Vietnam walks tightrope between inflation and downturn

HANOI – VIETNAM, like much of the world, is trying to stimulate its economy amid the global downturn, but it is in a quandary because it must also keep rampant inflation from flaring up again, say experts.

With a small and relatively insulated banking sector, Vietnam was not directly exposed to the subprime crisis that sparked the Wall Street meltdown and the subsequent worldwide credit crunch and turmoil on global financial markets.

But the wider economic repercussions of what has been called the worst global economic crisis since the Great Depression are already being felt in this developing economy, especially in the crucial export sector.

Amid slackening overseas demand, Vietnam’s monthly exports have steadily fallen from US$6.5 billion (S$9.87 billion) in July, to US$6 billion in August, to US$5.3 billionin September, to US$5.1 billion in October.

And, although it’s too early to say foreigners are pulling out of financial markets, in the past month they have been net sellers of bonds and stocks.

Inflation has been in double digits all year and stood at 26.7 per cent in October, a slight fall after a drop in global energy and commodity prices.

Aiming to reduce liquidity to fight inflation, the government had raised interest rates and bank reserve requirements several times this year.

But this has also starved businesses of credit for investment and working capital, forcing the central bank to reverse its monetary policy as both local and international factors have slowed economic growth in Vietnam.

Since late October, the State Bank of Vietnam has twice lowered its benchmark rate. It now stands at 12 per cent and Prime Minister Nguyen Tan Dung last week said more rate cuts could be expected to free up credit next year.

Mr Pham Do Chi, chief economist at investment fund VinaCapital Group, agreed that ‘the government can further reduce interest rates to help stimulate the economy through the domestic private sector and the foreign-invested sector.’

‘They may reduce the base interest rate further, by two percentage points in the next three months. The economy can absorb this because we have seen that inflation is coming down, and the economy is already cooling off.’

Consumer price increases started to level off in September and fell month-on-month by 0.2 per cent in October, government data said.

The communist government’s target is to bring annual inflation down to 23-24 per cent in 2008, and to less than 15 per cent in 2009, to defuse a major source of public anger and a wave of labour unrest.

Leaders have also cut the economic growth target from 8.5 per cent last year to around 6.5 per cent for this year and next – although some economists predict gross domestic product growth below six percent next year.

The government also predicts that export growth will slow to about 13 per cent in 2009 from a projected 33 per cent this year.

‘As the situation has completely changed in the space of three, four months, lowering the rates goes rather in the right direction,’ said Mr Sebastien Barbe, economist at Calyon of Credit Agricole French group, based in Hong Kong.

Vietnam’s inflation ‘is enormous but it will be less and less of a concern because disinflation forces that are at work everywhere are very, very strong.’

Still, Vietnam’s room for manoeuvre remains limited because the inflationary risk in the country has not disappeared. Some experts warn for example that public service wage increases next year could contribute to driving up prices again.

‘The main challenge is how you manage the macroeconomic situation in such a way that you can cope with the global economic slowdown… without rekindling inflationary pressures of the very recent past,’ said Mr Chi.

Mr Vo Tri Thanh, research director at the Central Institute for Economic Management under the Ministry of Planning and Investment, said it was ‘the time for us to ease, but cautiously, macroeconomic policy.’

A loosening is necessary as ‘social issues now emerge,’ he said, pointing at the rise in the number of labour strikes and increased unemployment. — AFP

http://www.straitstimes.com/Breaking%2BNews/SE%2BAsia/Story/STIStory_302997.html

Floods kill 11 in central and southern Vietnam

HANOI, Vietnam (AP) — Flooding killed at least 11 people in Vietnam’s southern and central regions, submerged thousands of homes in its largest city and stranded air and railway passengers, officials said Sunday.

The country braced for more rain as another tropical weather system approached, forecasters said.

Floods caused by surging high tides submerged thousands of homes in the southern commercial hub of Ho Chi Minh City over the weekend, according to state media.

No deaths were reported in the city, but television footage showed homes and streets in the downtown area under three feet of water.

At least eight people were killed in heavy rains in southern Khanh Hoa province over the weekend, including a 2-year-old boy who drowned, said disaster official Pham Van Quang.

In neighboring Phu Yen province, the bodies of three children were recovered Sunday after being washed away from their homes, said provincial official Dang Thi Lanh.

The floods disrupted the main highway and railway links between northern and southern Vietnam. Flights were canceled to Nha Trang, a southern beach resort town. Thousands of passengers were stranded, Lanh said.

Rains had stopped in most areas by Sunday afternoon, but a tropical low pressure system was moving toward the country’s central and southern coast and was expected to bring more heavy rain to the already hard-hit areas, the national forecaster said.

“We have mobilized hundreds of militiamen to help people in low-lying villages to reinforce their houses,” Lanh said.

Vietnam is prone to floods, which kill hundreds each year. Last week, 94 people died in floods that inundated the capital, Hanoi, and other provinces in the country’s northern and central regions.

http://www.google.com/hostednews/ap/article/ALeqM5hxIa8SlpURJY2Ei0bTV5vxvwUkZAD94FTR3O0

Vietnam aims for quick full recovery from historic floods

Hanoi was the worst-hit locality during the historic flooding late last month. At least 22 people were reported dead or missing in the wake of the floods.

Hanoi was the worst-hit locality during the historic flooding late last month. At least 22 people were reported dead or missing in the wake of the floods.

Vietnam’s northern and north-central provinces have been asked to marshal all forces to facilitate a swift recovery from the floods earlier this month that caused nearly VND8 trillion (US$472 million) in losses.

“We have to mobilize all necessary resources to stabilize residents’ lives and resume production,” Deputy Prime Minister Nguyen Sinh Hung told an online forum on the issue Friday, which was attended by relevant authorities and officials from 18 cities and provinces.

Hung instructed concerned ministries to continue working on sending relief, preventing diseases, providing housing to affected residents, and resuming schools, hospitals and agricultural production.

He also instructed ministry and provincial officials to improve water drainage and irrigating systems and adapt production methods in line with possible disaster conditions.

The Ministry of Agriculture and Rural Development Friday reported that floods, up till Wednesday, have damaged 30,000 hectares of rice paddies, 210,000 hectares of other crops, 10,000 hectares of fruits and 40,000 hectares of fisheries, with 200,000 livestock having been swept away.

Thousands of houses are still under water and infrastructure has been seriously damaged in many areas, the ministry reported, adding that continued flooding would cause more losses with the winter cultivating season only 15 days away.

In Hanoi, 18,000 hectares were still inundated, including 26 residential areas with 8,700 households, with some areas still under 1.2 meter of water, Vice Chairman of the municipal People’s Committee Trinh Duy Hung said. The city is projected to spend VND800 billion ($47.2 million) total for relief efforts.

Many other provinces in the Red River Delta also reported that floods have seriously damaged water drainage systems and thousands of households were facing starvation.

Some provinces have requested the government to supply three months worth of rice, estimated to be around 8,400 tons, to feed households in flooded areas. The bill for recovery works is estimated to be some VND1.45 trillion ($85.6 million).

The session Friday also discussed renovating the drainage systems around the Red River Delta.

The Ministry of Agriculture and Rural Development has said VND2.49 trillion ($146.9 million) is needed to construct replacement and additional water drainage systems in the delta over the next two years.

http://www.thanhniennews.com/society/?catid=3&newsid=43760

Tropical depression, rough seas kill four

HA NOI — Four fishermen were killed off the coast of Thua Thien-Hue Province in rough seas caused by a tropical depression, said the National Steering Committee for Storm and Flood Control.

The fishermen set sail despite warnings from border soldiers and an order preventing boats from leaving harbour.

Yesterday, the tropical depression was 400km east of the coast of Khanh Hoa and Binh Thuan provinces.

Strong winds in the centre of the depression were measured at 39-61km per hour.

At 1pm today, the depression is expected to be at the latitude of 11.4 degrees north and the longitude of 108.9 degrees west, off the coast of Ninh Thuan and Ba Ria-Vung Tau provinces.

Due to the tropical depression, heavy rains and strong winds are still battering the central provinces and rough sea are expected to last for several days.

The National Steering Committee for Storm and Flood Control and the National Committee for Rescue and Research sent an urgent message requiring the provinces stretching from central Quang Binh to southern Kien Giang and other relevant agencies to implement preventive methods against the tropical low pressure.

Authorities in those provinces must control the movement of boats and broadcast regular weather forecasts.

Officials on off-shore oil rigs areas must also actively ensure the safety of people and property, said the committee.

Rescue teams are on standby.

Strong tides in HCM City hit 1.52m yesterday afternoon, higher than the peak of 1.49 m last November, said the city’s Irrigation Department

Meteorologists are concerned, as this is the first time the flood tides have topped 1.5m, and have asked citizens to prepare for possible flooding in the event dykes do not stand up to high water levels. Areas of concern in HCM City include district 12, Thu Duc, Binh Thanh, Hoc Mon and Cu Chi.

Severe cold spell

Northern Viet Nam is forecast to suffer four to five severe cold spells this January, with temperatures dropping below 15 degree Celsius, said Nguyen Lan Chau, deputy director of the Central Hydro-meteorology Forecast Centre. She noted that cold spells are arriving late this year, with each severe cold spell lasting from three to five days.

There will also be 10 less severe cold spells like the one affecting northern provinces now, said Chau.

Meteorologists said cold weather usually comes in mid-December, so with cold weather predicted until late January, the coming winter will probably last until May.

The cold weather will, however, not affect central and southern areas, expected to reach lows of 18-20 degrees Celsius from November until March.

Residents of mountainous areas like Lai Chau, Lao Cai provinces should be particularly careful this winter, said meteorologists, as temperatures may fall below three degrees Celsius. —VNS

Tropical depression, rough seas kill four

Vietnam halts election project

AGENCE FRANCE-PRESSE

Vietnam's Communist Party keeps a tight grip on all political activity, both through cells in schools and workplaces. -- PHOTO: AGENCE FRANCE-PRESSE

HANOI – COMMUNIST Vietnam’s legislature on Saturday put the brakes on a trial plan to allow direct local elections next year, in a last-minute change before closing its autumn session.

The National Assembly instead voted to extend by two years until 2011 the terms of commune and district leaders who were indirectly elected in a process vetted by the Communist Party, a legislator and media reports said.

The original pilot plan, which had been discussed by legislators and outlined in a detailed assembly paper, would have mirrored the village-level elections introduced by neighbouring China 20 years ago.

The original proposal would have seen an April 25 vote next year in which citizens in 385 communes nationwide would have directly elected their people’s committee chairperson, a post akin to town mayor.

However, in a last-minute change early on Saturday, lawmakers approved other local government reforms, but scrapped the pilot plan for direct elections at the grassroots level of the Vietnamese political system.

Mr Uong Chu Luu, the assembly’s deputy chairman, said the introduction of direct elections and ‘the development of direct democracy at the base should be introduced prudently, with appropriate steps’.

With debate finished on the topic, the assembly closed its session.

Vietnam’s Communist Party keeps a tight grip on all political activity, both through cells in schools and workplaces and through the Fatherland Front, an umbrella group for mass organisations such as farmers’ and youth unions.

Decision making in Vietnam has long been top-down, with missives spread through loudspeakers and mass mobilisation campaigns that inform people about party edicts on everything from new farm techniques to family planning.

The new pilot project had been proposed a decade after the ruling party issued its so-called Grassroots Democracy decree, which outlined ways to expand citizens’ participation, oversight and transparency in local government.

That decree – summed up by the party slogan ‘people know, people discuss, people do, people supervise’ – was meant to help defuse local grievances following outbreaks of rural unrest in northern Thai Binh province in 1997.

In recent years, amid Vietnam’s rapid industrialisation, the number of land disputes has risen in rural areas, with farmers commonly accusing local officials of corruption and taking their land without adequate compensation. — AFP

Vietnam halts election project

Vietnam to allow dual nationality

A communist poster in Hanoi

A communist poster in Hanoi

HANOI (AFP) — Vietnam has amended its nationality law to legalise dual citizenship, a change that could affect many in the Vietnamese diaspora of more than three million people, officials said Friday.

The legislature of the communist country on Thursday passed a revised law that maintains Vietnam’s long standing single-nationality principle but, for the first time, allows for a number of exceptions.

The change means that many post-war refugees and other overseas Vietnamese who have become citizens of second countries can officially reclaim their lapsed Vietnamese nationality without losing their new citizenship.

“Those who apply to regain Vietnamese nationality can retain their foreign citizenship if they have justified cause and with permission from the state president,” reported the state-run Vietnam News Agency (VNA).

The law also says that children born overseas to at least one Vietnamese parent will be able to claim citizenship of the Southeast Asian country.

The amendment brings the decade-old law in line with what has long been common practice, as many Vietnamese immigrants in the United States, Europe, Canada, Australia and elsewhere hold two or more passports.

Vietnam has in recent years stepped up efforts to lure back overseas Vietnamese or ‘Viet Kieu’ — many of whom still harbour a deep distrust of the state they once fled — along with their capital and expertise.

Many of them fled their homeland during and after the Vietnam war, which ended in 1975, often surviving harrowing journeys as boat people followed by years in crowded refugee camps to start new lives in about 100 countries.

The VNA report said a strict single-nationality rule “no longer conforms to real-life, practical situations” and had led to many violations.

The text of the amended law said that those who regain their Vietnamese nationality are “assured… all rights of citizenship and must obey all citizens’ duties towards the state and society according to its laws.”

This would suggest that those who regain their Vietnamese nationality will enjoy full rights, such as being able to buy property, but may also be subject to obligations such as military service for males.

However, the law also states that further government decrees will be issued to clarify some of the finer points of the amended law.

National Assembly deputy and Vietnamese historian Duong Trung Quoc told AFP legislators had debated whether those who regain citizenship could buy property, vote in elections and would have to do military service.

“These are not simple issues and deputies only dealt with them in principle,” he said. “Ensuring their full rights to citizenship is a huge task.

“Legal conflicts will be dealt with on a case-by-case basis and in concrete circumstances, depending on Vietnamese laws and international conventions signed by Vietnam.”

AFP: Vietnam to allow dual nationality

Vietnam finds three more melamine-tainted milk products : Health

Hanoi – Vietnamese health authorities have found the industrial chemical melamine in three brands of powdered milk imported from Australia, health officials said Friday. Nguyen Thi Khanh Tram, deputy director of Vietnam’s Food Safety and Hygiene Department, said the new discoveries brought the number of melamine-tainted products found in Vietnam to 32.

The three types of powdered milk were listed as Golden Food toddler formula, Happy IQ, and a generic Australian brand.

Tran Anh Tuan, director of Ho Chi Minh City-based Thuc Pham Vang Company, which imports Golden Food, said local authorities had ordered a recall of the product. She said she was not sure how much had already been sold to consumers.

Authorities said the melamine-tainted milk powder would be destroyed at toxic waste treatment stations, cement plants or biogas tanks.

Tram said the actual number of melamine-tainted products purchased for import into Vietnam was higher than 32, as some shipments had been tested at customs and sent back without entering the country. The country has 29 testing centers working on the melamine problem.

“We don’t know when it will stop,” Tram said.

Vietnamese dairy companies are experiencing financial difficulties due to the melamine scare, as consumer demand for milk has dropped.

“We suffered serious financial losses in October,” said Dang Anh Tuan, deputy general director of Hanoi Milk, the third largest dairy company in Vietnam. “We could only operate at 20 per cent of our designed production capacity.”

Hanoi Milk’s stock lost 37 per cent of its value in October.

An officer at the Mai Anh Company, which imports Happy IQ and the generic Australian powdered milk brand, said these and other melamine-tainted products had caused heavy financial losses to her company in September and October.

Melamine, an industrial chemical that causes kidney-related diseases, has been discovered in processed dairy products around the world since Chinese authorities acknowledged in September that it was widespread in milk processed by several major Chinese dairy companies. The chemical had been added by Chinese farmers to artificially boost the milks protein content.

It is used to make plastics and fertilizers.

Vietnam finds three more melamine-tainted milk products : Health

Follow

Get every new post delivered to your Inbox.