VietNam Business: growth

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Saturday, February 19, 2011

Robust economic recovery in East Asia, says WB

The economic recovery in Vietnam in particular and in East Asia and
the Pacific in general is robust, said the World Bank in its latest
East Asia and Pacific Economic Update.

The WB Update was announced at a press briefing in Hanoi on Oct. 19.

According to the Update, Vietnam ’s economy has recovered strongly
with a GDP growth of 5.3 percent in 2009 and is on the way to the
target of 6.5 percent this year. The nation’s foreign investment rose
from 6.9 billion USD in 2009 to 7.6 billion USD in 2010.

In addition, manufacturing companies’ relocation of plants in Southeast
Asia is benefiting Vietnam as its workers’ salaries are low and its
sea-bordered position is favourable for attracting investment capital.

The Update notes that output has recovered to above
pre-crisis levels throughout developing East Asia, and is expanding at
near pre-crisis rates in some countries. Real GDP growth is likely to
rise to 8.9 percent in the region in 2010 (6.7 percent excluding China
), up from 7.3 percent in 2009 and in line with the average growth
rate during the 2000-2008 period. Private sector investment is once
again driving growth, confidence is on the rise, and trade flows have
returned to pre-crisis levels.

Yet, greater confidence
in the region's growth prospects and concerns about tepid economic
expansion in advanced economies is creating the need for policymakers to
perform a delicate balancing act -- in particular, around the return of
large capital inflows and appreciating currencies.

"Should inflows remain strong, especially against a background of weak
global growth, the authorities will be faced with the challenge of
balancing the need for large capital inflows -- especially foreign
direct investment -- with ensuring competitiveness, financial sector
stability, and low inflation," said Vikram Nehru, World Bank chief
economist for the East Asia and Pacific region.

The East
Asia and Pacific Update which is published twice yearly is the WB’s
comprehensive review of the region’s economies./.

Tuesday, February 15, 2011

China must boost spending for growth-official

File photo shows a family taking a rest on the back of their tricycle on a street in Beijing.

Photo: AFP

BEIJING - China must invest in welfare and housing so workers and farmers provide the spending for sustained growth, a top economic planner said in a report on Monday, while Communist Party chiefs drew up a long-term development blueprint.

The Chinese economy is set to grow by about 50 percent to $7.5 trillion by 2015, powering past Japan and moving closer to the biggest economy, the United States. But a meeting of the party's Central Committee, ending on Monday, has dwelt on domestic imbalances that could drag down that ascent.

Zhang Ping, head of the National Development and Reform Commission, which steers economic policy, said the key to surmounting those strains was expanding household spending, encouraged by stronger social welfare, cheaper housing, and resource price reforms.

"Expanding domestic demand is the guiding long-term strategy of our country's economic and social development," Zhang told a Communist Party newspaper, the Study Times.

"The focus of the next stage of economic work must be tapping the role of domestic demand, especially consumer demand, in generating economic growth," he told the paper, issued by the Central Party School, which trains rising officials.

Zhang's remarks appeared near the close of the meeting about the next five-year development plan starting in 2011.

President Hu Jintao has said the plan must promote more "inclusive growth", narrowing the gap between urban and rural incomes and boosting domestic demand.

State media will announce the results of the closed-door four-day meeting after it concludes.

The decisions may include promotions of Vice President Xi Jinping and other officials who are in line to succeed Hu and Premier Wen Jiabao after late 2012, analysts have suggested.

Tapping greater household spending while easing strains on resources and the environment presents Beijing with a daunting list of reforms that could hit the raw nerves of companies and government officials who have benefited from current policies.

Zhang said changes needed to secure growth included further freeing up resource prices, raising welfare spending to encourage citizens to spend more, increasing the incomes of ordinary workers, and providing cheaper housing.

Improving livelihoods

The government, Zhang said, must "continue making a priority of welfare and improving people's livelihoods, directing more public resources into that area.

"In price reforms, the focus will be on actively and steadily advancing resource and raw material price reforms," he said, noting the changes would cover oil, water, natural gas and power.

Such reforms are also likely to be signaled in the next five-year plan, and will be part of the legacy-building effort for President Hu and Premier Wen.

Hu and Wen came to power vowing to create a more balanced economy and equal society. Their record has been mixed, with growth still leaning heavily on injections of infrastructure spending, while household consumption has remained compressed and rural income growth still lags urban levels.

China's average per-capita income for the richest 10 percent was 65 times that of the poorest 10 percent, according to a Credit Suisse-sponsored study by Chinese economists. Even an official estimate of a 23-fold gap is a stark one for a government pledged to socialist equality.

Public ire has centred on the real estate market, where price rises have defied government efforts to cool the market, pushing prices in many cities beyond the grasp of many residents.

The government plans to build 5.8 million housing units for poorer citizens this year, which analysts have estimated will involve spending of up to 400 billion yuan ($60.2 billion).

That compares with total investment in real estate of 2.39 trillion yuan in the first seven months of the year.

Zhang said a more sustained effort was needed.

"We must increase government investment in publicly subsidised housing," he said.

The national parliament will formally approve the five-year plan early next year.

Thursday, February 10, 2011

Vietnam GDP growth seen at 6.7 pct in 2010

HANOI - Vietnam's ruling party estimated on Thursday gross domestic product growth this year would reach 6.7 percent, exceeding the government's official target of 6.5 percent.

Next year's economic growth target would be 7-7.5 percent while exports would be targeted to expand 10 percent, said a report issued after a meeting of the party's ruling Central Committee.

"The economy has recovered quickly. The pace of growth has become more and more stable closer to the end of the year, and GDP for the whole year is estimated to reach 6.7 percent," said the report on the government website, www.chinhphu.vn.

Economic growth accelerated to an annual rate of 7.16 percent in the third quarter from 6.4 percent in the second, the government statistics office said late last month. The economy grew 6.52 percent in the first nine months from a year ago.

Vietnam has been among the fastest growing economies in Asia, and last month the Party forecast GDP growth to average between 7.5 percent and 8 percent for the next five years.

It also forecast exports to rise an average 12 percent annually between 2011 and 2015.

Thursday's report said consumer price inflation would be 7-8 percent this year. The official target is for inflation not to exceed 8 percent, although a Reuters poll of economists put the figure at 8.5 percent.

Saturday, January 1, 2011

ADB ups growth forecast for Vietnam

ADB ups growth forecast for Vietnam The Asian Development Bank (ADB) has upped its economic growth forecast for Vietnam this year to 6.7 percent from the 6.5 percent it projected in April.

It has also raised the growth forecast for 2011 to 7 percent from 6.8 percent previously, while lowering inflation projection to 8.5 percent this year and 7.5 percent next year, according to the Asian Development Outlook 2010 Update released by the bank on Tuesday.

“The shift from strong fiscal and monetary stimulus implemented during the global recession to a more balanced policy stance helped to stabilize financial and economic conditions and, together with the global economic recovery, paved the way for solid economic growth this year,” said the report.

Vietnam’s third-quarter growth hit 7.16 percent, well above the government’s target of 6.5 percent for the full year, government data said on Tuesday.

Gross domestic product (GDP) in the country, which aims to become an industrialized nation by 2020, expanded 5.8 percent in the same July-September period last year, the General Statistics Office said.

Vietnam’s nine-month economic growth was 6.52 percent, a “relatively high rise” compared with last year’s 4.62 percent over the same period, the agency said. It said the economy had become “rather stable towards a positive trend.”

Talking to the press on Tuesday, ADB’s Vietnam Country Director Ayumi Konishi said, “Vietnam should continue its efforts to ensure a better understanding of its policy stance by the public at large, supported by greater and timely availability of information and statistics.”

“This applies not only to the government but also to the corporate sector. In order to promote better corporate governance of public and private enterprises, quality and timeliness of information to be made available to the owners or shareholders and potential future investors will be the key,” Konishi added.

Most of the fiscal stimulus measures implemented during the global financial crisis expired at the end of 2009. Reflecting a somewhat more restrained fiscal stance, the government is targeting a 2010 budget deficit equivalent to 6.2 percent of GDP, narrower than the actual deficit in 2009 of 7 percent, said the ADB’s report.

Lei Lei Song, senior economist at the ADB, said on Tuesday that Vietnam’s growth resulted from an improved external environment and government stabilizing measures brought in last year to address macroeconomic imbalances.

Song warned of risks to Vietnam’s economic development as the dong is expected to be further devalued and inflation remains much higher than in other countries. This may erode the confidence of consumers and investors, Song said.

According to ADB, policy tightening and a good rice harvest contributed to the pulling back of inflation to 8.2 percent in July and August, although it increased to 8.9 percent in September.

Sizable trade deficits and relatively high inflation, coupled with residents switching from local-currency assets into US dollars and gold, continued to put downward pressure on the dong exchange rate, the bank said. From last November to August 2010, the dong was devalued three times, by a total of about 11 percent against the US dollar.

Friday, December 31, 2010

ADB ups growth forecast for Vietnam

ADB ups growth forecast for Vietnam The Asian Development Bank (ADB) has upped its economic growth forecast for Vietnam this year to 6.7 percent from the 6.5 percent it projected in April.

Vietnam’s third-quarter growth hit 7.16 percent, well above the government’s target of 6.5 percent for the full year, government data said on Tuesday.

According to ADB, policy tightening and a good rice harvest contributed to the pulling back of inflation to 8.2 percent in July and August, although it increased to 8.9 percent in September.

Friday, December 24, 2010

Industrial production surges past annual target

HA NOI — Industrial production in the first nine months of the year surged 13.8 per cent year-on-year, higher than the Government's 12 per cent annual target, to reach roughly VND574.5 trillion (US$30.24 billion), according to the General Statistics Office.

In September alone, industrial production valued VND70.7 trillion ($3.7 billion), up 15.1 per cent over the same period last year.

With a growth rate of 17.4 per cent in the January-September period, foreign invested enterprises topped the list, creating value of VND241.8 trillion ($12.7 billion). Private businesses followed with a surge of 12.7 per cent to VND201.1 trillion ($10.59 billion). State-owned firms faired the worst, churning out an output of only VND131.5 trillion ($6.9 billion).

The GSO reported that the processing industry accounted for nearly 90 per cent of the country's total industrial production value in the first nine months, noting that the industry's 14.7 per cent growth rate contributed significantly to the country's growth rate of 13.8 per cent in January-September.

The significant growth of the processing industry was, according to the GSO, due to the world's economy recovery, which had helped industrial producers, especially foreign invested firms, to enlarge their production in the wake of rising consumer demand.

Sport shoe production saw a robust surge of 25.2 per cent year-on-year, churning out 146.3 million pairs. Glass production also rose 22.8 per cent to 69.2 million sq.m. Cement, fridges, vans and motorbikes also reported significant increases between 16.4 per cent and 21.1 per cent.

However, the mining industry in the first nine months of the year reported a modest 3.8-per-cent growth over the same period last year, with coal only rising 1.4 per cent to 32.4 million tonnes. Crude oil exploitation even reported a 13.8-per-cent decrease to only 11.1 million tonnes in the first nine months.

Deputy director of the Ministry of Industry and Trade's Planning Department Nguyen Thanh Hoa said the industrial production's growth had surged and remained stable at more than 13 per cent since April.

Besides the global recovery, Hoa also attributed the positive results to the effective implementation of Government policies including the encouragement to use Vietnamese products and the measures to limit the trade deficit.

With the increasing rate, Hoa forecast that the country's industrial production would rise roughly 14 per cent this year. — VNS

Thursday, December 23, 2010

Vietnam’s economic growth quickened to 7.16 pct

Vietnam’s economic growth quickened to 7.16 pct Vietnam’s economic growth accelerated in the third quarter indicating full-year expansion may be the fastest since 2007, boosted by gains in industrial production.

Gross domestic product advanced 7.16 percent in July through September from a year earlier, according to figures released Tuesday by the General Statistics Office in Hanoi. The economy expanded at a 6.4 percent pace in the second quarter.

Industrial output, retail sales and credit growth have fueled Vietnam’s recovery from last year’s global recession. The economic expansion may exceed the government’s 6.5 percent target for 2010, with the ruling Communist Party aiming for a 7.5 percent increase in GDP next year even as inflation quickens and the trade deficit widens.

The nation’s third-quarter acceleration “contrasts with just about everywhere else” in Southeast Asia as the region is losing growth momentum, Kevin Grice, a London-based economist at Capital Economics Ltd., said in a Sept. 27 note. “On the output side, the upswing is being led by industry and construction.”

The State Bank of Vietnam weakened the dong’s reference exchange rate by 2 percent in August in a bid to curb the trade gap. The shortfall widened to $1.05 billion in September even after the devaluation, while inflation accelerated for the first time in six months to 8.92 percent, more than the government’s 8 percent goal, recent reports showed.

The dong traded at 19,490 per dollar at 3 p.m. Tuesday in Hanoi from 19,099 before the devaluation was announced. The Ho Chi Minh City Stock Exchange’s VN Index rose for a second day, closing up 1.1 percent to 455.13.

‘Strong growth’

The economy grew 6.52 percent in the first nine months of 2010 compared with a year earlier, Tuesday’s data showed. A full- year gain of more than 6.2 percent would be the fastest since 2007’s 8.5 percent.

“The economy continues to show strong growth momentum,” Johanna Chua, the Hong Kong-based head of Asian economic research at Citigroup Inc., said in a note this month. “Domestic demand remains resilient.”

Vietnam’s government has been urging banks to cut interest rates to bolster lending, which increased 16.3 percent in the first eight months of 2010 from the end of last year, according to central bank data.

“Bank credit growth has picked up again, after slowing sharply at the beginning of 2010, and is now expanding at a pace close to the 25 percent” government target for this year, Capital Economics said last week. The nation’s GDP may increase 7 percent in 2011, the UK-based company said.

IMF analysis

While the government is concerned that high lending rates could affect industrial activity, “premature” monetary loosening may cause a “deterioration” in the trade deficit and boost inflation, the International Monetary Fund said in a report this month.

Such an outcome may lead to “sharp tightening measures at a later date with high costs to the economy,” the IMF said.

Inflation has remained above the government’s target for eight straight months, while the trade deficit reached $8.58 billion for January through September.

Industry and construction, which accounted for 41 percent of GDP, grew 7.29 percent in the first three quarters, the statistics office said today. Construction by itself expanded 10.25 percent during the nine-month period.

Services, which comprised 38 percent of the economy, grew 7.24 percent in the first nine months. Hotels and restaurants expanded 8.28 percent, as the number of foreign visitors to Vietnam advanced 34.2 percent from the same time a year earlier. Financial services gained 7.94 percent.

Agriculture, forestry and fisheries, which made up the remaining 21 percent of the economy, expanded 2.89 percent in the first three quarters. Vietnam is the world’s second-biggest exporter of both rice and coffee.

Wednesday, December 22, 2010

Danang targets double-digit growth for next 5 years

DANANG – The central coast city of Danang has announced high development targets for the next five years, aiming at an annual gross domestic product growth rate of 13.5%-14.5% to reach a GDP per capita of US$3,200 by 2015.

In a report released at the opening session of the city’s Party Congress on Tuesday, the city boasts an average GDP growth rate of 11% in the 2006-2010 period. The GDP per capita this year is estimated at US$2,015, or 2.2 times higher than that in 2005 and 1.6 times that of the national average.

Nguyen Ba Thanh, secretary of Danang City Party Committee, told the opening session that Danang City would strive to create the growth momentum for the entire central region.

“Central authorities have assigned a challenging task to Danang City. Danang will have to push up development, not only for its own sake, but also for becoming the growth momentum for the central region,” Thanh said.

Thanh, who was re-elected secretary of the city’s Party Committee, said the city’s infrastructure has been developed quickly, meeting the demand of investors.

In the first half of this year, Danang attracted US$2.7 billion of foreign direct investment committed into 175 projects.

The municipal Party Congress will wrap up Thursday, after endorsing socio-economic development goals.

Saturday, December 18, 2010

GDP accelerates to 6.52% in three quarters

CPI increases 1.31 % in September

HCMC – Vietnam’s gross domestic product growth rate has accelerated to 6.52% year-on-year in the January-September period, and the economy is headed for 6.7% for the whole year, the Ministry of Planning and Investment said on Monday.

In its report released on Monday for a regular meeting, the ministry noted that the economy has gained growth momentum, with the GDP growth rate moving faster one quarter after another, according to local media covering the meeting.

In fact, the economy posted an annualized GDP growth rate of 5.83% in the first quarter, 6.4% in the second quarter, and now 6.52% for the three quarters combined. This rate is higher than the targeted 6.5% growth rate endorsed by the National Assembly early this year.

Construction and manufacturing as a whole posted the strongest growth, at 7.29% year-on-year in the January-September period, followed by the service sector with 7.24%, while agriculture inched up 2.89%. The growth rates of all the three sectors are higher than those in the same period of last year, according to the ministry’s report.

While maintaining an upbeat tone about the economy this year, the ministry also highlights challenges to be addressed in the rest of the year. These include the uptrend of prices at home and abroad -- which may stoke up inflation -- the high interest rate charged by commercial banks that makes life harder for enterprises, and high trade deficit.

* September’s consumer price index surged 1.31 % against the previous month, attributed mainly to a dramatic increase of education services prices and depreciation of Vietnam Dong against the U.S. dollar, the General Statistics Office reported on Friday.

CPI in August increased by 0.23 % over the previous month, so increases in September were earlier forecast at between 0.8 and 1 %.

CPI in this month rose 6.46% compared to December, 2009. Vietnam targets to curb inflation this year at 7% to 8%, but this target is difficult to reach due to an uptrend in commodities prices in the rest of the year and higher import demands.

Thursday, December 16, 2010

ADB raises VN’s economic forecast to 6.7 pct

The Asian Development Bank (ADB) increased Vietnam ’s economic growth
forecast for 2010 from 6.5 percent to 6.7 percent while lowering the
inflation projection to 8.5 percent.

In its Asian Development Outlook 2010 Update (ADO Update) released in
Hanoi on Sept. 28, ADB also revised upward Vietnam’s GDP growth to 7
percent in 2011 from its April forecast of 6.8 percent.

“ Vietnam has consolidated its macroeconomic stability, and as a
result we are making upward adjustments in our growth forecast for both
2010 and 2011, while lowering the projections for inflation,” said Ayumi
Konishi, ADB Country Director for Vietnam .

According to ADB Senior Expert Lei Lei Song, Vietnam is performing well in the context of the global crisis.

“The shift from strong fiscal and monetary stimulus implemented during
the global recession to a more balanced policy stance helped to
stabilise financial and economic conditions and, together with the
global economic recovery, paved the way for solid economic growth this
year,” he said.

According to the General Statistics
Office, Vietnam ’s GDP growth rate reached 6.5 percent in the first
nine months of 2010.

Vietnam ’s neighbouring
economies, such as China , continue their robust growth next year,
which will help Vietnam ’s economy grow, Song added.

China ’s robust growth will demand more Vietnamese exports,
contributing to the Southeast Asian country’s growth, he said.

Vietnam ’s exports to China will continue to surge in the future, according to the senior expert.

Director
Konishi said as Vietnam is a low-middle-income country in the next
ten years, the country will have to face different challenges, including
how to raise the efficiency of the economy.

One of
the issues Vietnam should focus on in its economic development
strategy for the next 10 years is to identify its role in the ASEAN
bloc, he said, suggesting the country produce higher value products in
its efforts to speed up national industrialisation and modernisation.

He also recommended that Vietnam pay attention to taking measures
to narrow income gap in its development plan and attach environment
protection to development.

According to Yumiko Tamura, ADB
Principle Country Specialist, who is also Country Deputy Country
Director, developing Asia countries, including Vietnam , are
recovering with speed and vigour.

ADB forecast that these countries will see average growths of 8.2 percent in 2010 and 7.3 percent in 2011./.

Tuesday, December 14, 2010

Asia to grow 8.2 pct in 2010, slower next year

Growth across Asia and the Pacific will be the fastest this year since 2007 as the region recovers strongly from the global crisis, but will moderate in 2011

Photo: Reuters

MANILA - Growth across Asia and the Pacific will be the fastest this year since 2007 as the region recovers strongly from the global crisis, but will moderate in 2011, the Asian Development Bank said on Tuesday.

Developing Asia, a diverse group of 45 economies including China, India, Tajikistan, Samoa, and Indonesia, would grow 8.2 percent in 2010 and 7.3 percent in 2011, the ADB said in its update of its 2010 Asian Development Outlook.

The 2010 growth forecast has been revised up from 7.5 percent in April and a forecast of 6.4 percent a year ago; the 2011 forecast is unchanged from April.

"The return of investors' risk appetite for emerging market assets and the strong economic recovery have combined to bring a surge in capital flows to developing Asia," the ADB said.

Those flows -- both portfolio and direct investment -- reflected strong fundamentals and confidence in long-term reforms and growth potential, but also carried risks such as potentially destabilising markets and complicating policy setting.

"The prospect of reversal of inflows remains a possibility in the medium term as monetary tightening in the U.S. and the eurozone narrow the interest rate differentials with developing Asia," the bank said.

"Asian authorities should therefore consider appropriate policy measures to manage a surge in capital inflows and to encourage stable long-term capital flows."

The ADB said Asia would also benefit from greater coordination to overcome fears of losing export competitiveness through unilateral currency strength.

"While price stability must remain the overriding objective of monetary policy, the global crisis highlights the need to prevent asset price bubbles through improved coordination between financial regulation and monetary policy to the region."

China steady, asean up

The ADB maintained a forecast of 9.6 percent growth in China this year, supported by exports and domestic demand, and expected it to ease slightly to 9.1 percent in 2011.

Indian growth was expected to pick up slightly to 8.7 percent in 2011 from 8.5 percent this year, driven by domestic demand, company profits and favourable financing conditions.

Forecast growth for the 10 economies of Southeast Asia has been revised up to 7.4 percent in 2010 -- the fastest since 1996, before the Asian Financial Crisis -- from 5.1 percent.

"The world economy is experiencing considerable uncertainty, though, and there are signs that economic activity across Southeast Asia is starting to decelerate," the ADB said, forecasting regional growth in 2011 at 5.4 percent.

Central Asian economies were benefitting from buoyant oil and metal prices, and remittance inflows, but the ADB said there were exceptions to the regional improvement.

"Country-specific circumstances, such as devastating floods in Pakistan, the ongoing political impasse in Nepal, and political unrest in the Kyrgyz Republic will weigh on future growth," the bank said.

Thursday, December 2, 2010

Inflation pressure to increase in 4th quarter: expert

HCMC – Given the higher consumer price index in Hanoi and HCMC in September, experts have expressed concern that the whole country would see a high CPI this month, which may prompt the inflation pressure to rear its head again in the fourth quarter.

HCMC posts an estimated September CPI growth of 0.97% month-on-month after declining in two previous months while Hanoi’s CPI growth this month is expected at 0.96%.

Vu Dinh Anh, deputy head of the Market and Price Research Institute under the Finance Ministry, explained that September CPI was high due to promotions of home appliances and the beginning of the school year.

He, however, added CPI of Hanoi and HCMC this year did not affect much on the country’s inflation like in previous years, which may be due to the method of price calculation by the General Statistics Office. Anh therefore expected that September CPI of the country would be around 0.5%.

Anh also said that there would be many factors exerting pressure on inflation in the last quarter, including high global prices, and the country’s fiscal and monetary policies.

Recently, the global gold price has hit a record high, and technically that is a signal of high inflation. Global prices of some commodities such as rice and coffee have accelerated, proving the assumption above, the expert said.

From now to the end of the year, the demand for imports will increase strongly and in fact, banks have revised up their deposit rates in the U.S. dollar, meaning the demand for dollars has been increasing, he said.

In terms of macro-economic factors, the fourth quarter usually sees big State spending while credit tends to grow strongly in the last months of the year, which will also put inflation under pressure, Anh said.

Given the credit growth of about 3% in August, Anh said the possibility of credit growth exceeding 25% this year was high. He said the 25% growth target for outstanding loans was the ceiling level set to curb inflation, not the floor to push the economic growth as many people had thought.

“In my opinion, we do not need to strongly push credit growth as the country’s gross domestic products can still increase by 6.5% given the current credit growth,” he added.

The expert said he expected the Government could control the inflation at the single-digit rate this year.

Wednesday, November 10, 2010

Telecoms market to be opened up further

Photo: Reuters

Deputy Minister of Information and Communications Le Nam Thang has pledged a number of policies to encourage investors in the telecommunications sector, both domestic and international.

Thang told a forum on telecoms in Hanoi on Tuesday that the government would continue with policies to open up the domestic market and speed up global integration, including in the telecoms industry.

“The telecom sector has managed to record impressive growth in recent years and narrow the gap with developed countries, which has benefited economic growth and improved the people’s standard of living,” said the official.

The forum drew over 150 participants from domestic and international telecoms businesses, research institutions and consultancy companies.

Nitin Bhat from the company Frost & Sullivan, a global leading consultant in IT and communications, has evaluated Vietnam as a major market, with a constantly high growth rate.

He also forecast a slow-down in growth in the immediate future and urged more investment in the country’s infrastructure as well as market surveys to meet market demands, citing it as a guarantee for business success.

The International Telecommunications Union (ITU) also sees Vietnam as a rapidly growing market.

By the end of August this year, the nation has had over 156 million telephone users, over 90 percent of whom are mobile phone subscribers.

Compared with 2005, the density of telephones has increased 2.2 times, Internet subscriptions by 16 times and international connections by 28.2 times.

The telecoms industry’s revenue in 2009 reached US$6.8 billion, a growth of 2.5 times that of 2006.

ASEAN economic recovery remains robust: OECD

Photo: AFP

Southeast Asia is showing signs of moderate rebound after the global financial crisis but will remain robust, the OECD has said.

Both leading and coincident indicators for economies in the Association of Southeast Asian Nations (ASEAN) show steady growth is based on sound exports, strong domestic demand and improved business sentiment, the Organisation for Economic Cooperation and Development (OECD) said in its latest quarterly business report.

The OECD, a Paris-based international economic organisation comprising 33 of the world’s richest countries, based its forecast on data from five ASEAN nations, including Indonesia, Malaysia, the Philippines, Singapore and Thailand .

However, leading indicators suggest that growth in many ASEAN countries, while still robust, may be weakening in the next quarter, it said.

According to the report, signs of a slowdown in the Chinese economy, a key export market, constitute a negative factor for the outlook for ASEAN economies, while uncertainty about growth prospects for OECD economies remain.

OECD's forecast is in line with projections by officials and private sector economists that the pace of the region's economic rebound is likely to ease in the second half of the year, although full-year growth will remain strong.

While the OECD report did not contain projections for gross domestic product (GDP) growth in ASEAN this year, Singaporean officials have said they expect the island nation’s economy to surge by up to 15 percent.

Indonesia 's economy is expected to expand 6.0 percent and Malaysia should exceed 6.0 percent GDP growth this year, according to official estimates.

ASEAN's other members are Brunei, Cambodia, Laos, Myanmar and Vietnam.

Saturday, November 6, 2010

Asia banks set to boost lending as Basel hurdle cleared

HONG KONG/SINGAPORE - Asian lenders are set to use surplus capital to accelerate lending in the region's fast-growing economies or scout for acquisitions after new capital rules confirmed most will comfortably meet the global regulatory requirements.

The new Basel III rules announced late on Sunday will require banks to raise the level of top-quality capital they hold to 7 percent of their risk-bearing assets over the course of the next nine years. The majority of Asian banks comfortably meet that requirement already.

This means the region's banks are sitting on an estimated surplus capital of about $400 billion, according to analysts at brokerage CLSA, which will come in handy to cope with the strong loan growth expected in the region.

"Given that growth rates in Asia are so high, they may use the excess capital to finance growth and maybe we don't see much in the way of new capital raisings in the next 3-5 years," CLSA analyst Daniel Tabbush said.

Barring Japan, where demand for loans is forecast to drop 6.5 percent in 2010, most Asian countries are likely to see loan growth of between 5.7 percent to 18.3 percent over the course of 2010, according to research by Macquarie.

"The trick here is to find the well capitalized banks and match them with markets ripe for a further expansion in lending," said Ismael Pili, head of Asian financial research at Macquarie.

Pili sees banks in Indonesia - where the average common equity ratio is estimated at around 16.5 percent - having the best promise to deliver on growth, with PT Bank Panin and PT Bank Danamon having the most potential for balance-sheet expansion.

M&A possible

Banks could also look at M&A opportunities to deploy excess capital. Deal activity is seen higher in countries where credit growth is relatively slower or where banks have higher surplus capital.

"M&A is still a possibility, specially by the Chinese banks as they are the ones sitting with the biggest pool of excess capital," CLSA's Tabbush said.

CLSA estimates Chinese banks having about $153 billion in surplus capital.

Australia and New Zealand Banking Group Ltd, which wants to rapidly grow in Asia, is exploring the option to buy a majority stake in Korea Exchange Bank, which is currently valued at about $4 billion.

Still, expectations about large M&As are low due to lack of assets and regulatory restrictions.

"The problem with acquisitions in Asia is the lack of availability of assets," said Sunil Garg, a banking analyst with J.P. Morgan.

"Then there are lots of regulatory hurdles. When you get regulatory roadblocks, then it basically reduces opportunities. Hostile M&A is just not popular in Asia. So you can't do cross-border deals and you can't go hostile," he added.

Many Asian banks were holding on to excess capital due to the uncertainty over the Basel III rules. But holding on to excess capital over a longer period is set to dilute banks' return on equity, meaning some will look to raise dividends.

Friday, October 29, 2010

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

Friday, October 22, 2010

Economists cut U.S. growth forecast again

Projected US economic growth for the rest of this year and next was revised down for a third month in a row by a panel of about 50 economists.

The latest Blue Chip Economic Indicators report Thursday said the weaker outlook for second-half 2010 growth stemmed from lower expectations for consumer spending, business investment and private construction.

"Growth in the current quarter now is expected to be little better than the disappointingly soft advance registered last quarter," the survey said. Gross domestic product grew at a meager 1.6 percent annual rate in the second quarter, less than half the first quarter's 3.7 percent rate.

But the economists' group said that, after the mid-year soft patch, it saw a gradual improving trend setting in with growth slightly surpassing trend rate in the second half of 2011.

Blue Chip defines GDP trend growth at about 2-3/4 percent a year.

"For all of 2010, real GDP now is forecast to increase 2.7 percent on a year-to-year basis, 0.2 of a percentage point less than a month ago and 0.6 of a point less than predicted in June," the survey said.

Its consensus forecast for real GDP growth in 2011 was cut by 0.3 of a percentage point from a month ago to 2.5 percent.

"Given the depth of the recession, a forecast of roughly trend growth this year and next amounts to a very disappointing pace of recovery, with little progress expected to be made in lowering the unemployment rate," the forecast said.

Its consensus forecast is that the U.S. unemployment rate will end this year at 9.6 percent and fall only to 9 percent by the end of 2011.

It forecast that after averaging 554,000 new housing units in 2009, starts this year will rise to 600,000 and to 760,000 units in 2011. "Although residential investment appears destined to subtract from GDP in the second half of this year, double digit growth is expected by early 2011, with rates of growth over 30 percent by the second half," Blue Chip said.

The economists said they expect short-term interest rates to remain very low before starting to rise next summer. They said the Federal Reserve -- the U.S. central bank -- likely will keep the federal funds rate at its current range of zero to 0.25 percent through mid-2011, finally raising it to 0.75 percent by the end of 2011.

Saturday, October 9, 2010

Fitch downgrades Vietcombank, ACB on strong credit growth

HCMC – Bank for Foreign Trade of Vietnam (Vietcombank) and Asia Commercial Bank (ACB) have seen their rating downgraded to ‘D/E’ from ‘D’ by the international credit rating agency Fitch, which cited risks related to strong credit growth.

Fitch in its statement says that the downgrade reflects Vietcombank’s substantially weakened balance sheet arising from excessively strong loan growth and fragile underlying loan quality.

Furthermore, Fitch believes Vietcombank’s individual rating remains under pressure, due to increasing risk of high credit costs arising from underlying weak loan quality and limited capitalization.

Also, Fitch expects Vietcombank, along with other local banks, to continue facing a difficult environment, particularly given the Vietnamese Government’s weakening ability to manage inherently volatile market conditions when needed.

Vietcombank reported loan growth of 26% in 2009, which decelerated to 12.7% year-on-year in the first half this year, resulting in the aggregate growth of 118% between 2006 and mid-2010. However, Fitch notes that there is a risk of Vietcombank’s loan growth accelerating in the second half, given the Government’s strong encouragement to grow credits by up to 25% in 2010 as a means of supporting economic growth.

The same reason has been given for the downgrade on ACB’s Individual Rating to ‘D/E’ from ‘D’. Fitch estimates that, by end-September 2010, ACB’s capital adequacy ratio (CAR) would be lower than the new regulatory minimum of 9% that is effective from October 1.

ACB maintained its excessive loan growth in the first half this year with a 42% year-on-year increase. Fitch says that the bank’s target for 2010 is 54%, which implies a likely acceleration in lending in the second half this year, and that, if achieved, would equate to growth of 464% during 2006 - 2010.

ACB plans to raise equity capital by VND1.6 trillion and issue bonds worth VND3 trillion by end-October 2010. However, Fitch expects the bank’s capitalization to be insufficient in maintaining strong loan growth for a higher market share, and to adequately cushion against potential high credit costs.

Fitch also affirms Individual Rating at ‘D/E’ and ‘E’ for two State-owned banks namely the Bank for Investment and Development of Vietnam (BIDV) and Bank for Agriculture and Rural Development of Vietnam (Agribank), respectively.

The downgrade sparked protests from Vietcombank.

Pham Quang Dung, deputy general director of Vietcombank, told the local online newspaper Vnexpress that Fitch made assessment based on information released by the bank while the agency was not here to understand the reality of Vietnam.

Dung said the bank had got approval from the Prime Minister to spur capital by VND4 trillion that would make Vietcombank’s CAR rise to 10.5% from the current 8.45%.

“We have explained this situation to Fitch but they did not take it,” he added.

Commenting on high credit growth last year, Dung said that was due to the Government’s subsidized lending program and Vietcombank’s outstanding loans increased only 26% compared to the industry-wide growth rate of nearly 40%.

Although such a credit growth rate is high compared to international standard, Vietcombank still faced the threat of losing its market share in Vietnam, he said.

Wednesday, October 6, 2010

Vietnam predicts GDP growth rate of 6.7 pct

An apparent recovery trend that the national economy has shown in the past eight months provides experts with the grounds to predict that Vietnam will achieve a GDP growth rate of 6.7 percent and rein in inflation to below 8 percent this year.

According to the General Statistics Office, the country raked in US$44.5 billion in export earnings in the past eight months, representing a year-on-year increase of 19.7 percent and a three-fold rise over the yearly plan.

In the review period, the country attained an industrial production value of over $504 trillion, showing a year on year rise of 13.7 percent which surpassed the yearly plan.

Seeing those positive signs and the recovery of the global economy, many cabinet members at their August meeting predicted that the country’s GDP would reach 7.18 percent in the third quarter.

They forecast that it would grow at 6.7 percent for the whole year, surpassing the 6.5 percent goal targeted by the National Assembly.

There is a favourable development in the CPI, as it rose just 0.23 percent in August over July, constituting a low growth rate in the fifth consecutive month. It rose just 5.08 percent compared with December, 2009.

If CPI growth is maintained at this speed and grows 0.7 percent a month from now to the end of this year, it is forecasted not to exceed 8 percent as set early this year.

Experts say in this difficult circumstance, reining in inflation is significant as it will enable policymakers to take bolder steps in managing the macro economy and make the life of people, especially low-income earners, more stable.

To fulfill the yearly growth targets and deal with elements that can drive prices up in the remaining months of the year, including natural disasters, diseases, and fluctuations in the world market, Prime Minister Nguyen Tan Dung has in the cabinet’s August meeting asked relevant ministries, sectors and localities to continue providing businesses with the best conditions they can to boost their production and exports and lure more local and foreign investment.

He also asked relevant agencies to intensify the management of prices, bank loan interest rates and the foreign exchange rate and make adjustments suitable for actual needs.

Saturday, October 2, 2010

Vietnam 2010 GDP to grow 6.7 pct, beating target: gov’t

Vietnam 2010 GDP to grow 6.7 pct, beating target: gov’t Vietnam's economy is expected to grow 6.7 percent this year, beating a government growth target of 6.5 percent, the government said.

The economic growth would accelerate to 7.18 percent in the third quarter ending September from a year ago, from an annual growth of 6.4 percent in the second quarter, it said.

"The GDP growth in the third and the fourth quarters of 2010 will be higher than the growth rate in the first and the second quarters as domestic production has gathered growth momentum and global trade is rising rapidly," the government said in a statement issued late on Tuesday.

The National Assembly, the parliament, has initially targeted economic growth this year at 6.5 percent, rising from 6.32 percent in 2009.

The growth forecasts were released at a monthly cabinet meeting ending on Tuesday, at which the government set a growth target of 7.5 percent for 2011, the statement said.

The target for next year needs approval from the National Assembly, which will review next year's projections during a month-long autumn session starting on Oct. 20.

Vietnam's industrial output between January and August rose 13.7 percent from a year ago to 69.51 trillion dong ($3.58 billion), more than doubling the annual expansion in the first eight months of 2009, government statistics show.

The Vietnamese government has projected average annual economic expansion of between 7.5 percent and 8.5 percent over the five years from 2011, local media reported in July.

Saturday, February 19, 2011

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