Vietnam public debt rises to $600 per capita

With Vietnam's total public debts at 51.7 percent of GDP, each Vietnamese owes nearly US$600, according to the “global debt clock” in the UK-based magazine, The Economist.

The clock, available at http://www.economist.com/content/global_debt_clock, does not stop ticking, adding several hundred thousand dollars every second.

At 9:30 am in Vietnam today, the global debt had risen to $39.95 trillion from $39.79 trillion at 3:00 pm Tuesday.

Vietnam's debt was $50,935,068,493 (US$50.9 billion), meaning its 87.6 million people each owe $581.45.

Since 2001, when it was a mere $106 per capita and 26.6 percent of GDP, the figure has been rising.

The forecast for 2011 is slightly optimistic since, though the debt will increase by nearly $6 billion, as a ratio of GDP it will fall to 50.9 percent. The per capita figure will be $638.

The US, Canada, and Western Europe lead the ranking. Every French citizen, for instance, bears a debt of nearly $32,000 while in Greece it is $34,000.

The International Monetary Fund warned recently that unemployment, high public debt, and a weak banking system will be a threat to global prosperity.

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Global investors still prefer Vietnam

HCMC - Global investors have again picked Vietnam as the number one emerging investment destination beyond Brazil, Russia, India and China (BRIC) for the third year in a row since 2008 as indicated in a recent report by the UK Trade and Investment (UKTI) and the Economist Intelligence Unit.

More than 520 global executives representing all major industries participated in a survey conducted from July to August this year to explore the changing outlook for businesses already operating in emerging markets or planning to expand into these markets.

The executives expressed in the “Great Expectations: Doing business in emerging markets” report the markets they think are representing the best opportunities and the primary rationale for operating.

Aside from the BRIC bloc, global investors ranked Vietnam above Indonesia, Mexico, Argentina, Saudi Arabia, South Africa, Nigeria, Malaysia, United Arab Emirates and Turkey when they were asked about the emerging markets in their main targets for new and/or increased investment over the next two years.

In the top 10 investment targets for 2010, Indonesia advanced to second from fourth in last year’s survey and Argentina to fourth from twelfth while Mexico stood unchanged. Malaysia slid to eighth spot from fifth and the UAE to eighth from second in 2009.

On the global scope, the executives selected China as the top market for investment with 20% of them opting for the world’s second-largest economy, followed by Vietnam with 19% and India with 18%.

The survey points out up to 76% of global investors see emerging markets as a source of new business growth, and these markets are also viewed generating new consumer demand for the global economy.

According to the report, 71% of the respondents agreed that emerging markets beyond the BRIC countries collectively offer an opportunity too big to ignore. As a result, companies are prioritizing a range of other countries alongside their well-established operations in the bloc.

Many global firms are increasingly familiar with emerging markets, as recognized in the survey that shows nearly half of the respondents have been operating in one or more emerging markets for at least a decade and two thirds have been there for six years or more.

Far more executives believe that the potential rewards far outstrip the risks within both the BRIC countries and other emerging markets. The findings show 52% of them expect growth prospects for their once-risky emerging markets business to be “significantly better” over the next two years.

The UK Business Secretary Vince Cable said in support of launching the new report in London last week that the balance of global economic power was shifting towards emerging markets.

Emerging markets magnetize not only big companies but also small and medium enterprises. One in every three SMEs polled plan to expand into one new emerging market over the next two years through joint ventures or partnerships with local companies.

The survey found local companies in emerging markets are sought after for partnerships and alliances. Despite a greater ease with the risks of new places, the need to tap into local knowledge and contacts quickly remains strong.

The UKTI notes by 2030, 93% of the world’s middle class will live in emerging markets and the 30 fastest growing cities will be in emerging markets in the 2008 -2025 period.

Late last year, PricewaterhouseCoopers released a study showing that Hanoi and HCMC would be the top two cities having the world’s highest average real GDP of 7% in 2008-2025 in the list of the top 30 fastest growing cities in terms of economic growth.

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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

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IMF says risks to global growth have intensified

The International Monetary Fund said Friday that downside risks to global recovery have intensified due to recent turbulence in sovereign debt markets and continued weakness in the financial sector.

The IMF, in a briefing note prepared for Group of 20 deputy finance ministers, said global growth had been somewhat stronger than expected during the first half of 2010, "but is projected to slow temporarily during the second half of 2010 and the first half of 2011."

The Fund said European policy actions to calm the euro-zone sovereign debt crisis have eased market concerns.

"Renewed turbulence in sovereign debt markets could precipitate an adverse feedback loop between sovereigns and the financial sector, with spillovers to the real economy through higher bank funding costs, tighter lending conditions, and retrenchment in financial capital flows," it said.

The IMF also cited the U.S. property market as a source of downside risk, with increased foreclosures further pressuring bank balance sheets and possibly causing a reduction in credit available to the economy.

The G20 "surveillance note", prepared for a September 4-5 deputies meeting in Gwangju, South Korea, did not change any of the IMF's official forecasts. The Fund predicts global output will expand 4.6 percent in 2010 and 4.3 percent in 2011, compared to a decline of 0.6 percent in 2009.

The report did not specifically mention currency policies among the G20 members, which include top emerging markets China, India and Brazil. It did, however, say that sustained, healthy recovery in global growth rests on rebalancing of both internal and external demand.

Advanced economies must show a strengthening of private demand and an increase in net exports, while export countries, notably in emerging Asia, must rely more on internal demand and less on exports.

The IMF also called for the rebalancing to include credible plans by advanced economies to cut budget deficits in the future.

"This fiscal adjustment should begin in 2011, even if activity is modestly weaker than presently projected. Fiscal consolidation remains essential for strong, sustained growth over the medium term."

However, the IMF said that if growth threatens to slow appreciably more than expected, G20 countries should resort to monetary measures first, although it acknowledged that such defenses had "become thin". Some countries with budgetary breathing room may be able to temporarily

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IMF's Lipsky says moderate world recovery underway

John Lipsky, the International Monetary Fund's first deputy managing director, answers a reporter's question after the meeting of G20 finance and central bank deputies in Gwangju, south of Seoul, September 5, 2010.

Photo: Reuters

The world economy is recovering moderately but still faces challenges such as the need for medium-term fiscal consolidation, the IMF's First Managing Director, John Lipsky, said on Sunday.

"They are mainly confident that there is a moderate recovery underway globally," he told reporters, referring to delegates at the G20 meeting of deputy finance and central bank chiefs in South Korea.

"Obviously there are risks and challenges, but things seem to be moving more or less in line with our forecast," he said, listing well-designed exit strategies and medium-term fiscal consolidation as challenges.

He said some good progress has been made in discussing changes to the IMFs executive board, but did not elaborate. G20 members have pledged to reach an agreement on the issue by the time leaders meet in Seoul in November.

The United States, frustrated at Europe's refusal to share more IMF power with emerging economies, took unprecedented action last month to block plans that would have kept Europe's long-running dominance over the 24-member board.

Emerging economies have called for a bigger say in international institutions such as the IMF in line with their increasing contribution to the global economy and the resultant importance in global economic policy coordination.

A senior Indonesian official told Reuters separately that emerging economies want more voting powers as well as a readjustment in the way the global economic policy is made.

"For emerging markets, the important thing is not only the size of the increase of the quota, but the general idea of the relationship between the quota and governance of the IMF -- and that needs to come in one package," Hartadi Sarwono, deputy governor of the Indonesian central bank, said in an interview.

One senior official from a member country, who attended the whole of the meetings, told Reuters there was no discussion about specific currencies or currency issues, although issues related to reducing the global imbalances were a key topic.

"Delegates did not talk about any specific currencies or about a specific level of a currency, but of course they discussed global rebalancing," said the official, who did not want to be identified.

Japan is grappling with the yen's soaring to 15-year highs against the dollar and policymakers have repeatedly said they could take decisive action on the yen -- normally a code phrase for currency intervention.

South Korea will host the November 11-12 summit of G20 leaders in Seoul, with key issues also including reforming the global financial regulatory framework and drawing up plans to put the world economy on a balanced and sustainable growth path.

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IMF's Lipsky says moderate world recovery underway

John Lipsky, the International Monetary Fund's first deputy managing director, answers a reporter's question after the meeting of G20 finance and central bank deputies in Gwangju, south of Seoul, September 5, 2010.

Photo: Reuters

The world economy is recovering moderately but still faces challenges such as the need for medium-term fiscal consolidation, the IMF's First Managing Director, John Lipsky, said on Sunday.

"They are mainly confident that there is a moderate recovery underway globally," he told reporters, referring to delegates at the G20 meeting of deputy finance and central bank chiefs in South Korea.

"Obviously there are risks and challenges, but things seem to be moving more or less in line with our forecast," he said, listing well-designed exit strategies and medium-term fiscal consolidation as challenges.

He said some good progress has been made in discussing changes to the IMFs executive board, but did not elaborate. G20 members have pledged to reach an agreement on the issue by the time leaders meet in Seoul in November.

The United States, frustrated at Europe's refusal to share more IMF power with emerging economies, took unprecedented action last month to block plans that would have kept Europe's long-running dominance over the 24-member board.

Emerging economies have called for a bigger say in international institutions such as the IMF in line with their increasing contribution to the global economy and the resultant importance in global economic policy coordination.

A senior Indonesian official told Reuters separately that emerging economies want more voting powers as well as a readjustment in the way the global economic policy is made.

"For emerging markets, the important thing is not only the size of the increase of the quota, but the general idea of the relationship between the quota and governance of the IMF -- and that needs to come in one package," Hartadi Sarwono, deputy governor of the Indonesian central bank, said in an interview.

One senior official from a member country, who attended the whole of the meetings, told Reuters there was no discussion about specific currencies or currency issues, although issues related to reducing the global imbalances were a key topic.

"Delegates did not talk about any specific currencies or about a specific level of a currency, but of course they discussed global rebalancing," said the official, who did not want to be identified.

Japan is grappling with the yen's soaring to 15-year highs against the dollar and policymakers have repeatedly said they could take decisive action on the yen -- normally a code phrase for currency intervention.

South Korea will host the November 11-12 summit of G20 leaders in Seoul, with key issues also including reforming the global financial regulatory framework and drawing up plans to put the world economy on a balanced and sustainable growth path.

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