VietNam Business: economic

Showing posts with label economic. Show all posts

Sunday, February 20, 2011

ADB finds dollars dull SE Asian financial controls

ADB finds dollars dull SE Asian financial controls Vietnam has made progress in dealing with dollarization but more efforts are needed to enhance confidence in the local currency, the Asian Development Bank said in a statement last week.

The Manila-based bank just published a study about the economic impact of having multiple currencies circulate in Vietnam, Laos and Cambodia. In these countries, the bank found, foreign currencies are widely used, particularly the US dollar.

“The share of foreign currencies ranges from around 20 percent of all currency in circulation in Vietnam, about 50 percent in Lao PDR, and more than 90 percent in Cambodia,” the bank said.

ADB said that, aside from certain benefits, the use of multiple currencies reduces economic authorities’ control over monetary and exchange rate policies.

“Dollarization blunts the tools for macroeconomic stabilization, especially monetary and exchange rate policy, that a country like Vietnam needs in order to tackle a variety of economic and developmental challenges, such as rising inflation,” said Jayant Menon, Principal Economist in ADB’s Office of Regional Economic Integration.

“Vietnam has made good progress in de-dollarization,” says Ayumi Konishi, ADB Country Director. “Yet, authorities, especially the State Bank of Vietnam, are fully aware that administrative measures alone cannot be effective… it is essential to enhance people’s confidence in Vietnamese dong through sustainable and high economic growth, stabilization of the foreign exchange rate, reforms in monetary policies, and strengthening of the capacity of financial institutions.”

The study also suggested that “sharing information and experiences would help the monetary authorities of Cambodia, Lao PDR, and Vietnam to find a solution to the dollarization issue.” The three countries have a lot to gain from closer cooperation, it added.

Thursday, February 17, 2011

Co-operatives ‘are still a vital force'

HA NOI — Vietnamese co-operatives had made much progress in improving living conditions, especially in rural areas, and creating jobs, Deputy Prime Minister Hoang Trung Hai said here yesterday.

Hai, who was speaking at the third Patriotism Emulation Congress of the Viet Nam Co-operatives Alliance, urged co-operatives to fully utilise their economic potential.

Co-operatives have been the core of the collective economic sector in Viet Nam for more than 50 years. They operate on the voluntary participation of individuals and organisations and are particularly strong in rural areas.

Together with economic sectors run by the State, collective economic sectors are the foundation of Viet Nam's multi-sector economy.

Co-operatives enable members easier access to capital and techniques.

At the congress, the co-operatives alliance summarised the outcome of emulation movements launched five years ago to raise the effectiveness of co-operatives in alleviating poverty and building a new rural model.

"The two movements helped speed up the development of the collective economic sector with new models of large-scale co-operatives that offered jobs and improved living conditions for millions of labourers," said Hai.

Vice chairman of the alliance Nguyen Van Bien said that at present, Viet Nam had more than 18,200 co-operatives, 53 unions of co-operatives and 360,000 co-operative groups, 20 per cent higher than in 2005.

The sector created jobs for more than 12.5 million labourers in different economic fields, especially agriculture, handicrafts and aquaculture.

Moreover, Bien said, co-operatives also mobilised money from members to shift the economic structure and expand production.

For example, more than 1,000 credit funds offered loans worth a total of VND21 trillions (US$1billion). More than 80 per cent of the loans were used to help co-operative members develop agriculture and handicrafts.

The collective economic sector contributed about 5.45 per cent of the national gross domestic product, joining hands to reduce poverty rates in the last five years from 30 to 14 per cent.

However, the collective economic sector in general and the co-operatives in particular still face shortcomings. They often lack the management ability to provide close co-ordination with other co-operatives or with other sectors. — VNS

Monday, December 27, 2010

Government focuses on prices, power shortage

The government will focus on implementing measures to control prices and
deal with power shortage in the remaining months of this year,
according to Prime Minister Nguyen Tan Dung.

The PM made the statement at the cabinet’s September meeting on
September 30, which discussed the nation’s socio-economic performance in
the past nine months and socio-economic tasks in the fourth quarter.

PM
Dung said he will soon issue Instructions on solutions to control
prices and stabilize the market from now to the year-end and early 2011.

Putting
the emphasis on the close connection between prices and monetary and
credit policies, the PM underscored the need to continue keeping stable
the prime interest rate.

He asked relevant ministries and
agencies to be proactive and flexible in executing monetary policies in
service of economic growth, not letting any price fever of essential
goods, especially medicine and milk, occur.

To tackle power
shortage, PM Dung asked the electricity sector, especially the
Electricity of Vietnam to take drastic measures to ensure sufficient
power in both short and long terms.

He requested the sector to
quickly speed up construction and commissioning of power plants along
with buying power from neighbouring countries and regulating power
resources appropriately.

At this meeting, the cabinet members
discussed reports on the country’s socio-economic performance over
September and the past nine months presented by ministries of planning
and investment, finance, and industry and trade, and forecast the future
national and global economic situation.

They agreed that the country’s national economy moved positively over the past nine months with GDP reaching 6.52 percent.

Exports
in nine months were estimated to rake in 51.5 billion USD, rising 23.2
percent over the same period in 2009 and nearly quadrupling the yearly
goal of over 6 percent set by the National Assembly.

Trade
deficit continued to be narrowed to stand at 8.58 billion USD, which
accounted for 16.7 percent of export value, or the lowest level in the
past years.

The cabinet members were concerned about an increase
of 1.31 percent in consumer price index (CPI) in September, which made
CPI grow 6.46 percent compared to December, 2009 and 8.64 percent year
on year.

Also at this meeting, the cabinet members listened and
gave opinions to reports on Vinashin’s business and production
performance, land use plans for the 2011-2015 period and to 2020, and a
summary of government members’ opinions on a draft decree to replace
Decree 62/2006/ND-CP on sanctions against administrative violations in
the maritime sector./.

Monday, December 20, 2010

ADB ups stable Vietnam’s economic outlook

The Asian Development Bank has raised Vietnam’s GDP growth forecast for this year and next year by 0.2 percent to 6.7 percent and 7 percent due to the country’s efforts to maintain economic stability.

Vietnam has successfully shifted from the strong fiscal and monetary stimulus to tackle the global recession last year to a more balanced policy to stabilize financial and economic conditions, it says in its annual flagship publication, the Asian Development Outlook Update, which was released in Hanoi Tuesday.

The steps taken by the government to stabilize the economy have contributed to an improvement in the economic growth: GDP grew by 6.2 percent in the first half of this year compared to 3.9 percent in the same period last year.

Policy tightening and a good rice harvest have helped pull back inflation from 9.5 percent year on year in March to 8.2 percent in July and August.

The trade deficit has narrowed from $8.1 billion in July-December 2009 to an estimated $3.8 billion in the first half and the current account deficit from $8 billion to $2.7 billion.

The current account deficit, as a ratio to GDP, is forecast to narrow from 7.5 percent in 2010 to 5.4 percent in 2011 due to the shrinking trade deficit and increasing remittances and tourist arrivals.

The balance of payments situation has been improving due to higher foreign direct investment.

The bank is optimistic about the inflation situation since the country’s economy and world oil and commodities prices have been stable. It has cut down its earlier estimation of 10 percent inflation this year to 8.5 percent and from 8 percent to 7.5 percent next year.

However, it foresees a risk to the economy if there is a premature easing of monetary or fiscal policies or a perception of looser policy by financial markets and domestic investors.

“An early easing, or the perception of a relaxation, could derail the macroeconomic stabilization efforts, putting inflation on an upward trajectory and pressure on external accounts.”

So the authorities should maintain a firm and consistent policy stance, and communicate such a position effectively to the market until inflation is clearly on a downward track and foreign reserves increase, the bank warns. The other major challenge is to raise the efficiency of the economy and reduce supply-side constraints through structural reforms.

Ayumi Konishi, ADB’s country managing director for Vietnam, said at the release that the government should be very cautious about maintaining macroeconomic stability and effectively inform the people about the policies while promoting further reform.

The most important factor is providing quality and up-to-date information to businesses and potential investors, he added.

Last year, it ratified a total credit of $16.1 billion for the country’s loans, non-refundable and technical assistance projects.

The Asian Development Outlook and other ADB reports analyze the economic conditions and prospects in Asia and the Pacific and are issued every April and September.

Vietnam will host the ADB’s 44th annual summit in Hanoi next May.

Sunday, December 19, 2010

A brighter economic future

Goods are exported from HCM City's Cat Lai Port. Viet Nam's economic growth was expected to reach 6.7 per cent in 2010 thanks to Government steps to stablise the economy. — VNA/VNS Photo Kim Phuong

HA NOI — Viet Nam should maintain macroeconomic stability in response to its new status as a middle income country, the Asian Development Bank said yesterday as it boosted the nation's 2010 growth forecast.

Viet Nam's economy was expected to grow 6.7 per cent in 2010, up from the bank's 6.5 per cent forecast earlier this year, following the Government's steps to stabilise the economy, the Manila-based bank said in its twice-yearly economic forecast.

The country's expected growth boost was in accordance with the expansion of Asian economies by 8.2 per cent, up from the previously estimated 7.5 per cent, as the region "recovered from the global (financial) crisis with remarkable speed and vigour", according to the report.

The bank also increased Viet Nam's growth forecast for next year from 6.8 per cent to 7 per cent. Inflation was projected to average 8.5 per cent this year, easing to 7.5 per cent next year on the assumptions that domestic macroeconomic stability is maintained and that global oil and commodity prices remain relatively steady next year.

Viet Nam, along with Thailand and Malaysia, would see an upswing in their exports, said the bank, which predicted Southeast Asian economies to grow 7.5 per cent in 2010, up from an earlier 5.1 per cent estimate.

Since the last forecast in April this year, "Viet Nam has consolidated its macroeconomic stability," the ADB Country Director for Viet Nam, Ayumi Koshini, told a press briefing in Ha Noi yesterday. "As a result, we are making upward adjustments in our growth forecast for both 2010 and 2011."

The steps taken by the Government to stabilise the economy had contributed to improvement in the external and foreign reserves positions, the Asian Development Outlook Update noted. With improvement in the capital account, the overall balance of payments would likely turn to a small surplus in the second quarter of 2010 after recording deficits since the start of last year. The bank predicted quick economic growth in the second quarter.

Viet Nam was recently upgraded to a Middle Income Country as the GDP per capita reached US$1,024. In order to prepare for the next ten year period as a new Middle Income Country, Viet Nam needed to be cautious about maintaining macroeconomic stability and effectively communicating relevant policies to the public while accelerating reforms, the bank said in its report.

The country is preparing a new 10-year Strategy and a new five-year Socio-Economic Development Plan as a new ‘middle income country'.

"It will be critical for Viet Nam to keep an eye on the global economic scene," said Koshini who warned that the transformation of China from the ‘factory of the world' to the ‘largest consumer market in the world' would certainly change the regional economic map, together with the establishment of the ASEAN Economic Community by 2015.

The bank advised the Government to continue its efforts to ensure a better public understanding of its policy stance, supported by greater and timely availability of information and statistics which should be applied not only to the Government but also to the corporate sector.

The ADB report noted that the two laws approved by the National Assembly in June 2010 – the laws on the State Bank of Viet Nam and on Credit Institutions – together with various legal documents issued by the State Bank of Viet Nam (SBV) and other agencies, marked important progress in strengthening the framework for monetary policy implementation and safeguarding the stability of the banking system.

The Asian Development Outlook and its Update are ADB's primary economic reports analysing the economic conditions and prospects in Asia and the Pacific. They are issued in April and September, respectively. — VNS

Tuesday, November 30, 2010

Nation must ‘ensure balanced development'

by Mi Bong

Tam Binh Street in HCM City's Thu Duc District is flooded after heavy rains. Experts say Viet Nam should take more steps to minimise the impacts of climate change when formulating its socio-economic plans. — VNA/VNS Photo Trang Duong

HCM CITY — Viet Nam should ensure that its economic and social needs are balanced, and that its development vision is long-term, experts said at a conference in HCM City on Tuesday.

While agreeing that the priority should be accorded in coming years to maintaining macroeconomic stability and sustaining the growth momentum, both national and international experts said this cannot be achieved at the expense of the natural environment.

The impacts of climate change on socio-economic development were also discussed at the two-day seminar organised by the United Nations Development Programme, Viet Nam's Academy of Social Science and the Committee for Economic Affairs of the National Assembly.

Do Hoai Nam, chairman of the Viet Nam Academy of Social Science, said the nation should develop long-term strategies that take into consideration the world economic situation in the future and its likely impacts on the Vietnamese economy.

Referring to the overall socio-economic development goals for the 2011-15 period with a vision to 2020, Nam said key tasks included inflation control, effective implementation of monetary and fiscal policies, land law amendments, and policies for developing high-quality human resources.

"A social security system that covers the entire country, especially its remote areas, is also vitally important," he said.

He called on the State Bank of Viet Nam to follow a cautious monetary policy to control credit growth and money supply. The central bank should also continue improving its capacity to supervise the financial-monetary system effectively, he added.

Climate change

Measures to protect the environment and cope with climate change were vital for sustainable economic development, he said.

Nam also stressed the important role of State management in the economic restructuring process.

John Hendra, United Nations Resident Coordinator in Viet Nam said in the current domestic and international context, achieving the two objectives of stability and growth required monitoring of all relevant indicators, including inflation, exchange rate, the level and structure of public debt, and the amount of foreign reserves.

"While we all recognise the importance of macroeconomic stability and growth, it is also important to recall that sound development is one that balances economic and social needs," he said.

He also spoke of the need to strengthen links between the National Assembly and research institutions, academic circles and individual experts.

In the first nine months of this year, Viet Nam has seen some recovery from the economic downturn. The GDP grew by 6.4 per cent in the second quarter, up from 5.83 per cent in the first, with sustained high monthly industrial output growth rates of over 14 per cent compared to the same period of last year, the seminar noted.

Inflation has cooled down in the second and third quarter. The accumulative inflation rate was 4.99 per cent till the end of August, possibly enabling the containment of annual inflation rate within the target range of 8-8.5 per cent.

Deficit concerns

However, the lending rate of over 13 per cent has created difficulties for businesses in a market that is not expanding rapidly, speakers noted.

Macroeconomic stability could be threatened if inflation is extended alongside increased pressure of trade deficit, foreign exchange and possible widening of the budget deficit, according to the speakers.

Over the last 10 years, public investments, including State budget investments and investments by State-owned enterprises have increased significantly, absorbing a lot of credit and making it very difficult to curb budget deficit, experts noted.

Vo Dai Luoc of the Viet Nam Asia-Pacific Economic Centre suggested that Viet Nam prioritises development of the private sector as a key motivating force for national economic development; and also ensure greater transparency in its financial system.

Nguyen Minh Phong of the Ha Noi-based Academy of Economic and Social Development Research said the adjustment of exchange rates effected in the recent past was necessary and correct as a measure to curb inflation.

He said that in the coming time, there was a need to adjust the exchange rate flexibly according to market situations. Businesses need to watch out for exchange rate fluctuations and accommodate them in their dealings to avoid losses, he said. — VNS

Friday, November 26, 2010

Macro-economic instability a national concern

Photo: Tuoi Tre

How to keep the macro-economy growing steadily topped an on-going workshop in Ho Chi Minh City, where economists pointed out differing trends in the national economy that are difficult to forecast.

Dr. Tran Dinh Thien from the Vietnam Economic Institute said that the national economy was looking good as GDP growth has been high for consecutive years and in the third quarter it is likely to reach 7.18 percent, with inflation under control at 5.08 percent in the first eight months.

He warned however, at the two-day workshop on September 21, that the macro-economy has shown uncertain signs and was very difficult for economists to forecast.

He also complained of slow reforms in the internal structure.

Thien, urged immediate reforms in the State budgets, public investment and State-owned economic groups.

He also called for the State Bank of Vietnam to hold an independent position, and more efforts to develop the supporting industries and regional economies.

Salary reforms in the State economic sector and improving the handling of the macro-economy were the other steps that the senior economist urged to be taken.

Dr. Vo Dai Luoc pointed out the nation’s illogical macro-economic developments that need to be addressed, such as high inflation, the highest interest rates on deposits and loans in the world and an inflated Vietnamese dong amidst fixed exchange rates.

To address these problems, Luoc called on the State to introduce economic adjustments.

The State should also ensure reasonable growth and control inflation when handling the macro economy, he emphasised.

The World Bank’s Acting Economic Head, Keiko Kubota, recognised Vietnam’s efforts to reach to the world’s average income level of US$1,100 thanks to its drastic economic growth.

However she pointed out that the development was based on the renewal process which has been losing its momentum and has been threatened with emerging challenges in management as well as poverty and imparity.

The Vietnamese economy is still highly competitive and has yet to fall into the income trap, the senior economist from the world’s largest development bank said.

She called on Vietnam’s development strategy to focus its economic growth on the private sector and prevent the real estate market from overheating.

Top priority should be given to pre-empting crises and supporting productivity including human resources, urbanisation and infrastructure, the WB economist concluded.

The two-day workshop, was held in the nation’s largest economic hub under the co-sponsorship of the National Assembly’s Economic Committee and the Vietnam Academy of Social Sciences. It drew representatives from the Party, National Assembly and Government as well as senior experts, both from Vietnam and abroad

Thursday, November 25, 2010

Macro-economic instability a national concern

How to keep the macro-economy growing steadily topped an on-going
workshop in Ho Chi Minh City, where economists pointed out differing
trends in the national economy that are difficult to forecast.

Dr. Tran Dinh Thien from the Vietnam Economic Institute said that the
national economy was looking good as GDP growth has been high for
consecutive years and in the third quarter it is likely to reach 7.18
percent, with inflation under control at 5.08 percent in the first eight
months.

He warned however, at the two-day workshop on
September 21, that the macro-economy has shown uncertain signs and was
very difficult for economists to forecast.

He also complained of slow reforms in the internal structure.

Thien, urged immediate reforms in the State budgets, public investment and State-owned economic groups.

He also called for the State Bank of Vietnam to hold an independent
position, and more efforts to develop the supporting industries and
regional economies.

Salary reforms in the State
economic sector and improving the handling of the macro-economy were the
other steps that the senior economist urged to be taken.

Dr. Vo Dai Luoc pointed out the nation’s illogical macro-economic
developments that need to be addressed, such as high inflation, the
highest interest rates on deposits and loans in the world and an
inflated Vietnamese dong amidst fixed exchange rates.

To address these problems, Luoc called on the State to introduce economic adjustments.

The State should also ensure reasonable growth and control inflation when handling the macro economy, he emphasised.

The World Bank’s Acting Economic Head, Keiko Kubota, recognised
Vietnam’s efforts to reach to the world’s average income level of 1,100
USD thanks to its drastic economic growth.

However she
pointed out that the development was based on the renewal process which
has been losing its momentum and has been threatened with emerging
challenges in management as well as poverty and imparity.

The Vietnamese economy is still highly competitive and has yet to fall
into the income trap, the senior economist from the world’s largest
development bank said.

She called on Vietnam’s
development strategy to focus its economic growth on the private sector
and prevent the real estate market from overheating.

Top priority should be given to pre-empting crises and supporting
productivity including human resources, urbanisation and infrastructure,
the WB economist concluded.

The two-day workshop, was
held in the nation’s largest economic hub under the co-sponsorship of
the National Assembly’s Economic Committee and the Vietnam Academy of
Social Sciences. It drew representatives from the Party, National
Assembly and Government as well as senior experts, both from Vietnam and
abroad./.

Sunday, November 21, 2010

Firms thrive in face of global competition

HA NOI — Business management has faced many challenges with many Vietnamese enterprises deeply entangled in the global economy, according to participants at a special economic dialogue held in Ha Noi last Friday.

Speaking at the event entitled Global Economic Trends and Business Leadership in Viet Nam, Deputy Prime Minister Nguyen Thien Nhan confirmed that, despite difficulties, Viet Nam had retained a stable economic growth rate with high foreign direct investment capital in comparison to other developing countries after the world economic crisis.

GDP growth in the third quarter was 7.18 per cent and this year's GDP was expected to reach 6.7 per cent. Export turnover in the first eight months of 2010 was US$44.5 billion, an increase of 19.7 per cent over the same period last year.

These positive numbers could create opportunities for Viet Nam to export to both developed and developing economies as well as attract FDI flows. Nhan attributed these successes to the country's stable political system and to the plentiful and low-cost labour force that has increasing access to new knowledge.

However, he said, the challenges Viet Nam was facing included energy shortage, environmental pollution, shortcomings in urban planning and management, traffic congestion and macroeconomic instability in inflation, exchange rate and interest rate.

To resolve these issues, Nhan urged economic specialists to provide suggestions to the Government so that it can help leaders remain aware of new information and global trends.

Ashok Sud, CEO of Standard Chartered Bank in Viet Nam, Laos and Cambodia said leaders emphasised leadership and immediate action. According to Sud, businesses and countries alike needed three types of capital: financial, human and management gurus.

Dean of Harvard Kennedy School of Government David T Ellwood said the world faced an enormous economic crisis, severe climate change and natural disasters and that these issues require governments, businesses and ordinary people to act immediately and efficiently to reduce the cost and impact of those.

Participants of the event also discussed the need for large public companies to guide private companies as they entered the market. — VNS

Monday, November 15, 2010

Lang Son needs trade, economic breakthroughs

Prime Minister Nguyen Tan Dung has requested the northern province
of Lang Son consider making breakthroughs in trade and the bordergate
economy, service and tourism as top priorities in economic restructuring
and development.

PM Dung, who is also a
Politburo member, made the request at the 15 th Congress of the Lang
Son Provincial Party Committee on Sept. 16.

Lang Son province should speed up the construction of the Dong Dang-Lang
Son bordergate economic zone and focus on infrastructure and essential
facilities to attract investment and develop fields that are compatible
with its strengths in order to turn the province into a trade, service
and tourism centre of the northern mountainous region and function as a
trade link in the relationship with China and between China and ASEAN,
said Dung.

He also suggested the province create
breakthroughs in rural agriculture development, with priority
investment in the region’s socio-economic infrastructure, including
traffic, irrigation, electricity, schools and health clinics.

On its first working day on Sept. 15, the congress heard a political
report to review the previous congress resolution and discussed reasons
why targets failed to be achieved, including targets set for the gross
domestic product (GDP) of 2006-2010 period, and the collection of and
processing solid waste.

The political report
also pointed to seven basic economic development targets, nine social
targets and four environmental targets which will be discussed by the
congress in a search for feasible solutions.

The
congress elected the executive committee for the 15 th Provincial
Party’s Committee Congress. Phung Thanh Kiem has been re-elected as
Secretary of the Provincial Party Committee for the 15 th tenure
(2010-2015 period).

Addressing the congress, PM
Dung asked the congress to find out the reasons and provide solutions to
overcome existing shortcomings.

Lang Son should
bring into play its potential and advantages for development as it has a
favourable position and the biggest international bordergate on the
route connecting Vietnam and China – a huge developing market which will
become larger once the China-ASEAN free trade area is established, said
the PM.

The province, which boasts big land,
natural resources and human potential and diversified culture, has an
important position in the Nanning-Lang Son-Hanoi-Hai Phong economic
corridor and the Nanning-Singapore economic corridor, he said.

Dung asked the provincial authorities and people to develop the fine
relationship with the Chinese people and to defend border sovereignty
and security.

He also demanded the provincial
party committee build a strong and pure Party organisation that can
bring into play its nucleus role in the socio-political system,
encourage people to follow President Ho Chi Minh’s moral example and
constantly build strong and transparent politics, authority, fatherland
front and mass organisation system from provincial to grass roots level./.

Thursday, October 28, 2010

Expert proposes drastic reform of economic policy

Vo Dai Luoc addresses the seminar on problems of and solutions for the Vietnamese economy - Photo: Kinh Luan

HCMC – A high-profile economic expert on Wednesday called for drastic changes to the country’s economic policy, saying a new approach in policy making was required to ensure sustainable development.

Vo Dai Luoc, a professor who is doing research on the economic strategy for the next ten years as requested by the State, told a seminar at the Saigon Times Group that Vietnam was facing problems of trade and budget deficits, bad loans, and especially inefficient public investment.

The economic policy should be more open in the years to come as a way to leverage sustainable development, he told the seminar on problems and solutions for the local economy.

The reason behind these problems is that the economy’s growth engine remains unchanged, as it is based on export-oriented manufacturing and the leading role mandated to the state sector.

“I am not among those who support the idea that state-owned enterprises play the key role in economic development, and I think that we should make some breakthrough in changing this policy,” he said.

Luoc called on policymakers to make changes to the policy and mechanism because the country has seen a high growth rate but it is still not sustainable.

South Korea, as he pointed out, is probably the best current example of a developing economy making leaps and bounds into the realm of the most advanced.

“Vietnamese policymakers should take it as an example, and be aware that, with labor costs rising, the country needs to follow suit,” he said.

He suggested that the Government give a more open, thriving and vibrant economic environment to the special economic zones, allow them to utilize an economic management system that is especially conducive to business and has yet to exist in the rest of the country.

He also advised that local enterprises should not compete with China in industrialization. “Instead, they should try to find a different way, choose what are their competitive advantages in industries and services,” said Luoc.

“But I fear the kind of commitment needed can’t be created by Government initiatives alone,” he added, hinting at the responsibility of the business community as well.

Post-crisis opportunities, challenges highlighted

Photo: AFP

Numerous managers, economists and businesspeople gathered at a seminar in Ho Chi Minh City Thurday to discuss the opportunities and challenges as well as Vietnam’s policies and measures after the economic crisis.

Co-hosted by the Vietnam Investment Review (VIR) and the Association of Foreign-invested Enterprises, the seminar also served as a forum for the delegates to analyse the factors affecting the flow of investment and trade.

VIR’s Editor-in-Chief Nguyen Anh Tuan said that the global financial crisis had many adverse impacts on Vietnam in terms of exports, foreign direct investment (FDI), the stock market, international tourism and other fields.

However, Vietnam has managed to stave off the worst of the economic recession and stabilise its macro-economy thanks to concerted efforts by the government and the business community, he said.

Professor Nguyen Mai noted that FDI is considered the brightest spot in the country’s economic picture over the past two years, but Vietnam needs to improve the quality of this capital source.

While discussing the knock on effects on the stock market, the Vice Chairman of the State Securities Commission Nguyen Doan Hung emphasised the need to stabilise the market before implementing long-term targets, including enhancing the quality of auditing, information and corporate administration, tightening the supervision and protection of investments and dealing properly with securities companies suffering losses.

Dr. Le Xuan Nghia, the Vice Chairman of the National Financial Supervisory Committee, said that Vietnam is likely to face more monetary risks in the medium term, citing its foreign exchange rates.

The slow recovery of the global economy could hamper the flow of capital into Vietnam , worsen the depreciation of the Vietnamese dong and weaken the country’s international balance of payments, said Nghia.

Wednesday, October 27, 2010

Asia stocks hit 4-month high in cautious rise

Photo: Reuters

HONG KONG - Asian stocks rose to a four-month high on Friday, some investors inspired by positive US economic data to pick out bargains, with the cautious shift toward risk reining in yen strength.

Leading European stocks fell 0.4 percent in early trade.

The yen's yield disadvantage has also been growing this week, following upside surprises in US and Australian economic figures, handing dealers an incentive to join any selloffs of the currency.

"At the end of the day, traders are still focusing on economic developments in the US and debt issues in Europe," said CMC Markets analyst David Taylor in Sydney.

"The key theme is that it is less likely the US will have a double-dip recession."

Overnight, US initial jobless claims fell to a two-month low. China on Friday posted stronger-than-expected import growth in August, indicating a possible rebound in domestic demand, and a 34.4 percent rise in exports year-on-year.

The Chinese data also supported currencies of major commodity exporters such as Australia, keeping the Aussie dollar on track for a third straight week of gains.

Still, risk taking has not become overwhelming by any stretch. Economists keep ratcheting down US economic forecasts, corporate executives sound cautious and some of Europe's banks may need more capital soon.

Tokyo's Nikkei share average closed 1.6 percent higher, with Fast Retailing and Canon Inc the biggest lifts to the index. The Nikkei is on its way to its biggest weekly increase since the week of July 11.

The MSCI index of Asia Pacific stocks outside Japan edged up 0.1 percent after earlier hitting the highest since May 4, with the technology sector leading gains.

The index is up nearly 11 percent in the quarter, on track for the largest gain since the third quarter of 2009.

The US S&P 500 index overnight rose 0.5 percent and broke above its 100-day moving average, a medium-term obstacle, revealing its 200-day moving average only 1 percent away as the next significant barrier.

Spreads disfavor yen

The yen suffered from traders closing out of short-term bets on the currency and hastening its decline.

The US dollar rose 0.5 percent to 84.23 yen, pulling further from a 15-year low around 83.32 yen hit on Wednesday.

The US dollar index, which measures its trade-weighted value compared with six other major currencies, rose 0.2 percent, climbing above its 55-day moving average, a technical obstacle the index has struggled with in the last three weeks.

Investors betting on the yen have grown concerned about the moves in bond spreads that have gone against the Japanese currency. Overnight a lower-than-expected reading of US initial jobless claims pushed up Treasury yields.

Last month economists on average slashed their 2011 US economic growth forecasts by three tenths of a percent, the biggest single-month downward revision to year ahead predictions in two years, Thomson Reuters Datastream showed.

That has made investors lean heavily in the direction of negative economic news, so that a positive surprise causes them to scramble to cover their bets.

The spread of US 10-year Treasury yields over Japan has widened 6 basis points this week, the biggest weekly gain since July 2010. Australian 2-year yields have shot up 22 basis points above same maturity Japanese yields this week, the largest increase since March 2010.

"Of course this could prove to be a false break but we would note US yields appear to have been basing for a number of weeks now," Jonathan Cavenagh, strategist with Westpac in Sydney, said in a note.

"Hence if the yield spread continues to move in favor of the USD then USD/JPY is a good buy at current levels."

US crude oil futures jumped 1.3 percent to near $75.21 a barrel after a leak forced the shutdown of the biggest pipeline supplying Canadian oil to refineries in the Midwest.

Saturday, October 23, 2010

Post-crisis opportunities, challenges highlighted

Numerous managers, economists and businesspeople gathered at a seminar
in Ho Chi Minh City on September 9 to discuss the opportunities and
challenges as well as Vietnam ’s policies and measures after the
economic crisis.

Co-hosted by the Vietnam
Investment Review (VIR) and the Association of Foreign-invested
Enterprises, the seminar also served as a forum for the delegates to
analyse the factors affecting the flow of investment and trade.

VIR’s Editor-in-Chief Nguyen Anh Tuan said that the global financial
crisis had many adverse impacts on Vietnam in terms of exports,
foreign direct investment (FDI), the stock market, international tourism
and other fields.

However, Vietnam has managed
to stave off the worst of the economic recession and stabilise its
macro-economy thanks to concerted efforts by the government and the
business community, he said.

Professor Nguyen Mai
noted that FDI is considered the brightest spot in the country’s
economic picture over the past two years, but Vietnam needs to
improve the quality of this capital source.

While
discussing the knock on effects on the stock market, the Vice Chairman
of the State Securities Commission Nguyen Doan Hung emphasised the need
to stabilise the market before implementing long-term targets, including
enhancing the quality of auditing, information and corporate
administration, tightening the supervision and protection of investments
and dealing properly with securities companies suffering losses.

Dr. Le Xuan Nghia, the Vice Chairman of the National Financial
Supervisory Committee, said that Vietnam is likely to face more
monetary risks in the medium term, citing its foreign exchange rates.

The slow recovery of the global economy could hamper
the flow of capital into Vietnam , worsen the depreciation of the
Vietnamese dong and weaken the country’s international balance of
payments, said Nghia./.

Saturday, October 9, 2010

HCMC’s economic restructuring slow off the mark

HCMC – There has been little progress in the planned restructuring of HCMC’s economy, experts said at a conference on Tuesday.

While HCMC is an economic driving force in Vietnam, the city’s contribution to the national economy has not met expectations, said Tran Dinh Thien, head of Vietnam Institute of Economics, in a meeting to assess impacts of Vietnam’s joining WTO and HCMC’s economic restructuring.

“When I ask myself what big changes have occurred in the city in the last 20 years, it’s hard to find the answer,” Thien said.

The city economy still relies on providing foreign companies with outsourcing services, and external factors [like importing materials],” he added.

According to the HCMC Bureau of Statistics, added values in all the three sectors of service, industry and agriculture have fallen annually. The three sectors are expected to contribute 57%, 42% and 1% to the city’s economy respectively in 2015.

The service sector has experienced the fastest growth to account for 54.5% of the city’s GDP in 2010. However, a shift from manufacturing to service is not attributed to the city’s efforts, but rather the natural progress as more entrepreneurs venture into the service sector that promises higher profits.

Tran Van Bich, another economic expert, noted that manufacturing is being moved out of the city to other provinces, and the land is being taken up by service providers.

In addition, non-State and foreign invested companies have made strong contributions to the city’s economy. Foreign invested enterprises accounted for 23.3% of the city’s GDP in 2009, up from 20.6% in 2006.

For real progress to be made, experts suggested HCMC needs breakthrough changes in red tape, infrastructure and skilled workforce numbers. The big challenge though is administrative reform.

“Choosing key sectors has been important for the city, but it’s vital to undertake institutional changes,” said Thien .

“HCMC should have a larger vision as it develops into a modern mega city, than just trying to upgrade its current situation. I can’t imagine what the city will look like in ten years,” Thien added.

Developing infrastructure with natural conditions and economic targets in mind and training a highly skilled workforce for the transferring of high technology are also needed for the city’s sustainable development, he said.

Tuesday, October 5, 2010

High disbursement shows positive economic signs

Photo: Tuoi Tre

A positive trend in economic development is reflected in the high disbursement of investment and development project funds.

Statistics show that an estimated VND92.1 trillion (US$4.7 billion) was disbursed from the State budget for development projects in the first eight months of the year, making up almost 74 percent of the annual plan.

Disbursement of Official Development Assistance (ODA) commitments reached over $1.8 billion, or 74.5 percent of the annual target and 13.5 percent increase year on year.

Foreign Direct Investment (FDI) saw up to $7.25 billion disbursed, representing an increase of 3.6 percent over the same period last year.

The Ministry of Planning and Investment (MPI) forecast that development investment this year is expected to reach VND800 trillion, accounting for 41.37 percent of gross domestic product and representing a growth of 12.9 percent year on year.

Once the disbursement is reached, it would be the second consecutive year Vietnam has surpassed the annual target for development investment, said MPI.

The trend was of primary importance for Vietnam since the country is largely dependent on investment for economic growth, the ministry explained.

The figures have shown the great efforts made by the Government, ministries, industries and local administrations to mobilise different financial sources for development amid post-crisis economic difficulties worldwide.

The figures were evidence of investors’ and partners’ confidence in Vietnam’s potential for growth, MPI said.

Problems, however, remain with cumbersome administrative procedures and limited management competence.

Experts have called on responsible agencies to move promptly in reviewing and adjusting relevant policies and streamlining administrative procedures in an effort to increase the country’s capacity to absorb investment.

The Director of the National Centre for Socio-Economic Information and Forecast, Le Dinh An, said measures to lure FDI should be associated with economic restructuring and geared to concrete industries and products.

Such an orientation should be also applied to ODA fundraising, he added.

National Assembly Vice Chairman Nguyen Duc Kien proposed an early orientation for mobilising and using ODA at a workshop in July.

He also called for relevant agencies to make objective evaluations of national debts in support of mobilising financial sources for economic development.

High disbursement shows positive economic signs