulties, especially in the early months. Compared to the end of 2001, the world economic and trade situation has not significantly improved, purchasing power remains weak, prices are slow to recover, and new barriers have emerged. Issues such as labor, environment, food safety, and brand disputes raised excessively by importing countries have affected our exports, particularly in seafood and textiles. Domestically, export supplies also face some limitations, partly due to structural changes in agriculture and partly due to drought in many areas. Therefore, although monthly export turnover has increased continuously since March, reaching an estimated $1.42 billion in June (the highest monthly figure since the beginning of 2001), the total export turnover for the first six months still decreased by 5.9% compared to the same period last year. Excluding crude oil, other products had a lower decline rate (-2.7%). This situation requires significant efforts and endeavors from all sectors, levels, and enterprises to approach the target set by the 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 domestically and internationally in the remaining months of the year, after reviewing the export capacity of key products, the Ministry of Commerce predicts 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 reach positive growth by 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 billion, an increase of 6.8% over 2001, accounting for 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 billion (details can be found in the attached annex).

B. REGARDING THE GENERAL MECHANISM TO ENCOURAGE EXPORTS:

To achieve the export growth target of 10-13% as set 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 enhancing and improving the efficiency of import and 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 gave special attention to promoting 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 for expanding the scope of entities eligible for bonuses based on export turnover in 2002. On May 21, 2002, the Ministry of Finance issued Decision No. 63/2002/QD-BTC to announce bonus levels for certain goods. Among the 13 groups of goods eligible for bonuses, 11 groups belong to the agricultural and rural economic 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 fully leverage the positive effects of the bonus system and facilitate traders, the review of application files has been delegated to provinces. Provincial People's Committees need to closely direct and ensure compliance with national procedures and regulations. The time frame for processing applications should be clearly defined and applied at all levels involved in the review process. For example, if additional information or corrections to the application are required, all such requests must be made within five working days from the date of receipt of 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 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 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, animal and plant 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 export certificates for shoes and leather goods destined for the EU and export origin certificates (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 Commerce organized four inter-ministerial teams to survey import and export activities in the United States, China, Russia, Africa, and is currently organizing a team to visit Japan with the participation of many enterprises. Through these trips, enterprises have gained a clearer understanding of the market and specific customer needs, with dozens of enterprises establishing relationships with partners, and some signing memorandums and contracts worth millions of US dollars.

- The Ministry of Commerce 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, vegetable and fruit exports to China, and textile and garment 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 Circular No. 167/HTPT-VNN to expand the scope of short-term credit support for exports under Decision No. 133/2001/QĐ-TTg dated September 10, 2001 of the Prime Minister, including all exporters of rice, coffee, tea, peanut kernels, beef, poultry, canned fruits, fresh fruits, dried fruits and processed fruits, pepper, cashew nuts, seafood, porcelain, furniture, rattan and bamboo products, textiles, and footwear 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 instruct commercial banks to continue providing loans to implement state investment development credit projects that have been appraised and are ongoing. New projects appraised by the Development Support Fund should be provided loans 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 coordinate with the Ministry of Commerce and relevant ministries to study improvements to the funding system for market development and trade promotion, to be submitted to the Prime Minister by May 2002. It is recommended that the Ministry of Finance strengthen coordination with relevant ministries and sectors to promptly implement this measure.

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

Decision No. 05/2002/NQ-CP has 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, product exhibition centers, commercial advisory services, investment information dissemination based on local budgets.

Currently, some provinces and major cities like Ho Chi Minh City, Hanoi, Da Nang, Hai Phong have begun implementing this policy. It is suggested that other provinces and cities refer to the experience of these places 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:

Decision No. 05/2002/NQ-CP assigns the Ministry of Finance to coordinate with the Government Price Control Board, the Ministry of Trade, and relevant ministries to inspect and review input service costs for export goods to submit specific recommendations to the Prime Minister in June 2002 to reasonably reduce these costs.

Currently, the Ministry of Finance and the Government Price Control Board are reviewing these costs. The Ministry of Trade has provided comments to the Government Price Control Board regarding communication service prices and fees, port service prices, bridge and road fees. It is suggested that the Ministry of Finance and the Government Price Control Board strengthen coordination with relevant ministries and sectors to promptly develop a proposal to report to the government.

1.3 Establishing insurance mechanisms for certain agricultural products:

Decision No. 05/2002/NQ-CP assigns the Ministry of Finance to coordinate 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 in 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:

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

2.3 Enhancing the role of industry associations:

Directive No. 31/2001/CT-TTg assigns the Government Organization and Cadre Management Department to lead and coordinate with the Ministry of Trade and relevant ministries and sectors to study and improve the operations 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 work, the Prime Minister has approved the implementation of pilot programs for appointing economic counsellors specialized in industries. Directive No. 31/2001/CT-TTg assigns 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 study and supplement related 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.

Recently, based on the proposal of the Ministry of Trade, the government issued Document No. 301/CP-KTTH dated March 22, 2002, agreeing to pilot the establishment of several product exhibition centers in the United States, Russia, and the United Arab Emirates (Dubai). Currently, the Ministry of Trade is leading the 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, operation methods, funding, and staffing of these centers to promptly implement pilot projects 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 value in 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, weakened purchasing power in Japan and the US economy, and disputes over trademarks in the US affecting catfish and basa fish exports.

In the coming months, exports to the United States, China, Hong Kong are expected to increase significantly due to the shrimp season. Exports to the EU will continue to face many difficulties due to increased antibiotic residue testing. To effectively address this issue, relevant ministries and sectors need to closely coordinate with provincial People's Committees and enterprises to implement market solutions, ensure food safety, secure raw materials for processing, provide export incentives, offer production and purchase credit, and regularly inform the EU about the situation to prompt the EU to lift the enhanced inspection measures on shrimp products. It is necessary to take advantage of geographical advantages to strengthen exports to the Chinese market, particularly southern and southwestern provinces. With signs of economic recovery in the United States, efforts should be intensified to increase exports to this market while also striving to combat lawsuits filed by the U.S. Catfish Association against Vietnamese companies for dumping catfish and basa fish in the U.S. 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:

Export volume for six months was approximately 1.59 million tons, achieving a value of around 343 million USD. Despite the average price increasing by about 21-23 USD per ton FOB compared to the same period last year, the export volume decreased by about 19.6%, resulting in a value decrease of approximately 1.4%. The current rice price in the Mekong Delta ranges from 1750 to 1850 VND per kg, depending on quality and locality. At this price level, the cost of 5% broken rice would be around 195-197 USD per ton, and 25% broken rice would be around 173-175 USD per ton. Meanwhile, the global rice market prices remain relatively stable without significant increases (Thai 25% broken rice at 173 USD per ton, Pakistan at 158 USD per ton, India at 130 USD per ton).

According to the Ministry of Trade, the continuous high price of rice during the peak harvest period of the Winter-Spring crop is mainly due to the absence of carryover rice from last year, and since March, 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. Additionally, unlike last year, we have signed more than 1 million tons of export contracts to concentrated markets since the beginning of the year, allowing enterprises to proactively purchase to await export (as of April 30, 2002, enterprises under the Vietnam Foodstuff Association still had stockpiles of about 700 thousand tons). Furthermore, the National Reserve Corporation also purchased in April and May.

Essentially, the Winter-Spring 2001-2002 crop rice has been fully consumed, with only a negligible amount remaining in the hands of farmers primarily for domestic consumption. Therefore, the rice export volume this year will likely not exceed 3 million tons. In this context, efforts should focus on implementing government contracts and advising enterprises to be cautious when signing additional commercial contracts. Regarding the market, it is possible to export more than 3 million tons of rice. However, given the higher domestic rice price compared to export prices and the calculation of domestic supply, according to the Ministry of Trade, the export volume for 2002 is estimated at 2.8 to 2.9 million tons of rice, meaning there is a plan for approximately 1.1 to 1.3 million tons in the second half of the year. Contracts signed after July 1, 2002 total about 950 thousand tons (government contracts totaling 650 thousand tons including Iraq: 300 thousand tons, Indonesia: 300 thousand, Cuba: 50 thousand; other commercial contracts totaling 250 to 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 rice prices rise and there is no inventory to fulfill 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 has shown considerable complexity recently, notably with domestic prices sometimes exceeding export prices. The main cause is concern over Vietnam's production volume and the El Niño risk, 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 engage in speculative activities. Currently, the domestic market has stabilized, with domestic prices around 6500 VND per kg while export offers range from 460 to 470 USD per ton. Price recovery is unlikely to occur quickly due to the lack of significant improvement in global supply-demand balance.

Due to the reduced production volume for the 2001-2002 season, it is anticipated that the entire year of 2002 will process approximately 680 to 700 thousand tons, achieving a value of around 274 million USD, a reduction of 27% in volume and 30% in value compared to 2001. The average export price nationwide is estimated at 403 USD per 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 provincial People's Committees, improving quality, diversifying products... enterprises need to maintain the discount rate relative to London prices as in recent periods (approximately 50 USD per ton), and increase the export of high-quality coffee to boost export value. On the part of the Association, it is necessary to strengthen forecasting work and trade promotion, and guide enterprises to comply with new coffee standards starting October 1, 2002.

Looking at the coffee consumption market, overall it remains assured, with major markets being the EU, the United States, and Japan. In the future, greater attention should be paid 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, ranging from 11 to 12 thousand VND per kg, nearly double the cost of privately owned coffee. This situation arises because state farms bear a large number of 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:

The 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 was that exports to China, the primary market for Vietnamese fruits and vegetables, were temporarily stagnant due to some procedural issues from the Chinese side.

Regarding the fruit and vegetable market, the expected export plan at the beginning of the year was 350 million USD, but there were difficulties with supply sources, particularly the main raw material, pineapple, supplied to processing factories, which may result in only reaching an export value of 330 million USD, approximately the level achieved in 2001. However, in the long term, it is necessary to quickly form concentrated raw material areas to better manage product quality and eliminate the use of prohibited plant protection chemicals. Post-harvest technology, especially fruit preservation technology, needs to be invested in to reduce short-term consumption pressure.

5- Rubber:

Export volume for the first six months of the year 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 exports mainly resulted from a temporary reduction in global rubber supply, with Japan's rubber inventory at its lowest level since 1968, while demand showed signs of recovery. However, due to the lack of long-term improvement in supply and demand balance, prices could not significantly increase this year. It is forecasted 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 yield 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 like in 2001, mainly due to slow demand recovery while supply remained stable. It is estimated that the export value for 2002 will reach 42 thousand tons, valued at 150 million USD, approximately the level achieved in 2001. To boost exports, it is recommended to provide support in capital, technology, and seeds to renovate low-yielding cashew orchards, introduce new drought-resistant varieties with higher yields, enhance credit support and improve tax exemption and refund systems to facilitate the import of raw materials for processing and export. Increase the production of high-end products for export while paying attention to raw material 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::

Exports for the first six months reached 46 thousand tons, valued at 64 million USD, increasing by 1.8% in quantity but decreasing by 12.3% in value compared to the same period in 2001. Since mid-April, prices began to recover after news of a 20% reduction in Vietnam's pepper production this year due to drought (current domestic prices have exceeded 20,000 VND/kg). It is forecasted that Vietnam will export about 50 thousand tons in 2002, a 12-13% decrease from 2001, but the value may not decrease, possibly even slightly increase.

To boost and improve the effectiveness of exports, striving to bring Vietnam's pepper price closer to the world average, it is necessary to renovate varieties, techniques, and encourage enterprises to invest in post-harvest processes 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 is a very low achievement, of course, influenced by many factors, but three main reasons include: saturated markets, unstable product quality, and insufficient development of industrial electronics and computer software compared to consumer electronics. From now until the end of 2002, if monthly exports are estimated to be between 45 and 50 million USD, with November and December possibly reaching 60 million USD, the total annual export value would only reach 300 million USD, totaling 530 million USD for the whole year, equivalent to 70% of the target.

Overall, the electronics industry does not lack consumption markets, beyond Southeast Asia and Europe, we are also approaching Africa, the Middle East, and the United States. The main issue is that Vietnam's exported electronics lack competitive ability (mainly in 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:

The export value for June 2002 is expected to reach 200 million USD. The export value for the first six months of 2002 is estimated to be around 990 million USD, a 3% increase 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 reason is that exports to some major markets have decreased or are trending downward, such as:

The Japanese market is the largest export market, accounting for 34% in 2001, but decreased by 25% in the first six months of 2002, equivalent to 55 million USD, due to continued economic decline in Japan, with a forecasted negative growth of 1% in 2002, leading to reduced purchasing power and unclear signs of recovery in 2002.

The EU market in 2001 accounted for 33%, and in the first six months of the year, it only increased by 3.3% (equivalent to 8 million USD) due to: Goods that were exempted from quotas in phase three between countries that are members of the WTO (including China and Taiwan) under the ATC Agreement implemented from October 1, 2002, competed, reducing Vietnam's export value to these markets. In addition, the quantity of textile and garment products increased by about 16% compared to the same period last year, but the export value did not increase much due to a price reduction of about 10%.

Forecast for exports in the second half of 2002:

In 2002, the production capacity of textile and garment products increased significantly. Some factories expanded their production scale by 2 to 3 times, many new factories were established, but in reality, they could not meet all orders from US partners. Most factories are currently operating at full capacity, and trained workers are insufficient, leading to competition among factories for workers. Unemployment and factory closures have not occurred, but export efficiency is not high due to low export prices to the US and difficulties in fulfilling orders.

With the efforts of all levels and sectors, along with the implementation of the Vietnam-US Trade Agreement becoming effective from late 2001 and textile and garment products exported to the US not yet subject to quotas, Vietnamese textile and garment products have the opportunity to grow rapidly. Specifically, regarding the market and production capacity of textile and garment products for export in 2002, it is possible to strive to achieve the planned target of 2.4 billion USD, an increase of 19% compared to 2001 (1.975 billion USD). Therefore, the remaining export task for the second half of the year is 1.41 billion USD. An average of 230 million USD must be exported each month 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.

- Issue early mechanisms for managing and using quotas for textile and garment products exported to the EU, Canada, and Turkey markets in 2003 so that businesses can sign contracts and procure raw materials for production immediately in the fourth quarter of 2002.

- Request the Ministry of Finance to issue a decision on export bonuses based on export value for textile and garment products (excluding those exported to the EU, Canada, and Turkey with quotas) and leather shoes according to the conclusion of Deputy Prime Minister Nguyen Manh Cam in Notification No. 132/TB-VPCP dated October 3, 2001.

- Provide capital to build some wholesale and retail centers for textile and garment products, shoes (both domestically and in potential foreign markets) including warehouses and stores in major import markets such as the US, EU, Japan...

- Urgently implement policies to reduce input costs (do not increase electricity, water prices; telecommunications service usage fees; transportation and port charges; support infrastructure investment such as technology research...) to lower export costs, thereby enabling textile and garment products to compete with those from other countries because our export prices are still trending upwards.

- Financially support vocational schools teaching sewing (clothing, leather shoes), especially training technical workers and workshop supervisors to meet the current sudden increase (increase land, tax incentives, provide 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, quality, and attract more new customers while maintaining existing ones. Proactively seek markets and customers.

+ Implement business linkages within the region to expand production scale and improve the ability to fulfill large orders - this is particularly significant for the US 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 market is Western Europe, where there has been a high increase in quantity but not in value; the second largest market is the United States, with a high growth rate of 18-20% in export value but still not commensurate with production capacity. The export value to the US is expected to increase rapidly in the coming months, reaching the projected figure of 200 million USD in 2002 (an increase of 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 need to strictly implement the Anti-Fraud Trade Agreement signed between the Government of Vietnam and the EU (issues related to export prices, origin of raw materials and finished products...) and comply with international trade laws, avoiding investigations into fraudulent trade practices such as dumping or mislabeling of origin. (Currently, the Ministry of Commerce, together with the Ministry of Industry and relevant sectors, is resolving 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