Vietnam needs to change growth model: Deputy PM 

Comsumer prices rose 11.75 percent in 2010

Vietnam has to change its growth model in 2011 as the country’s economy has thus far only achieved fast but not sustainable growth, says Deputy Prime Minister Nguyen Sinh Hung.

Speaking at a press briefing in Hanoi on Friday, he said the economy had expanded 6.78 percent in 2010, higher than the target of 6.5 percent.

But there were still weaknesses, including economic instability and a high inflation rate of 11.75 percent, causing difficulties for citizens, he said.

Besides, interest rates were still high while many business depend on financing from banks.

“In 2011, the government is determined to change the growth model and restructure the economy for fast and sustainable economic growth,” he was quoted by the Vietnam Economic Times as saying.

“This means the government has identified stability as the number one goal and it will not pursue growth at all costs,” he said.

Vietnam is aiming for a 7 percent growth in 2011.

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Vietnam says will fight inflation, prices aren’t under control 

 

Vietnam will focus on fighting inflation in 2011 as the prices of some goods in the country aren’t yet under control and growth has created risks to macroeconomic stability, the government said.

Inflation accelerated to 11.09 percent in November, the fastest pace since March 2009. Economic growth for 2010 may reach 6.7 percent and accelerate to as much as 7.5 percent next year, the government said in a report released Tuesday at a conference in Hanoi.

“Prices of specific products, including milk and medicine, have yet to come under adequate control,” the government said. Vietnam’s economic growth “has generated new difficulties to macroeconomic stability,” according to the report.

Vietnam needs a “coherent package” of measures including higher interest rates to re-establish its monetary policy credibility and slow inflation, the International Monetary Fund said Tuesday.

The central bank said in a statement prepared for the conference it plans to prioritize macroeconomic stability and inflation control next year.

“The government is on the horns of a dilemma,” Australia’s Ambassador to Vietnam, Allaster Cox, told reporters at the conference.

“You’ve got the short-term needs for growth and employment generation, which are urgent to maintain social stability, and yet at the same time you’ve got to try and drive competitiveness and improve the economic engine to generate more efficiency to reduce the overheating.”

Credit may grow 25 percent to 27 percent this year, central bank Governor Nguyen Van Giau said in the State Bank of Vietnam’s statement.

‘Too high’

Lending growth of even 25 percent “is too high,” according to Masato Miyazaki, the IMF’s division chief for the Asia and Pacific department, who also said in remarks prepared for the meeting that the Vietnamese government’s actions often give an “impression” that it favors short-term growth “despite official statements to the contrary.”

Recent economic growth has been fueled by a rapid expansion in fiscal policy and credit, the United Nations said in remarks prepared for the meeting.

Vietnam faces an “increasingly deteriorating macroeconomic outlook,” the UN said, citing inflation, a current-account deficit and a weakening currency. “This is slowly eroding the public’s confidence and that of international investors and global capital markets.”

The implementation of “ad-hoc and trade-restrictive measures” to fight inflation such as price registration and import-licensing systems are unlikely to be sustainable and will contribute to hoarding, according to a joint Australian-Asian Development Bank statement to the meeting.

Binh Phuoc asked to make a big leap in economic growth

LookAtVietnam – The southern border province of Binh Phuoc should fully exploit its natural resources, including land, forests, and minerals to make a breakthrough in economic development, said National Assembly Chairman Nguyen Phu Trong.

During a visit to the province on March 11-12, Mr Trong acknowledged the socio-economic achievements that the local Party, administration and people have made since Binh Phuoc was re-established in January 1997.

He analysed difficulties and challenges facing Vietnam and Binh Phuoc in 2009 and asked the province to effectively implement the Party’s resolution on agriculture, farmers and rural development as well as the Government’s measures to maintain steady economic growth and ensure social welfare.

“Along with economic development, the province should seek ways to improve local people’s physical and spiritual lives and harmoniously settle pressing social issues such as housing, employment, education, health care and environmental protection, while creating an attractive investment environment for domestic and foreign businesses,” said Mr Trong.

He expressed hope that the local Party, administration and people of different ethnic groups would fully tap their potential to develop on a par with other provinces in the southern key economic region.

He acknowledged the province’s proposals concerning the management and use of forest land, infrastructure construction and the development of rural electricity, tourism, the border economy and industrial zones.

He said the National Assembly will examine and decide key issues within the scope of authorisation and send other contents to relevant agencies.

While staying in Binh Phuoc, Mr Trong visited the families of social policy beneficiaries, ethnic groups, village chiefs and soldiers at border guard stations.

Binh Phuoc, which has a 240km long borderline with Cambodia, is home to approximately 850,000 residents of 41 ethnic groups. It is relatively rich in natural resources, land, forests and minerals.

Despite economic difficulties last year, the province still achieved a high economic growth rate of 14 percent, double the national average.

VietNamNet/VOV

Obama says he supports free-market economic system

U.S. President Barack Obama said on Thursday that he supports the free market economic system, a move to seek support for his efforts to revive the ailing economy.

A man walks past the New York State Department of Labor in Bronx of New York, March 12, 2009. With layoffs spreading, the number of initial claims for jobless benefits rose last week, while the total number of people continuing to receive benefits set a record high, the government said Thursday. (Xinhua/Liu Xin)

During a meeting with CEOs and other top leaders, Obama said he wants government to right the ship and then “let private enterprise do its magic.”

“At these moments, government has stepped in not to supplant private enterprise, but to catalyze it, to create the conditions for thousands of entrepreneurs and new businesses to adapt and ultimately to thrive,” said the president.

He said his government must move quickly and aggressively on the most immediate threats to the American economy and financial stability — jobs, housing and credit.

“And that’s why we’ve already passed a recovery plan that will save and create 3.5 million jobs over the next two years, more than 90 percent of which will be located in the private sector,” he explained.

“That’s why we’ve launched a housing plan that will help responsible families lower their monthly payments, a plan that’s already helping responsible homeowners save money by refinancing their loans,” he added.

Meanwhile, Obama vowed to enact tough, common-sense regulatory reforms, which he said will prevent a crisis like the current one never happening again.

“There are going to be a series of fairly complex issues around regulation in the financial markets which we believe is necessary,” Obama told business leaders.

“But we are also very mindful we’ve got to do those regulatory reforms in a way that doesn’t strangle innovation and creativity and entrepreneurship but deals with the systemic risks that obviously we were unprepared to deal with when this latest crisis occurred,” he said.

“When I meet with the leaders of the other G-20 nations next month, I’ll ask them to join us in these actions, because in an age when financial transactions often cross borders, global coordination is essential to safeguard against future crises,” he added.

However, he also stressed his government believes the financial market reforms should not lead to a new “super-regulator.”

“We think it is very important that there is coordination, not necessarily a super regulator,” Obama said.

VietNamNet/Xinhuanet

Economic growth topped 6 percent in 2008


The focus of the government’s $1 billion economic stimulus package announced earlier this month would be interest rate subsidies for small and medium businesses like the cooking oil factory pictured above, Minister of Planning and Investment Vo Hong

In the face of a dramatic global slowdown and raging inflation earlier in the year, Vietnam’s economy has proved resilient.

Vietnam posted an “impressive” economic growth rate of 6.23 percent this year despite the dramatic global events, Planning and Investment Minister Vo Hong Phuc said Wednesday.

The full-year economic growth rate just missed the government’s most recent target of 6.7 percent – lowered from an original target of 7 percent – and was slower than last year’s 8.5 percent growth rate.

Phuc told a press conference in Ho Chi Minh City the nation’s 2008 year-on-year inflation rate was 19.9 percent, significantly lower than the 30 percent touted earlier this year by some economists.

Foreign investment pledges to Vietnam this year exceeded US$60 billion, with around $10 billion disbursed, Phuc said.

Phuc said he hoped even more foreign investment would be pumped into Vietnam next year as a result of the favorable investment environment the government had rolled out.

The trade deficit this year stood at $17 billion, compared with the government’s target of $20 billion, Minister of Industry and Trade Vu Huy Hoang said.

The value of exports this year is expected to hit $63 billion, a 29.5 percent increase on last year, Hoang said, while the value of imports are estimated at $79.91 billion for the year, up 27.5 percent from last year.

Small, medium enterprises targeted

Phuc used the press conference to reveal more details of the government’s $1 billion economic stimulus package announced earlier this month.

The focus on the package would be interest rate subsidies for small and medium businesses, Phuc said. The subsidies would represent a 4 percent discount on the current commercial bank loan interest rates, he said.

Proposals to set the interest rate subsidies at 5 percent will be examined by the ministries of planning and investment and finance, Phuc said.

The stimulus package will also include funding for unemployment reduction programs and support for housing development.

The government plans to expand the package to $6 billion, including $1.2 billion to be raised by the sale of government bonds. The extra spending will be directed to tax exemptions and rebates or credit guarantees for offshore loans.

Phuc said in case of an emergency, the package could be funded by Treasury reserves. He stressed any drawing on the reserves would be fully transparent.

The National Assembly (NA) will decide whether the income tax law, set to take effect on January 1, will be delayed, Minister of Finance Vu Van Ninh said.

The government has referred the proposed delay to the NA Standing Committee, which is now in session, for a final decision, Ninh said.

PRIME MINISTER’S 2008 CONCLUSIONS

At the press briefing, Government Office Chief Nguyen Xuan Phuc conveyed Prime Minister Nguyen Tan Dung’s conclusions after a two-day cabinet session that wrapped up Wednesday.

In the context of the economic slump and a series of natural disasters, the government has steered the economy in an active, flexible, determined, timely and comprehensive manner.

The government has succeeded in keeping a close eye on macroeconomic management in the sectors of national foreign currency reserves, government debt and national debt. Social welfare policies have also benefited poor and low-income people. The country is considered safe and secure by other countries.

The government took responsibility for the lower-than-targeted economic growth rate of 6.23 percent this year as well as the high trade deficit in the first quarter of this year.

Reported by An Dien

Vietnam, Japan should strengthen economic ties: PM


Prime Minister Nguyen Tan Dung has asked visiting former Japanese premier Yasuo Fukuda to support the signing of a bilateral partnership agreement between the two countries and the restoration of Japan’s aids to Vietnam.

The two countries should do their utmost to achieve both goals for mutual benefit, he said.

Receiving Yasuo Fukuda who is on an unofficial visit to Vietnam, Dung praised the support provided by the Japanese government in recent times.

However, the recent suspension of Official Development Assistance (ODA) preferential loans to Vietnam would affect the good relations between the two countries, he said.

The former Japanese government leader is on an unofficial visit to Vietnam to attend the two-day international conference on population and development that opened Saturday in Hanoi.

The two leaders agreed the Pacific Consultants International (PCI) case must be solved completely, and that ODA management should be tightened to avoid similar problems in the future.

Source:  government website

Grim economic data puts crisis summit in spotlight


A vendor sleeps on cabbages while waiting for customers at a vegetable market in Taiyuan, Shanxi province Tuesday.

Weak economic readings from China, Japan and Britain and a grim corporate outlook worldwide reinforced fears Tuesday of a prolonged recession, prompting investors to look to a world leaders’ summit for solutions.

Chinese import growth slowed in October and inflation fell to a 17-month low as domestic demand cooled, making it likely Beijing will cut interest rates soon to back up the government’s new economic stimulus plan.

“The increasing risk of deflation will make the central bank more aggressive in loosening monetary policy,” said Hu Yuexiao, an analyst with Shanghai Securities.

In Japan, exports fell nearly 10 percent in the first 20 days of October, corporate bankruptcies jumped 13.4 percent year-on-year and sentiment in its service sector hit an all-time low, all signs the world’s second biggest economy was teetering on the brink of recession.

German analyst and investor sentiment about the outlook for Europe’s largest economy improved but the ZEW survey, which measures the ratio of optimists to pessimists, still read -53.5, reflecting a large preponderance of the latter.

British retail sales fell by the biggest amount in more than three years last month, and a housing industry survey showed home sales slumped to their lowest level in at least 30 years.

“These are seriously poor numbers, especially in the run-up to Christmas,” Stephen Robertson, director general of the British Retail Consortium, said of the sales data.

The worst financial crisis in 80 years, prompted by huge banking losses in the US housing market, has now created a broad economic downturn, with even fast-growing China proving not to be immune.

Brown demands summit action

The credit crunch has seen banks clam up on lending to each other, businesses and households for over a year now.

Investors are looking to a summit of world leaders in Washington on Saturday for new solutions, following moves worldwide to cut interest rates, kick-start money markets and recapitalize banks at a cost of more than US$4 trillion.

“We need monetary and fiscal policy coordination across the world… a broad, concerted economic response is now urgent,” British Prime Minister Gordon Brown told a news conference. “The second priority is that we agree on a timetable for measures that will clean up the failings in our banking system.”

But officials are downplaying the likelihood of dramatic measures and aides to US President-elect Barack Obama – who world leaders have urged to make the credit crisis his number one priority – said he would not attend the November 15 summit.

Many in Europe want a root-and-branch reform of financial regulation but US officials have sounded more reluctant.

“Major reactions in the market may be delayed until after the outcome of the G20 meeting at the weekend,” said Hideki Amikura, deputy general manager of the forex section at Nomura Trust Bank.

Obama is expected to spend hundreds of billions of dollars in a fiscal stimulus package once he takes power in January.

Corporate pain

Inevitably, companies are not escaping unscathed.

Vodafone, the world’s largest mobile phone company by revenue, cut its full-year revenue outlook for the second time in four months but said it would maintain profits by cutting 1 billion pounds ($1.58 billion) in costs.

Samsung Securities Co, South Korea’s biggest brokerage, reported a 69 percent fall in quarterly net profit on the back of falling financial markets.

The world’s largest hotelier, InterContinental Hotels, posted a 14 percent rise in third-quarter profits but said it saw a sharp deterioration in October market conditions.

Investors, spooked by worries about the worsening corporate outlook, sold shares. Japan’s Nikkei share index dropped 3 percent and European stocks shed 2.3 percent at the open.

Monday’s optimism, sparked by China’s nearly $600 billion stimulus package, quickly evaporated.

“Worrying corporate news from the US plus suggestions that the recession will be longer and deeper than previously thought are adding to the downside,” Matt Buckland, dealer at CMC Markets, wrote in a note.

Deutsche Bank said the equity value of General Motors was now zero, sending its stock to a 62-year low, and analysts said Goldman Sachs could post its first quarterly loss.

US electronics seller Circuit City filed for bankruptcy – the biggest retailer to do so since Kmart in 2002 – and coffee chain Starbucks reported disappointing earnings.

The New York Times reported Obama urged President George W. Bush to back immediate emergency aid for car makers at their first post-election meeting at the White House.

Source: Reuters