Vietnam inflation slows, foreign investment surges

The Associated Press

Tuesday, October 28, 2008

HANOI, Vietnam: Vietnam’s inflation rate eased to 26.7 percent in October as global oil and commodity prices fell but remains one of the highest in Asia, according to government figures released Tuesday.

Despite high inflation, Vietnam continues to attract record foreign direct investment commitments as investors believe the country’s long-term growth prospects are sound. Pledged foreign direct investment from January to October totals $58.3 billion, up nearly six times from the same period of last year, the General Statistics Office said.

The consumer price index has now fallen for two consecutive months after reaching a 17-year high of 28.3 percent in August, the statistics office said in a statement. Vietnam usually releases economic data before the end of the reporting period based on estimates.

The government has cut fuel prices several times since August following a steep fall in the global price of crude oil. The consumer price index fell 0.2 percent from September.

Vietnam’s economy has grown rapidly over the last decade, powered by an influx of foreign capital, but began overheating last year. The economy grew 8.5 percent last year but slowed to 6.5 percent in the first nine months of this year, hit by government efforts to tame rampant inflation and a swelling trade deficit.

Food prices in September surged 40.6 percent from a year earlier and the cost of housing and construction materials jumped 22.8 percent.

Prime Minister Nguyen Tan Dung said earlier this month that the government expects inflation for 2008 to be 24 percent.

As of Oct. 22, some 953 new projects have been licensed this year, the GSO said.

Malaysia topped the list of investments by country, with investment commitments totaling $14.9 billion so far this year. The bulk that figure comes from a $9.79-billion steel mill project licensed in September.

Taiwan came second with $8.6 billion of investment commitments, followed by Japan with $7.3 billion.

http://www.iht.com/articles/ap/2008/10/28/business/AS-Vietnam-Economy.php

Vietnam faces poverty threat

The United Nations has warned that double-digit inflation and shocks from the global financial turmoil are threatening to plunge Vietnamese households living on the margins, back into dire poverty.

UN resident coordinator, John Hendra, says many groups remain vulnerable to food shortages, especially landless farmers, the urban poor and ethnic minority groups..

He says global commodity and energy prices have dropped back from their peaks this year, but Vietnam’s inflation, still stood at almost 27 per cent this month.

He says the global financial crisis will likely impact Vietnam’s export-driven economy on top of the soaring consumer prices.

Vietnam faces poverty threat

Vietnam inflation slows but economists still worried

Hanoi – Vietnam’s once-sizzling inflation rate slowed for the second straight month in October, but Vietnamese economists said Monday the government should not yet declare victory. “I am not reassured by the low inflation figure from October, because it doesn’t prove that the government’s tight monetary policy has succeeded,” said Tran Duc Nguyen, an economist and informal government adviser.

Vietnam’s consumer price index fell 0.2 per cent in October after rising 0.2 per cent in September. The figures bolstered a trend that has seen inflation fall since hitting a month-on-month high of 3.9 percent in May.

Overall, prices have risen 26.7 per cent since last October.

And economists said the slowing inflation might not be due to the government’s tight credit policies in recent months, but to lucky external factors.

“The government’s tightened credit policy has only brought partial, preliminary success,” said Vo Tri Thanh, a senior official at the Central Institute for Economic Management. “Vietnam had good luck in October, as world prices have been falling quite fast.”

Experts said the decreases were largely due to lower world commodity and energy prices and domestic fuel price cuts, as well as tightened credit by Vietnamese banks.

Thanh said Vietnam’s macroeconomy faces a variety of risks, and stabilizing it should remain the government’s top priority. Year-on-year inflation remains high, inflationary pressures still exist, bad debts burden many banks, and the country is running a high balance of payment deficit.

“It will take time to overcome the domestic causes of inflation inside Vietnam,” said Nguyen.

Nguyen said the government should tighten credit for state-owned enterprises, but loosen it to the more efficient private sector, but he acknowledged that would be politically difficult.

Consumers continue to feel the pinch of high annual inflation. The Government Statistical Office said Saturday that year-on-year food prices were up 40.6 per cent in October, though down by 0.4 per cent against September.

Prices for housing and construction materials increased 22.8 per cent year-on-year while declining 1.1 per cent month on month.

Prime Minister Nguyen Tan Dung last week told the National Assembly that the annual inflation rate for 2008 would be 24 percent, and said the government aims to bring it below 15 percent next year.

Vietnam inflation slows but economists still worried : Business

Analysts hail China, Vietnam deal

A new deal between Vietnam and China to resolve land and sea borders has been hailed as a major step forward.

Analysts say the deal will help avert fresh conflict between the two sides.

The two powers agreed in Beijing over the weekend to finish demarcating their land border this year, and to solve a maritime territorial dispute.

China and Vietnam have a tense relationship. Most recent disputes centre on the right to exploit oil and gas resources.

Border progress

The weekend deal was signed in Beijing by the visiting Vietnamese Prime Minister Nguyen Tan Dung and Chinese Premier Wen Jiabao.

“The China-Vietnam joint declaration of October 2008 represents a very positive continuation of the process of confidence-building measures that has been under way for nearly a decade,” said Dr Carlyle Thayer, visiting fellow at the Strategic and Defence Studies Centre at the Australian National University.

“It highlights areas for future co-operation and significantly sets up a hot line so the two sides can deal promptly with incidents, such as armed clashes, that arise from time to time,” he told the BBC.

He said the agreement to finish the physical laying of boundary markers along the once-disputed 1,350 km (840 mile) land border was particularly important.

The agreement also offers a plan to demarcate the Gulf of Tonkin, establish a common fisheries area and conduct joint naval patrols from time to time.

The statement did not settle the issue of the Spratly Islands, a strategic string of rocky outcrops in the middle of the South China Sea claimed by several nations.

But China and Vietnam promised to “collaborate on oceanic research, environmental protection, meteorological and hydrological forecasts, oil exploration and information exchanges by the two armed forces,” China’s Xinhua news agency reported.

This builds on the resolution earlier this year of a potential conflict provoked by Vietnam’s publishing of a Maritime Strategy for the exploitation of maritime resources.

Past disputes

China and Vietnam have an uneasy relationship.

China supported the Vietnamese Communists during the Vietnam War, but Vietnam is wary of its huge northern neighbour and, after a brief but bloody 1979 border war, lost 70 men in a brief naval battle in 1988.

The two neighbours normalised relations in 1991.

BBC NEWS | Asia-Pacific | Analysts hail China, Vietnam deal

China, Vietnam pledge to settle disputed borders, boost trade

HANOI (AFP) — In a step to resolving long-running disputes, China and Vietnam have pledged to turn contentious border areas into economic growth zones and jointly explore oil-rich offshore areas in the future.

The communist neighbours — who stress their comradely ties but also have a history of distrust and conflict — reached the agreement during a visit by Vietnamese Prime Minister Nguyen Tan Dung to Beijing, state media said.

Both countries are among claimants to the Spratly islands in the South China Sea, believed to be rich in oil and gas reserves, and claim sovereignty over the Paracel islands, which are occupied by China.

During Dung’s visit, which ended Sunday, Beijing and Hanoi “agreed to start a joint survey in the waters outside the mouth of Beibu Bay (Gulf of Tonkin) at an early date,” China’s state-run Xinhua news agency reported.

They would “gradually advance the negotiations on demarcation of these maritime zones and will jointly exploit the zones,” Xinhua said.

The statement did not settle the hot-button issue of the Spratlys, a strategic string of rocky outcrops in the middle of the South China Sea that are also claimed by Taiwan, Brunei, Malaysia and the Philippines.

But China and Vietnam pledged to “collaborate on oceanic research, environmental protection, meteorological and hydrological forecasts, oil exploration and information exchanges by the two armed forces.”

The agreement, although vague on details and timelines, signals a gradual shift in relations between East Asia’s economic giant and the southern neighbour which for many centuries was ruled by China.

The South China Sea dispute — in which Chinese naval vessels have in the past fired on Vietnamese fishing boats — has in particular stirred strong nationalistic sentiments and sparked anti-Beijing street protests in Vietnam.

“The China-Vietnam joint declaration is a major confidence building measure between two potential protagonists,” said veteran Vietnam-watcher Carl Thayer of the Australian Defence Force Academy.

“The agreement to begin work on demarcating waters outside the Tonkin Gulf will serve to reduce the area where clashes between fishermen and naval vessels are likely to occur,” he told AFP.

Earlier this year Beijing angered Hanoi when it reportedly warned US oil giant Exxon Mobil Corp that it would be barred from operating in China unless it pulled out of a joint exploration deal with Vietnam.

Last week Dung and his Chinese counterpart Wen Jiabao oversaw the signing of a strategic cooperation pact between state-run China National Offshore Oil Corp and PetroVietnam, reports said without giving further details.

Both countries also reaffirmed they would complete demarcation of their 1,350-kilometre (840-mile) land border on schedule by the end of this year.

As recently as 1979 China and Vietnam fought a brief border war in the mountainous region when China, having backed Hanoi during the Vietnam war, sought to punish Vietnam for ousting Cambodia’s China-backed Khmer Rouge.

Under both countries’ plans, Vietnam’s north is set to be transformed with industrial projects and new road and rail links that would connect China’s Yunnan and Guangxi provinces with Vietnam’s Haiphong seaport.

The ‘economic corridors’ — part of a web of highways linking China with Southeast Asia — would help boost annual two-way trade to a targeted 25 billion dollars by 2010 from 16 billion dollars last year.

Dung also visited China’s Hainan province and proposed closer shipping links with Vietnam. Other deals included a 200-million-dollar joint industrial zone in Haiphong and a light-rail project in the capital Hanoi.

Thayer said the agreement “to proceed positively in contentious areas is a positive contribution to peace and security in the region.”

“Both Premier Wen Jiabao and Prime Minister Nguyen Tan Dung have demonstrated statesmanship in these troubled times by not letting the rancour of nationalism trump economic development,” he said.
AFP: China, Vietnam pledge to settle disputed borders, boost trade

China, Vietnam to resolve disputes

Last week Mr Dung and his Chinese counterpart Wen Jiabao oversaw the signing of a strategic cooperation pact between state-run China National Offshore Oil Corp and PetroVietnam. -- ASSOCIATED PRESS

HANOI – IN a step to resolving long-running disputes, China and Vietnam have pledged to turn contentious border areas into economic growth zones and jointly explore oil-rich offshore areas in the future.

The communist neighbours – who stress their comradely ties but also have a history of distrust and conflict – reached the agreement during a visit by Vietnamese Prime Minister Nguyen Tan Dung to Beijing, state media said.

Both countries are among claimants to the Spratly islands in the South China Sea, believed to be rich in oil and gas reserves, and claim sovereignty over the Paracel islands, which are occupied by China.

During Mr Dung’s visit, which ended on Sunday, Beijing and Hanoi ‘agreed to start a joint survey in the waters outside the mouth of Beibu Bay (Gulf of Tonkin) at an early date,’ China’s state-run Xinhua news agency reported.

They would ‘gradually advance the negotiations on demarcation of these maritime zones and will jointly exploit the zones’, Xinhua said.

The statement did not settle the hot-button issue of the Spratlys, a strategic string of rocky outcrops in the middle of the South China Sea that are also claimed by Taiwan, Brunei, Malaysia and the Philippines.

But China and Vietnam pledged to ‘collaborate on oceanic research, environmental protection, meteorological and hydrological forecasts, oil exploration and information exchanges by the two armed forces’.

The agreement, although vague on details and timelines, signals a gradual shift in relations between East Asia’s economic giant and the southern neighbour which for many centuries was ruled by China.

The South China Sea dispute – in which Chinese naval vessels have in the past fired on Vietnamese fishing boats – has in particular stirred strong nationalistic sentiments and sparked anti-Beijing street protests in Vietnam.

‘The China-Vietnam joint declaration is a major confidence building measure between two potential protagonists,’ said veteran Vietnam-watcher Carl Thayer of the Australian Defence Force Academy.

‘The agreement to begin work on demarcating waters outside the Tonkin Gulf will serve to reduce the area where clashes between fishermen and naval vessels are likely to occur,’ he told AFP.

Earlier this year Beijing angered Hanoi when it reportedly warned US oil giant Exxon Mobil Corp that it would be barred from operating in China unless it pulled out of a joint exploration deal with Vietnam.

Last week Mr Dung and his Chinese counterpart Wen Jiabao oversaw the signing of a strategic cooperation pact between state-run China National Offshore Oil Corp and PetroVietnam, reports said without giving further details.

Both countries also reaffirmed they would complete demarcation of their 1,350-kilometre land border on schedule by the end of this year.

As recently as 1979 China and Vietnam fought a brief border war in the mountainous region when China, having backed Hanoi during the Vietnam war, sought to punish Vietnam for ousting Cambodia’s China-backed Khmer Rouge.

Under both countries’ plans, Vietnam’s north is set to be transformed with industrial projects and new road and rail links that would connect China’s Yunnan and Guangxi provinces with Vietnam’s Haiphong seaport.

The ‘economic corridors’ – part of a web of highways linking China with Southeast Asia – would help boost annual two-way trade to a targeted US$25 billion (S$37 billion) by 2010 from US$16 billion last year.

Mr Dung also visited China’s Hainan province and proposed closer shipping links with Vietnam. Other deals included a US$200-million joint industrial zone in Haiphong and a light-rail project in the capital Hanoi.

Mr Thayer said the agreement ‘to proceed positively in contentious areas is a positive contribution to peace and security in the region’,

‘Both Premier Wen Jiabao and Prime Minister Nguyen Tan Dung have demonstrated statesmanship in these troubled times by not letting the rancour of nationalism trump economic development,’ he said. — AFP
Breaking News

Vietnam inflation rate falls to 26.7 percent

HANOI (AFP) — Vietnam’s consumer prices rose by 26.7 percent in October against the same month last year, the state-run General Statistics Office (GSO) said in inflation data released Saturday.

The figure was lower than the year-on-year inflation rate of 27.9 percent reported in September, and consumer prices also dropped by 0.2 percent month-to-month, the first such decline in two and a half years.

The monthly fall comes amid lower world commodity and energy prices, domestic fuel price cuts and Vietnamese banks tightening credit.

Since the start of the year, Vietnam’s consumer price index has risen by 21.6 percent, said the GSO. Prime Minister Nguyen Tan Dung last week forecast that the annual inflation rate for 2008 would be 24 percent.

The GSO said that year-on-year food prices were up by 40.6 percent in October, but down by 0.4 percent against September.

Prices for housing and construction materials increased by 22.8 percent year-on-year and declined by 1.1 percent month-to month.

Beverage and tobacco prices were up by 13.3 percent compared to October 2007 but down by 0.7 percent compared to last month.

Vietnam, after more than a decade of rapid economic growth, has struggled to contain double-digit inflation this year, which hit a record 28.3 percent in August, through a policy of fiscal and monetary tightening.

AFP: Vietnam inflation rate falls to 26.7 percent

China, Vietnam seek sea border resolution this year

BEIJING (Reuters) – China and Vietnam have agreed to find a solution to a festering maritime territorial dispute this year, the two sides said in a joint statement in Beijing.

The two countries dispute sovereignty over the Spratly Islands, a string of rocky outcrops in the South China Sea suspected of containing large oil and gas deposits and also claimed by Taiwan, Brunei, Malaysia and the Philippines.

They also agreed to consult on finding “a proper area and way of making joint exploration,” the statement said, according to Xinhua news agency.

“The two countries will coordinate more closely to solve the remaining problems, so as to ensure they complete demarcation and erecting land markers along the whole borderline by year end,” Xinhua quoted the joint statement as saying.

China supported the Vietnamese Communists in their decades-long war against South Vietnam and its U.S. sponsors.

But Vietnam has traditionally been wary of its larger Asian neighbor and in 1979 the two countries fought a brief border war after Vietnam occupied Cambodia and overthrew the murderous Khmer Rouge regime that favored Beijing.

Beijing and Hanoi normalized relations in 1991.

In 1988, China and Vietnam fought a brief naval battle near one of the Spratly reefs in which more than 70 Vietnamese sailors died.

Another set of islets further north of the Spratly group, the Paracel Islands, were seized by China in 1974 and have been occupied by them ever since despite Vietnamese protests.
In July, China told Exxon Mobil Corp to pull out of an oil exploration deal with Vietnam that it saw as a breach of Chinese sovereignty.

(Reporting by Nick Macfie; Editing by David Fox)
China, Vietnam seek sea border resolution this year | International | Reuters

Vietnam Annual Inflation Slows a Second Month on Fuel Prices

By Jason Folkmanis

Oct. 25 (Bloomberg) — Vietnamese annual inflation slowed for a second month in October, eased by fuel-price cuts and the reluctance of local banks to make loans. The monthly inflation rate declined for the first time since March 2006.

Consumer prices climbed 26.7 percent in October from the same time a year earlier, according to figures released today by the General Statistics Office in Hanoi. Year-on-year inflation in September was 27.9 percent. On a monthly basis, prices fell 0.2 percent in October from September, the first decline in two-and-a-half years.

Inflation has seen “a vast improvement from earlier in the year,” DWS Vietnam Fund Ltd. said in a note sent to investors on Oct. 23.

On Oct. 21, the State Bank of Vietnam cut its key interest rate to 13 percent from 14 percent, with HSBC Holdings Plc saying the bank was encouraged by evidence of slowing inflation. U.S. Federal Reserve Chairman Ben S. Bernanke and the heads of six other central banks said this month that global inflationary pressures are moderating amid a financial crisis.

“The world is changing quickly,” said Alain Cany, the Ho Chi Minh City-based chairman of the European Chamber of Commerce in Vietnam, in an Oct. 20 telephone interview. Vietnam “may not have to fight inflation so much by themselves. Commodity prices are coming down.”

Prices in the category including transportation rose 24.8 percent from a year ago, down from a 26.1 percent annual rate in September, and fell 0.9 percent from September. The price of 92-RON gasoline, the country’s most commonly used grade, is now at 15,500 dong ($0.92) per liter, down from 17,000 dong at the beginning of the month.

Food Prices

Food prices rose 40.6 percent year-on-year, down from a 42.7 percent annual rate in September. On a monthly basis, food prices fell 0.4 percent from September, with prices in the sub- category including rice declining 1.9 percent.

Export prices for Vietnam’s top-quality rice grade fell 15 percent in the week ending Oct. 7 from a month earlier, according to the U.S. Agriculture Department. “Global rice prices continue to decline,” the Agriculture Department said in a report this month.

Prices in the category including construction materials rose 22.8 percent, down from a 26.1 percent year-on-year rate in September, and declined 1.1 percent on a monthly basis.

Local companies are having difficulty securing financing after a rise in interest rates earlier in the year and amid a government focus on keeping credit expansion in check, the U.K.-listed fund Vietnam Holding Ltd. said this month. “Inflation has responded to policy changes,” Vietnam Holding said.

Vietnam’s inflation rate in August reached 28.3 percent, the highest year-on-year level since at least 1992, according to figures from the General Statistics Office in Hanoi.

To contact the reporters on this story: Jason Folkmanis in Ho Chi Minh City at folkmanis@bloomberg.net

Bloomberg.com: Asia

Vietnam rejects wrong views on former journalists’ trial

VietNamNet Bridge – Vietnam rejected what it referred to as wrong opinions regarding the trial of two former journalists on October 24, stating that it continually encourages the press to join the fight against corruption.

The Foreign Ministry spokesman Le Dung made these remarks in response to correspondents’ questions about opinions overseas relating to the trial of Nguyen Viet Chien, a former journalist with Thanh Nien newspaper and Nguyen Van Hai, a former correspondent with Tuoi Tre newspaper, based in Ho Chi Minh City.

“We reject any wrong opinions about the trial of Nguyen Viet Chien and Nguyen Van Hai. The trial was held publicly, in line with legal procedures and in accordance with international human rights standards, including a 1966 civil rights covenant on the rights to freedom of opinion, the expression and collection of information and accompanied liabilities and duties ensuring national security and public order”, he said.

Dung noted that representatives of foreign missions and a number of foreign journalists also attended the trial.

“Vietnam is fully aware of the threat of corruption, and considers corruption as a national disaster and the fight against corruption as a very important task,” he said, adding “The Vietnamese Government always encourages the press to take an active part in the fight against corruption in a comprehensive, thorough and lawful manner.”

On October 15, the Hanoi People’s Court sentenced Chien to two years in prison and Hai to 24-month non-custodial sentence after being found guilty of the charge of “abusing democratic freedom rights to infringe upon the interests of the State, the legitimate rights and interests of organisations and individuals” under Clause 2 Article 258 of the Penal Code.

(Source: VNA)
VietNamNet – Vietnam rejects wrong views on former journalists’ trial