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.

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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).

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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.

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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.

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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)