Vietnam’s economy: growing too fast

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://blogs.ft.com/beyond-brics/2011/04/07/vietnams-economy-growing-too-fast/#ixzz21u8ivYno



Emerging market investors tend to gravitate toward countries that have accelerating economic growth prospects.

Vietnam, which has been battling regular bouts of economic instability, is one of the few fast-growing countries in the world where investors want to see growth slow down.

On Wednesday, the Asian Development Bank became the latest financial institution to downgrade the Southeast Asian nation’s growth prospects for this year following the government’s unveiling of a package of measures designed to combat surging inflation and a lack of confidence in the financial system.

The ADB cut its forecast for GDP growth this year to 6.1 per cent from 7 per cent, arguing that if the government successfully implements its fiscal and monetary tightening policies, growth will slow but inflation will be brought under control eventually.

The package of measures – known as Resolution 11 – certainly looks the part, with the government vowing to keep borrowing rates high until inflation has stabilised, curb credit growth and cut non-recurring, non-salary spending by 10 per cent.

But, as Ayumi Konishi, the ADB’s country director, told beyondbrics: “the real test will come in the implementation.”

While inflation is a growing challenge across the region, the causes and the scale of the problem are very different in Vietnam. Across Asia, capital inflows have been driving prices higher while in Vietnam, rapid credit growth and wasteful spending by state-owned companies lies at the root of the problem.

Investors and government officials in China are spooked out by annual inflation of 4.9 per cent.

But in Vietnam, consumer prices rose by 13.9 per cent year-on-year in March.

The extent of the credit expansion in Vietnam over recent years has raised fears about financial contagion, especially in light of the problems at Vinashin, the state-owned shipbuilder that is unable to pay its foreign debt at present.

The ADB noted in its latest update on the Vietnamese economy, which was released on Wednesday, that:


The large increase in the domestic credit stock, about $100 billion during 2007–2010, raises concerns over banking asset quality, as does bank exposure to real estate and state-owned enterprises.

Most investors believe that the government allowed economic problems to build up because it was reluctant to see growth slow in the run up to the Communist party’s key five-yearly congress, which was held in January.

Politics and economics don’t always mix.

Chairman Vu, Vietnam's Coffee King

Karl Shmavonian, Forbes Staff

BY SCOTT DUKE HARRIS

It’s ten minutes before eight on a mild morning in Hanoi, and the philosopher-king of Vietnam’s potent coffee industry is down to the last 2 inches of his first cigar of the day. Chairman Vu, clad casually and crowned in a Panama hat, is said to prefer Cohiba, but this one’s a Davidoff, “a German brand,” he says through an interpreter. He offers one, but it seems a bit early in the day. 

Vietnam's coffee king, Dang Le Nguyen Vu / Photo credit: Catherine Karnow

When Dang Le Nguyen Vu isn’t running Trung Nguyen Corp. from its base in Ho Chi Minh City, he might be found at his vast retreat in the coffee-growing Central Highlands, where he has a choice of 120 horses in his riding stable.

Westerners doing business in Vietnam estimate Vu’s personal worth at north of $100 million, a mind-boggling sum in a country whose per capita income is $1,300.

On this particular day Chairman Vu, as he is often addressed, has come to Vietnam’s capital to see the prime minister and the agricultural minister to discuss the nation’s coffee policy. So he takes his morning cup and smoke at Trung Nguyen’s cafe that is near the seats of power. So near, in fact, that a few weeks later it would be cleared to make way for construction of a new ­National Assembly building.

Like many of his countrymen, Chairman Vu has his own bust of the man the Vietnamese call “Uncle Ho,” entombed not far from us this morning. But what would a communist revolutionary make of this 41-year-old capitalist?

Ho’s ghost might enjoy what Chairman Vu calls his “coffee doctrine.” Vietnam and most other coffee-growing nations, Vu points out, are poor, tropical countries that typically receive only $1 out of every $20 earned in the global coffee industry, with the bulk of profits going to the likes of Nestlé andStarbucks. “Why should we just follow that order?” he asks. With Trung Nguyen now exporting to 60 countries and reaching deeper into China and the U.S., Vu says, Vietnam can keep moving up in the multibillion-dollar industry’s value chain.

Uncle Ho wanted prosperity for Vietnam, says Dang Xuan Minh, who is both a member of the Vietnamese Communist Party and the founder of AVM, a firm that advises on mergers and acquisitions. Dang notes Oct. 13 is now VietnameseEntrepreneurs Day, dated to coincide with a letter that Ho sent to Vietnamese businessmen in 1954, thanking them for their financial support of the revolt against the French.

Vietnam’s pro-business spirit, he points out, was recently celebrated in “Entrepreneur’s Life,” a song and video that features the chairman of the company that makes Bulls Head Fertilizer crooning: “The country cannot be powerful without its people being rich.”

Chairman Vu stands out among a cadre of capitalists who are becoming inspirations for risk-taking in a changing society. Closely held Trung Nguyen won’t provide many financials but had sales of $151 million in 2011 and is clocking 78% growth this year, a spokeswoman says.

As its instant coffee wins customers in the potentially huge Chinese market—amid a culture that, like Vietnam, has long favored tea—Vu talks boldly of a major expansion that includes a two-year timetable to take his company public, not on Vietnam’s modest markets but on an international bourse. Within the company Vu pushes a battle plan envisioning investment of $800 million in factories and such over ten years.

Acknowledging that chronic tensions between China and Vietnam could complicate such plans, Vu points to the West’s stance. “We wish that every Chinese person would spend $1 per year for our coffee products,“ the spokeswoman explains.

Vu’s humble roots are another reason he stands out in a country where liberalization is often blamed for producing crony capitalism. He “went from zero to hero,” said Nguyen Viet Khoi, a professor at Vietnam’s University ofEconomics and Business.

Vu was a high school student in 1986 when Vietnamese authorities recognized that central economic planning wasn’t working in a nation devastated by decades of warfare and dependent on a weakening Soviet Union. A country of rice paddies was importing rice to feed the hungry. Vietnam’s reforms, known as Doi Moi, have moved its economy in fits and starts toward what its government calls “market-oriented socialism.”

In Vietnam business heft is said to ­require an “umbrella” of protection from influential officials. Vu may now have a few umbrellas, but his childhood was typical of the rural highlands—tending his family’s crops and pigs, helping his mother make bricks for a nearby kiln. He excelled in school and was admitted to a pre-med program at Tay Nguyen University in Buon Ma Thuot, the coffee capital.

Vu and fellow students drank a lot of joe. During his third year of studies, Vu says, he realized he didn’t want to be a physician. His mother shed tears as he told her of his plans to strike it big in ­Vietnam’s budding coffee industry.

On the small, single-room building that housed his first roaster, Vu painted the first sign for Trung Nguyen (or roughly, central highlands). His initial capital, he says, was the “trust” of growers who gave him their beans on the promise that he would share his proceeds. He made cafe deliveries by bicycle before upgrading to motorbike. Fifteen years later Vu’s company can claim 3,000 employees and a truck fleet.

Vu’s parents now live at his home outside Buon Ma Thuot, where Trung Nguyen’s “Coffee Village” features a museum and conference hall. In addition to his horses, Vu also has collected dozens of busts of such luminaries as Mao, Napoleon, Balzac and Beethoven. Why? “Big changes are usually brought about by individuals, not a group of persons,” he explains.

Vu’s rise has not come without controversy. He was singled out in a book by Vietnamese academics (not Khoi) with a title that translates as Talented and Deservingly So (National Political ­Publishing House, 2008). Of ten ­Vietnamese profiled in the book—Bill Gates and Thomas Edison were among the foreigners featured—all but Vu were historical figures. The authors devoted 42 pages to Vu, compared with 25 for Ho. “Shocked With the Book Putting CEO of Trung Nguyen With Great Man,” declared one headline among many. In a letter Vu denied accusations that he “bought” his acclaim and also thanked the critics, ­saying that open discussion was good for the nation.

Seen by some as charismatic and eloquent, by others as polarizing and worse, Vu has helped to train other entrepreneurs and has emerged as an unofficial ambassador of Vietnam’s economic evolution. He has spoken before groups such MIT’s Sloan Fellows and hosted international coffee confabs. Harvard professor Peter Timmer, a food-security scholar who often visits Asia, says that he and Vu have had several long conversations.

“My sense is that Vu is very smart and also a real leader in the business sense. He has a vision about what the company can do, and he can communicate that vision to the entire staff,” Timmer says. “They buy into it and become highly effective ­employees, thus helping to bring about the vision.”

He adds: “Henry Ford was like that; George Eastman was like that; Steve Jobs was like that. I’m not sure it’s appropriate to put Vu in that category quite yet, but he does strike me as one of the most successful entrepreneurs in Southeast Asia.”

In 2007 Vietnam got membership in the World Trade Organization. Before a recent slowdown from efforts to control rampant inflation, its economy had been growing at a 7% annual clip, enabling its populace to edge into “middle income” status in 2011 as measured by the World Bank. The coffee industry, fueled by World Bank loans, went from being a minor ­exporter into the world’s second largest after Brazil.

In his talks with Vietnam’s leaders, Vu says he is nudging forward a “clustering” strategy to move the nation up from a grower of raw beans to a bigger role as a roaster, processor and exporter. “While you can see the economic growth in the numbers, I don’t think the old model will work in the future,” he explains. “We will need a new formula for success.”

Trung Nguyen recently added its fifth processing factory to support instant coffee exports to Korea and China, where it says its business has been exceeding 25% annual growth.

At home Trung Nguyen owns 42 cafes and its brand is featured at 1,000 others, as well as prominently at grocery stores. According to ACNielsen, it trumps Nestlé’s Nescafé and Vina-cafe Bien Hoa, held by Vietnam conglomerate Masan Group.

Vu has a model plantation that aims to increase the quantity and quality of Vietnam’s coffee by employing an irrigation system from Israel and special fertilizer from Finland. A goal is for Vietnam, the world’s top producer of harsher, cheaper Robusta beans, to boost acreage for smoother, pricier Arabica.

Embedded in Vu’s doctrine is his faith that coffee has a way of liberating thought, stimulating creativity and fueling progress. It’s a bit like crediting Seattle kiosks for Microsoft, Amazon and grunge rock. “The notion that coffee consumption is the lead indicator of progress and innovation is absurd,” Timmer says, “but he does seem to believe that.”

Packaging for Trung Nguyen’s premium Legendee coffee features the image of Honoré de Balzac and this quote: “When we drink coffee, ideas march in like the army!” Like many Vietnamese, Vu seems reluctant to talk politics. “What we stress,” he says, “is creativity and the creative energy of what people can do to change their lives.”

He concurs, however, with the view that Vietnam’s greatest obstacles to progress are corruption and its often backward schools. The two are related, he says: “Well-educated people would not tend to be corrupt people.”

Quan Hoang Vuong, an American-educated economist who has consulted for Trung Nguyen, considers Vu a friend. While Vu has some expensive tastes, Vuong says that the chairman is more interested in Vietnam’s economic and cultural progress than material wealth.

The chairman’s sensibilities are reflected in Trung Nguyen’s bilingual menu. One list of coffee selections are labeled Thoughts, Discover, Idea, Creation and Success.

As the morning chat turns, Vu warms to a suggestion that, instead of the Taoist concept of yin and yang, Vietnamese culture might be better expressed through two folkloric creatures—the turtle and the dragon. The turtle is tough, patient and perseverant, outlasting adversity. Think of the soldiers in the fabled Cu Chi tunnels, turtles by day and dragons by night, who 40 years ago turned back U.S. forces. The dragon, a fanciful symbol of luck, dares to dream and take action. “If you don’t dream, how can you turn it into reality?” Vu says, his cigar long since stubbed out. “Without action, we shouldn’t expect a good result.”

But the turtle, he adds, is important, too. “So do you want me to give you the ratio for Trung Nguyen?” A grin. “I’d say we are two-fifths turtle and three-fifths dragon.”

PM Nguyen Tan Dung approves the re-lending conditions for ADB-funded project

PM Nguyen Tan Dung approved conditions for re-lending the loan provided by the Asian Development Bank (ADB) for the Skills Enhancement Project.

The PM assigned the Ministry of Labor, Invalids and Social Affairs to work with the ADB to review criteria and select non-public vocational training schools for Vietnam Development Bank (VDB) to assess their financial capacity and liabilities.

Illustration photo

The project is worth US$78 million, of which ADB finances US$70 million. The Ministry of Labor, Invalids and Social Affairs is the project implementer.

The Project will produce a more competitive and highly skilled workforce in priority industries by developing higher level training programs at a new college level, while also establishing and strengthening system governance and quality assurance frameworks for vocational training. Studies will also strengthen the policy foundation for future development.

The project will improve the quality and management of vocational education and training (VET) programs in 15 public and five private vocational colleges (VCs) in economic zones offering programs for occupations in high demand in priority industries. The programs cover automotive technology, electrical manufacturing, hospitality and tourism, information and communication technology (ICT), mechanical manufacturing, and navigation and shipping./.

By Thuy Dung (VGP)

Vietnam, Russia to kick-start FTA negotiations

VietNamNet Bridge – Top Vietnamese and Russian leaders have agreed to accelerate negotiations and the signing of a free trade agreement (FTA) between Vietnam and the customs alliance of Russia, Belarus, and Kazakhstan.

The FTA will open up big prospects for increasing economic, trade, investment and service cooperation between Vietnam and Russia, said Prime Minister Dmitry Medvedev and visiting Vietnamese President Truong Tan Sang in Moscow on July 26.

Both leaders noted with satisfaction the positive development of trade ties between Vietnam and Russia, with the value expected to hit US$3 billion in 2012.

However, they said such an FTA is needed to increase two-way trade value which is expected to hit US$3 billion in 2012, and agreed to kick-start the FTA negotiations during the upcoming Asia-Pacific Economic Forum (APEC) summit to be held in Vladivostok, Russia, this September.

Both host and guest shared the view that the strategic partnership between Vietnam and Russia has developed well, saying bilateral political ties have been further strengthened, while mutually beneficial cooperation in economics, trade, science and technology, security and national defence, education-training, culture and tourism has been expanded substantially.

They acknowledged both sides’ efforts in undertaking strategic cooperation projects, especially those on oil and gas and the on-going construction of the Ninh Thuan 1 nuclear power plant.

PM Medvedev confirmed that Russia supports energy cooperation projects with Vietnam and creates favourable conditions for the two countries’ joint venture companies to implement signed contracts and expand oil&gas exploration in Russia.

President Sang welcomed Medvedev’s view and assured his host that the Vietnamese government supports Russian oil&gas companies in carrying out their energy projects in Vietnam.

The two leaders discussed new areas of cooperation and agreed to assist Vietnamese businesses to take part in development projects in Russia’s Far Eastern region, as well as Russian companies to do business in Vietnam.

They valued the results of bilateral cooperation in national defence and military technology, and said Vietnam and Russia should strengthen cooperation in education-training, science-technology, culture and tourism.  

They also exchanged views on fostering ties between the Communist Party of Vietnam and the United Russia Party led by Medvedev, including the exchange of high-level visits.

President Sang proposed that the Russian government create more favourable conditions for Vietnamese nationals to integrate well into the local communities.

The same day, President Sang met with Vietnamese embassy staff and representatives of the Vietnamese community in Russia. 
President Truong Tan Sang began an official five-day visit to Russia at the invitation of President Vladimir Putin.

President’s visit dominates Russian headlines

Russia’s ITAR-TASS and RIA-Novosti News Agencies and television stations have underscored the significance of President Truong Tan Sang’s visit to Russia.

They quoted Prime Minister Medvedev as saying that bilateral cooperation in trade and humanitarian areas has proved very effective, with two-way trade reaching US$3 billion in 2011.

During their coming talks, President Putin and his Vietnamese counterpart will discuss ways to promote political dialogues and broaden mutual cooperation in all aspects.

The Kremlin has issued a press release highlighting the recent results of close cooperation between the two countries in various areas, especially in tourism and education and training.

According to the release, as many as 52,000 Vietnamese experts have graduated from Russian universities, 2,200 of them as doctors and doctors of science.

There are now 6,000 Vietnamese studying at universities and colleges in Russia, 1,700 of them under an exchange program between the two countries.

The Russian side appreciates Vietnam’s unilateral visa exemption for Russian citizens visiting Vietnam within 15 days.

The number of Russian visitors to Vietnam reached 78,000 in 2011 and 87,000 in the first five months of 2012.

VNN/VOV/VNA

Prime Minister Nguyen Tan Dung promises quicker disbursement of WB funding

Prime Minister Nguyen Tan Dung has asked the World Bank to continue providing preferential loans to Vietnam, pledging to take drastic measures to accelerate the disbursement of WB funding and increase the efficiency of the use of capital.

PM Nguyen Tan Dung (R) and WB’s Vice President for East Asia and Pacific Region Pamela Cox,

Receiving the Vice President for East Asia and Pacific region of the WB, Pamela Cox in Hanoi on July 25, PM Dung thanked the bank for its policy consultation and capital lending to Vietnam .

He said despite achievements over the past time, Vietnam has yet to achieve sustainable economic growth while poverty still remains a problem. Therefore, the country continues to need assistance in terms of both advice and capital to sustain its development and avoid the “middle income trap”, Dung said.

Cox spoke highly of Vietnam ’s socio-economic achievements, particularly the government’s policies to curb inflation and stabilise macro-economy. She affirmed that the WB will always go side by side with Vietnam in the process of development, adding that she found Vietnam has used WB loans effectively./.

Source VNA

Prime Minister Nguyen Tan Dung pushes World Bank-funded project

Prime Minister Nguyen Tan Dung has asked relevant ministries, sectors and local governments to hasten the implementation of the Government’s information and communications technology development project.

With a total budget of approximately US$107 million, including a preferential loan of nearly $87.9 million from the World Bank, the project is an important part of the Government’s strategy to develop e-government services.

Prime Minister Nguyen Tan Dung

The project aims to increase access to information about policies, services and administrative procedures and improve the efficiency and transparency of Government agencies, provide better public services and more effectively cope with corruption.

It was also expected to encourage businesses to participate more actively in utilising new information technologies.

So far, however, the project, along with eight others financed by the World Bank, is still experiencing sluggish capital disbursement. As originally planned, the bank loan will have been 100 percent disbursed by 2010.

During a meeting earlier this week with representatives from the World Bank, Deputy Minister of Information and Communications Nguyen Minh Hong said that the ministry will order relevant sectors to work closely with the bank’s supervising team to review barriers and propose punitive measures to accelerate the project’s implementation.

The project is now expected to be completed by June 2013.

The scope of the project includes a strategic plan to modernise and increase the capacity of the General Statistics Office (GSO) to provide timely and reliable data on poverty and socio-economic development, as well as accelerating e-government development in the major regional cities of Hanoi, Da Nang and HCM City.

Vietnamese diplomat asks US firms for support

Vietnam’s Ambassador to the US, Nguyen Quoc Cuong, has called on American firms to support Vietnam in gaining the US’s grant of the Generalised System of Preferences (GSP) and recognition for its market economy.

At a talks with representatives of about 50 US firms in Washington on April 11, Ambassador Cuong said that any support will help increase cooperation between the two countries as well as speed up negotiations on the Trans-Pacific Partnership (TPP) agreement.

Illustrative image (Source: VNA)

He urged the American business association to lobby the US Congress and the administration to recognise the benefits of Vietnam being in the TPP negotiations, particularly in the garments and footwear sectors.

The Vietnamese diplomat stressed that the TPP agreement is extremely important for its member countries, including the US and Vietnam , when taking into account the strong development and the level of liberalisation of trade in the Asia-Pacific region.

He asked US firms to continue to invest and trade with Vietnam and pointed out that the US is Vietnam ’s largest trading partner and bilateral economic cooperation has made gains in recent time.

Calman Cohen, a representative for the US business association at the talks, spoke of Vietnam’s economic development and confirmed his association’s support for Vietnam during the TPP negotiations process.

VNA

More Japanese investors coming to Viet Nam

Japan’s investment in Vietnam has sharply increased in the first four months this year and this trend is expected to continue in the coming time.

Among 32 countries and territories having new investment projects in Vietnam since the beginning of this year, Japan took the lead with fresh capital of nearly US $2.9 billion, accounting for 67.1% of the total foreign investment.

Illustration photo

According to the Foreign Investment Agency under the Ministry of Planning and Investment, Japan currently ranks the fourth out of 94 countries and territories having direct investment in Vietnam with 1,664 valid projects worth US $23.6 billion.

Vietnam has continued to be an attractive destination for Japanese firms, according to surveys by the Japan External Trade Organization (Jetro). An online survey by a prestigious Japanese newspaper has also shown that Vietnam is the most attractive destination to expand production

Mr. Sakae Yoshida, Jetro President, said, since April 2011, over 2,400 Japanese investors have registered to get to know about Vietnam via Jetro. Besides big firms, many Japanese small-and medium-sized enterprises are also investing in Vietnam.

Mr. Hiroshi Hiramoto, General Director of Japanese securities firm JSI, said many Japanese companies want to buy stocks of well-performing Vietnamese enterprises, especially large private groups.

Picking up opportunities

In June, a Vietnamese business delegation will visit Osaka to seek business cooperation opportunities with Japanese investors.

Hai Phong is now one of Japanese investors’ favorite investment destination thanks to the city’s effort to lure Japan’s big companies and development of supporting industry to serve Japanese investors.

Meanwhile, in Da Nang, the number of small- and medium-sized enterprises from Japan is increasing.

Noticeably, the Japanese investors’ capital quality and investment structure are in line with Vietnam’s orientation for foreign investment attraction, said the Ministry of Planning and Investment.

Source VGP

ESCAP: Vietnam to grow at 5.8 percent in 2012

The UN Economic and Social Commission for Asia and the Pacific (ESCAP) has forecast the Vietnamese economy will grow at a rate of 5.8 percent in 2012 and the country’s inflation rate is likely to fall back to single digit by the second half of the year.

Illustrative image

This was part of a report on the Economic and Social Survey of Asia and the Pacific 2012 launched by ESCAP in Hanoi on May 10.

The ESCAP report analysed measures taken by the Vietnamese Government to stabilise the macro-economy since 2011.

It said that in the first four months of 2012, Vietnam saw more stable macroeconomic indexes with its remarkably declining inflation rate, sharply falling lending, lowering interest rates, stable foreign exchange rate, and increasing foreign currency reserves.

The report showed that as confidence in the Government’s monitoring policies has recovered, Vietnam should address the issues of bad debts and liquidity in the banking system.

Regarding measures to curb price hikes on goods, the report said that Vietnam needs to diversify the economy, create useful employment opportunities and increase domestic consumption.

The best way is to increase agricultural productivity, focusing on expanding non-agricultural jobs and domestic markets for agricultural products, supporting rural development and boosting a green revolution based on modern technology and new varieties as well as providing credits to poor people, it said.

On the economic situation and prospects of Asia and the Pacific, Dr. Shuvojit Bannerjee, an economic expert of ESCAP in Bangkok , Thailand said Asia Pacific will continue to be a driving force for global growth.

Asia Pacific is forecast to remain a region that enjoys the most rapid growth in the world with an estimated 8.6 percent in China and 7.5 percent in India this year, he said.

Source VNA

Vietnam inks rare earth agreement with Japan

A memorandum of understanding (MoU) on mining and processing rare earth in northern Lai Chau province’s Tam Duong district was signed with Japan on May 18.

Under the MoU signed between the Lai Chau-VIMICO Rare Earth Joint Stock Co. and the Japanese Dong Pao Rare Earth Development Co, the project will be carried out in two phases.

Rare earth sample in Vietnam

The first phase is to research and set up a mine with a capacity of 10,000 tonnes a year.

The second phase is to negotiate over the establishment of a Vietnam-Japan joint venture with charter capital of at least 30 percent of the project’s total investment value.

At a Vietnam-Japan summit in late 2010, Prime Minister Nguyen Tan Dung chose Japan as the partner for cooperation in developing the domestic rare earth industry.

He signed an agreement with Japan ’s Prime Minister Yoshihiki Noda on cooperation in this area last October.

Source VNA

More trade promotions needed on Dutch market

Vietnamese businesses need to step up trade promotions and advertising so their brand names become familiar to consumers in the Netherlands , as trade ties between Vietnam and the European country have been developing rapidly.

Illustrative image

According to the Import and Export Department at the Ministry of Industry and Trade, the value of Vietnamese exports to the Netherlands rose by 60 percent to reach 2.15 billion USD in 2011, compared to 1.33 billion USD in 2009.

In the first quarter of 2012, Vietnam posted an export value of 512.85 million USD, a rise of 8.28 percent over the same period last year. The country’s major exports to the Netherlands include footwear, garments, cashew nuts, pepper, coffee, seafood, vegetables, furniture and wooden products.

During this period, 12 out of 23 export categories reached an export value of over 10 million USD, with computers topping the list, then electronics and electronic spare parts, which accounted for 17.7 percent of the total export revenue. They are followed by telephones and spare parts, which make up 12.6 percent and by footwear at 12.08 percent.

According to experts, the Netherlands encourages import activities, creating favorable conditions for Vietnamese enterprises.

Source VNA

World Bank: Vietnam’s economy becomes more stable

Vietnam ’s economy is gradually entering a more stable macroeconomic environment after a prolonged period of heightened turbulence, said a World Bank report.

Illustrative image

At a press conference to announce the World Bank’s East Asia-Pacific Economic Update 2012 in Hanoi on May 23, the chief economic expert of the WB in Vietnam, Deepak Mishra said while Vietnam’s economy has started to stabilise, the significant tightening of macroeconomic policies, along with an uncertain global economic environment, are beginning to take a toll on economic growth.

The country’s real GDP growth decelerated from 6.8 percent in 2010 to 5.9 percent in 2011 and further to 4.0 percent in the first quarter of 2012, he said.

According to the report, tighter domestic policies in 2011 have dampened investment, particularly in infrastructure and real estate, and private consumption. Thanks to a combination of these measures and falling food prices, inflation declined to 10.5 percent year-on-year in April, 2012 from a peak of 23 percent in August, 2011.

Maintaining macroeconomic stability remains the Vietnamese Government’s priority. The country’s economic growth is expected to be around 5.7 percent, and year-end inflation is forecast to decline to below 10 percent in 2012.

In a move to shore up the economy, the State Bank of Vietnam reduced policy interest rates by 200 basis points in March and April from 15 to 13 percent, and announced further reductions of at least 100 basis points every quarter during 2012, the report said.

Cooling demand and slow credit growth should dampen the inflationary impact of the rate cuts, which at the same time should help ease financing costs for the private sector.

The report also said that Vietnam ’s public debt is likely to remain sustainable if economic recovery continues and authorities remain on the current path of fiscal consolidation.

Deepak Mishra pointed out that Vietnam ’s near-term policy challenge is to maintain macroeconomic stability and restore confidence among investors, while addressing longer-term structural reforms.

He noted that the Government is stepping up efforts to restructure small and medium-sized enterprises (SME), public investment management and the financial sector.

A number of key regulations, including those involving medium-term investment planning, management and supervision of State capital investment in SOE, and performance monitoring of SOE are likely to be enacted during 2012.

Even if only a subset of the announced structural reforms is implemented steadfastly, Vietnam should return to a more sustainable macroeconomic environment while laying the foundations for greater efficiency and productivity to drive medium and long-term growth, he said.

The WB report also indicated that growth remains strong in developing East Asia and Pacific, recording 8.2 percent in 2011, although it has slowed from its post-crisis peaks.

In 2012, East Asia will remain the strongest performing region, even though its annual growth will further moderate as a result of a continued weak external environment.

The region is projected to grow by 7.6 percent this year, with slower expansion in China pulling down much of the regional aggregate.

Source VNA

Phu Quoc to become eco-tourism centre

The Mekong Delta province of Kien Giang will develop its Phu Quoc island into an eco-tourism centre, according to the province’s tourism development strategy for the 2011-2020 period.

Phu Quoc, Vietnam’s largest island with a total area of 574 sq.km, is one of the country’s most popular tourist destinations. It is dubbed as a “tourism paradise” in the south-western region.

A beach on Phu Quoc island

Under the development plan, the island is set to welcome 1-1.2 million visitors each year by 2015, earning 209 million USD. Of the number, foreign arrivals make up 35 percent.

By 2020, the island is expected to gross 771 million USD from receiving 2-3 million tourists annually with 40 percent being foreign visitors.

With major products such as exploring, ecological and cultural tourism, the island targets to become a more attractive tourism destination to holiday-makers.

Apart from the domestic market, Phu Quoc is expected to become a popular destination for travellers from foreign markets such as Northeast Asia, North America, West Europe and ASEAN./.

Source:VNA

Vietnam rice exports hit 1.3 billion USD

Vietnam earned over 1.3 billion USD from exports of 2.78 million tonnes of rice from the beginning of the year to June 14, according to the Vietnam Food Association (VFA).

Illustrative image.

Of this total, 329,803 tonnes of rice worth 143.985 million USD were exported during June, the VFA added.

Source VNA

Viet Nam, EU begin free trade agreement talks

Vietnam ’s Minister of Industry and Trade Vu Huy Hoang and the EU’s Trade Commissioner Karel De Gutch officially began negotiations for a Free Trade Agreement between Vietnam and the EU in Brussels , Belgium , on June 26.

When delivering a speech prior to the talks, De Gutch said this is an important milestone in relations between the EU and Vietnam as well as the Association of Southeast Asian Nations (ASEAN).

Vietnamese Minister of Industry and Trade Vu Huy Hoang and the EU’s Trade Commissioner Karel De Gutch launch FTA negotiations

“I’m delighted to announce the opening of trade negotiations with Vietnam ,” he said.

“ Vietnam is our third partner in the ASEAN region after Singapore and Malaysia , with whom we launch individual negotiations.”

According to the EU Trade Commissioner, the first round of negotiations should take place just after the summer break.

When reviewing the development of Vietnam-EU relations, Hoang said that Prime Minister Nguyen Tan Dung and EC President Jose Manuel Barroso agreed to start negotiating a FTA as soon as the details of working teams were completed during the Prime Minister’s visit to the EC on the occasion of the eighth Asia-Europe Meeting (ASEM) in October, 2010.

Both parties discussed the terms of reference for negotiating the EU-Vietnam Free Trade Agreement (EVFTA), especially the commitment requirements and capacity of both signatories.

They reached a consensus at a meeting on the sidelines of the 20th ASEAN Summit in Phnom Penh , Cambodia on March 31, 2012.

The EVFTA is a comprehensive free trade agreement that accommodates the principles of the World Trade Organisation (WTO) for the benefit of all. It covers fields such as goods, services, investment and other areas of mutual concern.

During the negotiating process, they will also examine the differences in development between Vietnam and the EU, said the minister.

The EU is an important trade partner for Vietnam , which has a rapidly developing economy and is an attractive destination for EU investors.

The EU mainly imports footwear, textiles, coffee, wood and aquatic products from Vietnam while it exports machinery and other equipment, pharmaceutical products, raw materials for garments, textiles and footwear, steel and fertiliser to the Southeast Asian country.

Therefore, economic deals, especially a FTA, will be of great benefit to both parties, said Hoang.

When talking to a Vietnam News Agency correspondent in Belgium , Minister Hoang stressed that strengthening relations with the EU is one of Vietnam ’s top priorities and in line with the country’s strategy for overseas relations. Vietnam considers the FTA with the EU as important to its trade policy and is determined to speed it up, he said.

The minister said he believes that with goodwill shown from both parties, the FTA will soon come into effect, in the interests of both countries and both business communities.

For his part, De Gutch said there will be plenty of opportunity to successfully complete the signing of the EVFTA in the near future.

The agreement will bring a great deal of economic benefit to both the EU and Vietnam , he said, adding that the EU is still pursuing a FTA with the whole of ASEAN.

Two-way trade between Vietnam and the EU has developed remarkably in recent years with the EU being Vietnam ’s fourth largest investor in 2011 with an investment of 1.77 billion USD or over 12 percent of the country’s total foreign direct investment (FDI).

Since October 2009, the EU has given the green light to the European Commission to negotiate a FTA with each ASEAN member and the EU began negotiating a FTA with Singapore in March 2010 and Malaysia in October 2010.

Source VNA

Hanoi sees export turnover increase 6.6 percent

Hanoi enjoyed a 6.6 percent increase in export turnover for the first seven months of this year from one year ago, reaching almost 5.9 billion USD.

Illustrative image

However, export revenues in July dropped 1.1 percent compare with the previous month to 987 million USD. The figure also represented a 0.3 percent decrease year-on-year.

Five out of 11 main export lines still managed to earn more than the level in the previous month, which are: garment and textiles, electronics, computer components and peripheral device, handicrafts, electric wire and cable.

The export turnover is forecast to see higher growth towards the end of the year.

Source VNA

HSBC: Viet Nam to enjoy rapid trade growth in next 15 years

Vietnam is expected to see rapid trade growth in the next 15 years, according to the Global Connections Report, announced by the Hong Kong Shanghai Banking Corporation (HSBC) on July 10.

The report says that Vietnam ’s total trade value from 2012 to 2026 will rise by 187 percent, close to double the increase in global trade.

Growth is forecast to be 8.2 percent over the next five years and then at a similar pace to 2021, before slowing like its Asian peers in 2022-26 to around 5.3 percent.

Shrimp processing.

According to the HSBC Trade Confidence Index, confidence amongst Vietnamese international businesses remains stable and relatively high. Indexed scores of 116, 115 and 115 have been recorded since the first half of 2011.

Despite an 8 percent contraction since the second half of 2011, 80 percent of respondents still expect to see trade volumes remain stable or grow in the next six months.

The survey shows that in the near term, intra-regional trade will remain critical for Vietnamese businesses now and over the next six months.

Vietnam ’s major export partners are the main trading nations of the world, including the US , Japan , China and Germany . Export growths to all these markets are expected to remain strong with the US being the largest by some distance, at 6.6 percent overall.

Exports to Japan are forecast to enjoy a growth of around 6 percent while export growth to China is expected to be particularly strong at over 10 percent, reflecting the growth in intra-regional trade.

Source VNA

PM Nguyen Tan Dung okays to host a conference to review FDI attraction

PM Nguyen Tan Dung has allowed the Ministry of Planning and Investment (MoPI) to host a conference to review the attraction of foreign direct investment (FDI) over the last 25 years.

Illustration photo

The conference is scheduled to take place in mid October, 2012.

Statistics show that FDI sector makes up over 50% of export revenue and created almost two million direct jobs and tens of thousands indirect ones. At present, Vietnam is home to over 13,500 valid FDI projects.

According to the Foreign Investment Agency, in 2012, the country focuses on luring FDI inflow to areas like infrastructure, eco-friendly industries and engagement in global value chains./.

By Khanh Phuong (VGP)