Vietnam govt seeks to lower growth target

Vietnams lawmakers should lower the countrys economic growth target, a senior official has said

Vietnam's lawmakers should lower the country's economic growth target, a senior official has said

HANOI (AFP) — Vietnam’s lawmakers should lower the country’s economic growth target to around five percent in the face of an economic slowdown, a senior official said Wednesday.

The government asked the National Assembly to agree to reduce this year’s target from the previous goal of 6.5 percent, Deputy Prime Minister Nguyen Sinh Hung said at the opening of the legislature.

A lower target is required “to create momentum for better and more sustainable development in the following years,” he said, urging legislators to make the economy’s health their top priority.

The communist country’s economy expanded by 6.18 percent last year, its lowest level in almost a decade, and Hanoi said first-quarter growth was 3.1 percent, the worst on record.

But Vietnam was one of the few countries with growth in the first quarter of the year while the world’s major economies battled recession.

Hung said the global financial and economic crisis is difficult to forecast and continues to have a negative impact on Vietnam.

“Our difficulties remain numerous”, he said, although “there have been signs that we have got out of the most difficult period”.

The global downturn has hurt Vietnam’s exports, tourist arrivals, and private sector investment, Hung said.

The World Bank has estimated 5.5 percent growth for Vietnam this year and the International Monetary Fund (IMF) predicts 3.5 percent.

“It’s still going to be a tough global environment that Vietnam faces,” the IMF’s country representative, Benedict Bingham, told AFP.

Hung said that because of the downturn, state revenues have fallen while spending demands have risen, particularly for demand stimulation and social security expenditures.

The National Assembly will be asked to approve a maximum eight percent budget over-spending in 2009 to allow for the needed expenditures, Hung said.

In December the government announced a stimulus plan worth about one billion dollars.

During its 28-day sitting — almost all of which is behind closed doors — the assembly is expected to revise tax law as part of its effort to stimulate demand, officials said previously.

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Donors pledge $5 bln soft loans, grants to Vietnam

Vo Hong Phuc, Minister of Planning and Investment in Vietnam and Consultative Group co-chairman, left, listens as James W. Adams, vice president of the World Bank and Consultative Group co-chairman, right, speaks during closing session in Consultative Group Meeting in Hanoi, Vietnam, Friday, Dec. 5, 2008. (AP Photo/Chitose Suzuki)

Vo Hong Phuc, Minister of Planning and Investment in Vietnam and Consultative Group co-chairman, left, listens as James W. Adams, vice president of the World Bank and Consultative Group co-chairman, right, speaks during closing session in Consultative Group Meeting in Hanoi, Vietnam, Friday, Dec. 5, 2008. (AP Photo/Chitose Suzuki)

HANOI, Vietnam (AP) — International aid donors pledged $5 billion in low-interest loans and grants to Vietnam on Friday, with the total falling slightly from last year because Japan has frozen aid until the communist country takes effective measures to tackle corruption.

Last year, donors pledged $5.4 billion in official development assistance to booming Vietnam, which has recorded economic growth of at least 7 percent annually over the past decade.

On Thursday, Japan, which has provided more development aid than any other country to Vietnam, said it would make no new loans to Vietnam next year.

The announcement came after four Japanese executives pleaded guilty last month to paying $820,000 in bribes to a Vietnamese official overseeing a highway project in Ho Chi Minh City, the country’s southern commercial and financial hub.

Tokyo has said it would only resume providing aid to Vietnam when effective anti-corruption measures are in place.

Other donors also raised concern about corruption, as well as the recent arrests of two Vietnamese journalists.

“The events of the last six months have raised concerns with respect to whether the media is being encouraged to actively report on corruption within the government,” said James Adams, vice president of the World Bank.

Minister of Planning and Investment Vo Hong Phuc replied that the journalists “were arrested for breaching laws, not because they were fighting corruption.”

Phuc praised international donors for their support in the face of a deepening global economic downturn.

“In spite of difficult times and the financial crisis, most countries have increased their aid commitment to Vietnam,” Phuc said. “This reflects the donors’ support for the policies of the Vietnamese government.”

The World Bank became the largest aid donor, with a pledge of $1.66 billion, and the Asian Development Bank pledged $1.57 billion. The European Union will give $893 million.

Over the past three years, donors have pledged a total of $13.6 billion in development aid to Vietnam, of which over $6 billion has been spent, mostly on infrastructure projects, according to the government.

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Corruption could hinder growth, international expert warns

Harvard Business School Professor Michael Porter (L) and Deputy Prime Minister Hoang Trung Hai in Hanoi Tuesday

Vietnam’s leaders need to urgently tackle corruption, which is putting economic growth at risk, an economic expert has warned.

Harvard Business School Professor Michael Porter said a strong press was a key plank in exposing and preventing corruption.

“Corruption could make any country’s progress come to a complete stop,” Porter told the Global Competitiveness and Competitive Advantages of Vietnam conference in Ho Chi Minh City on Monday.

The country has experienced impressive growth over the last two decades, Porter said. However, reforms so far have not been enough to lift Vietnam to the middle income economy bracket.

The reforms implemented over the next couple of years will determine whether the country will follow the experience of the Republic of Korea or the Philippines, he said.

South Korea had a nominal annual per capita income of US$20,015 in 2007. In the same year, the Philippines had a per capita income of $1,626 and Vietnam $829, according to International Monetary Fund estimates released last month.

Porter said every country’s competitiveness depended on its efficient use of human capital, cash and natural resources.

According to the Global Competitiveness Report 2008, Vietnam’s global competitiveness index score was -0.35, with the nation’s monthly minimum wage at about $50.

Vietnam fell two places to 70th in the 2008 Global Competitiveness Report, chaired by Porter and released in October by the World Economic Forum.

A series of experts have identified the key barriers to Vietnam’s economic growth as high inflation, poor infrastructure and a lack of skilled laborers.

Porter said the current global economic downturn meant Vietnam should set its key priorities as reducing corruption, improving infrastructure and improving the skills of its workforce.

He said the government also needed to urgently introduce the financial market reforms that were part of Vietnam’s World Trade Organization (WTO) commitments, as well as reform state-owned enterprises.

The more important thing was for all levels of government to commit to the same agenda, he said.

Too many levels of government in Vietnam was also holding back development, with each locality working on its own programs, Porter said on the sidelines of another seminar in Hanoi Tuesday.

Economists and policy-makers, including Deputy Prime Minister Hoang Trung Hai, also attended the Country Competitiveness Discussion in Hanoi.

Some attendees at the HCMC conference on Monday said the government had made a good start in tackling corruption.

“I do believe the government here is on the right track to fight corruption despite lots of work needing to be done in the time ahead,” Bo Eklund, Danish businessman and general director of private equity fund management company FMS Vietnam, told Thanh Nien Daily on the sideline of the seminar.

In the long term, Vietnam could focus on agricultural development to turn itself into one of the world’s largest suppliers of food and foodstuffs, Porter said. Alternatively, the country could invest in warehouses and seaports to become a leading global cargo transit center.

Do Xuan Quang, managing director of freight forwarding company Vector Aviation, said Porter’s proposal for Vietnam’s competitiveness plan should guide the nation’s policymakers.

“Porter’s competitiveness action agenda for Vietnam sounds great but the issue is how we will implement it,” said Pham Chi Lan, vice president of the Institute of Development Studies.

Pho 24 restaurant chain founder Ly Quy Trung also said Porter’s message seemed sensible.

“Our economy still expects shortcomings next year,” Trung said. “However, crisis always goes along with opportunity.”

The competitiveness seminar in HCMC was hosted by the Pace Institute of Directors and attracted more than 1,000 attendees from Vietnam and neighboring Asian countries.

Reported by Vinh Bao – Truong Son

Central bank lowers rates for fourth time to boost growth

The State Bank of Vietnam cut interest rates for the fourth time in six weeks to sustain the economy as the global financial crisis undermines growth.

The key rate would fall to 10 percent from 11 percent, effective December 5, the government said in a statement. The refinancing rate will decline to 11 percent from 12 percent and the discount rate to 9 percent from 10 percent, also effective from the same date.

“This is a clear message that the government will make an all-out effort to help the slowing economy after containing inflation,” said Tran Phuong Binh, chief executive officer of Ho Chi Minh City-based DongA Commercial Bank.

Vietnam’s exports, tourism and services are suffering because of the global crisis, Prime Minister Nguyen Tan Dung said on November 27, according to a report on the government’s website. The key rate will probably fall to 7 percent by mid-2009 as the government tries to maintain growth, Deutsche Bank AG said last week.

Lower rates may help revive lending for struggling industries such as construction, after steel companies warned of a sharp decline in sales.

“The central bank’s rate cut is good in general, since it will force banks to lower their lending rates,” said Hoang Thach Lan, chief analyst of HCMCbased SME Securities Co.

The central bank reduced the amount of compulsory reserves that banks have to set aside by 2 percentage points to 6 percent.

“Pull out the stops”

The government will “pull out all the stops” to promote economic growth, London-based Standard Chartered Plc said last week.

Consumer prices rose 24.2 percent in November from a year earlier, the third straight month that inflation slowed after peaking at 28.3 percent in August.

Vietnam has slashed its economic growth target for this year to 6.7 percent from an earlier goal of as much as 9 percent. The central bank has switched tack after pushing the key rate to 14 percent this year, the highest level in Asia.

Source: Bloomberg

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Vietnam Money-Interest rates ease, dong stabilises

HANOI, Nov 17 (Reuters) – Vietnamese banks cut their dong lending rates further on Monday after a central bank rate cut earlier this month, while the dollar/dong exchange rate stabilised, bankers said.

Vietnam’s four largest banks lowered their overnight dong loans to between 8 and 10 percent on the interbank market, against a fixing of 9.16 percent a week ago, Reuters data showed.

Vietcombank, Vietnam’s largest partly private lender, said it was cutting

the prime rate on dong loans to 13.5 percent on Monday, the lowest on the domestic market, from 15.2 percent.

Vietcombank was competing with BIDV, Vietnam’s second-largest lender, which offered 14 percent as of Monday for dong loans to businesses dealing with essential commodities such as oil products, steel, cement, fertiliser and cement.

The central bank cut its base rate to 12 percent from 13 percent on Nov. 5 — the second cut in two weeks — and lowered the compulsory reserves required

on bank deposits to support economic growth.

Vietnam should keep lowering interest rates next year and manage the exchange rate flexibly in the face of a worsening global economy, Prime Minister

Nguyen Tan Dung said last week.

The State Bank of Vietnam set the official mid-point for interbank trade at 16,490 dong per dollar on Monday, the highest since Aug. 11, after widening the trading band to 3 percent either side of the mid-point from Nov. 7, up from 2 percent.

The U.S. dollar has traded at more than 17,000 dong per dollar on the free market since the band was widened, while on the interbank market commercial

banks quoted it at near to 17,000 dong, the central bank said in its market review.

The official exchange rate of the dong as set by the central bank has fallen 2.3 percent against the dollar this year but has stabilised at just under

17,000 per dollar on the interbank market in recent sessions.

Vietnam will maintain a flexible monetary policy to support exports and follow market signals to determine foreign exchange rates, central bank governor

Nguyen Van Giau told parliament last week.

Earlier this month the National Assembly approved an export growth target

next year of 13 percent, slowing significantly from this year’s expected growth of nearly 34 percent.

(Reporting by Ho Binh Minh; Editing by Alan Raybould) Keywords: MARKETS VIETNAM/RATES (ho.minh@thomsonreuters.com; +844 3825 9623; Reuters Messaging: ho.minh.reuters.com@reuters.net)

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Vietnam’s GDP in first nine months lags behind target

AFP , HANOI
Tuesday, Sep 30, 2008, Page 11

Vietnam’s economy grew 6.5 percent in the first nine months of the year, lower than its target but still “encouraging” in the “context of a deteriorating world economy,” the government said yesterday.

To reach the official aim of 7 percent growth for the whole year, “the GDP growth for the remaining three months must be 8 percent,” said an official report from the state-run General Statistics Office (GSO).

Amid double-digit inflation, Vietnam had to lower its growth target for this year after recording 8.5 percent growth last year.

But some parts of the media estimate the economy will grow at less than the 7 percent target, while the government says it has changed its focus from high growth to containing inflation to ensure stability and social security.

Vietnam’s inflation rate this month reached 27.9 percent compared with a year ago.

In terms of foreign direct investment (FDI) between January and September, the value of licensed projects reached US$57.1 billion, the GSO said.

Malaysia topped the list of leading investors, with US$14.9 billion for 37 projects. Then came Taiwan, Japan, Brunei and Canada.

According to the GSO, the FDI figure increased sharply because of the granting of licenses for a number of multibillion dollar projects to build steel factories, oil refineries and residential areas.

Disbursed FDI for this period reached US$8.1 billion, up 37.3 percent from a year ago.

The GSO also said industrial production in the first nine months of the year reached more than 493,000 billion dong (US$29.7 billion), up 16 percent year-on-year.

Source: Taipei Times

Vietnam economic growth at 6.5 percent in first nine months

A rice cart being pulled in Ho Chi Minh City

A rice cart being pulled in Ho Chi Minh City

HANOI (AFP) — Vietnam’s economy grew 6.5 percent in the first nine months of the year, lower than its target rate but still “encouraging” in the “context of a deteriorating world economy”, the government said Monday.

To reach the official aim of 7 percent growth for the whole year, “the GDP growth for the remaining three months must be 8 percent,” said an official report from the state-run General Statistics Office (GSO).

Amid double-digit inflation, Vietnam had to lower its growth target for 2008, after recording 8.5 percent growth in 2007.

But some parts of the media estimate the economy will grow at less than the 7 percent target, while the government says it has changed its focus from high growth to containing inflation to ensure stability and social security.

Vietnam’s inflation rate in September reached 27.9 percent compared to a year ago.

In terms of foreign direct investment (FDI), between January and September, the value of licensed projects reached 57.1 billion dollars, the GSO said.

Malaysia topped the list of leading investors, with 14.9 billion dollars for 37 projects. Then came Taiwan, Japan, Brunei and Canada.

According to the GSO, the FDI figure increased remarkably due to the granting of licences for a number of multi-billion dollar projects to build steel factories, oil refineries and residential areas.

Disbursed FDI for this period reached 8.1 billion dollars, up 37.3 percent against the same period last year.

The GSO also said industrial production in the first nine months of the year reached more than 493,000 billion dong (29.7 billion dollars), up 16 percent year-on-year.

AFP: Vietnam economic growth at 6.5 percent in first nine months

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