3 August, 2015 AsiaNews.it Twitter AsiaNews.it Facebook            

Help AsiaNews | About us | P.I.M.E. | | RssNewsletter | Mobile






mediazioni e arbitrati, risoluzione alternativa delle controversie e servizi di mediazione e arbitrato
e-mail this to a friend printable version


» 12/02/2010
VIETNAM
Vietnam must change development model
This is what many economists believe given the country’s high inflation rate, weak currency and lack of firm economic policy. The government, however, is waiting for next month’s Communist Party congress; hence, no initiative is being taken.

Hanoi (AsiaNews/Agencies) –Vietnam continues to try to attract foreign investments in order to carry on its economic development, but is faced with an 11 per cent inflation rate, a currency that is depreciating every day and a paralysed government waiting for next month’s Communist Party congress. Many analysts believe the country must change model of economic development if it wants to avoid a major economic crisis.

Vietnam’s economy grew at an average of more than 7 per cent a year over the past decade. After a blip due to the global financial crisis, it is expected to continue growing at about this rate this year.

The government has followed a development strategy based on the Chinese model. Foreign investments are attracted by low taxes and cheap wages. However, this has led to high inflation, and a weak dong, Vietnam’s currency.

Double-digit inflation has dogged the country for years, reaching a 28 per cent peak in August 2008. For 2010, the government set a target of 8 per cent but by September, inflation was rising by 1 per cent a month. Last month, it stood at 11 per cent annually.

The cost of basic items like food has risen rapidly, despite government threats to set a ceiling. The cost of sugar and some other items jumped by up to 80 per cent over the past year, driven by rising global prices and a declining dong. Summer floods in central Vietnam that wiped large areas of cropland made matters worse.  Economists now expect further increases before the Lunar New Year, in February 2011.

Meanwhile, the dong is slipping in value. Other Southeast Asian currencies such as the Thai baht and the Singapore dollar have been appreciating against the US dollar this year as hot money flowed into their economies. By contrast, Vietnam’s central bank has devalued the dong three times against the dollar since November 2009. This has favoured economic growth but raised concerns about the country’s macroeconomic stability and confidence in its economic policies.

On the black market, the dong was trading at 21,500 to the US dollar, more than 10 per cent below the official exchange rate. And yet, ordinary Vietnamese and firms are snapping up dollars and gold.

The government appears reluctant to tighten credit ahead of a Communist party congress in January for fear that the growth rate might slip or cumbersome state-owned enterprises start to collapse.

However, this is impoverishing many in the population even if it attracts investments with local manufacturers churning out low cost export goods.

The situation is looking up for foreign investors and small business, but is bad news for the development of large domestic companies. Economists and some government officials think the whole approach to economic development should be reviewed.

"Reducing the fiscal deficit and tightening monetary policy are necessary now to take pressure off the currency in the short term and reduce expectations of inflation," said Jonathan Pincus, head of the Fulbright Economics Teaching Programme in Ho Chi Minh City and a former UN economist.

Without a quick action, he said, the national economy could collapse under the weight of rapid inflation, a weak currency, a large trade deficit and limited foreign currency reserves.


e-mail this to a friend printable version

See also
12/05/2012 VIETNAM
Hanoi to control inflation and credit to boost economic growth
01/28/2009 SINGAPORE
To combat economic crisis, government suggests less meat, shorter showers
09/30/2005 middle east
Foreign investments grow 51 per cent in Mideast
02/18/2011 CHINA
Foreign investments in China rise, fuelling fears about inflation
02/26/2010 INDIA
Against crisis, government to support agriculture and modernise infrastructures

Editor's choices
CHINA
Unofficial catholic community of Wenzhou speak out against forced demolition of Crosses, whole diocese fasting
by Joseph YuanAfter 90-year-old Bishop Vincent Zhu Weifang of Wenzhou led 26 priests of the open Church community to protest against the government’s act to demolish Crosses, Coadjutor Bishop James Shao Zhumin of Wenzhou also led his priests to issue an open statement “Strongly demand a halt to demolish Crosses on all churches.
CHINA
Wenzhou: 90-year-old bishop and 26 priests protest against cross demolitions
by Joseph YuanThis is not the first time that the old bishop and his priests speak out against the demolition campaign against crosses and churches, which has touched more than 400 buildings. During the protest, police tried to disperse the group, which sought to submit a petition. The faithful recite a Crown of the Divine Mercy is in support of the Chinese Church. In Lishui, churches are expected to be torn down by 31 August.
ISRAEL - IRAN
After nuclear deal, Israel ought to become Iran’s best ally
by Uri AvneryThis is the thesis of Uri Avnery, leader of Gush Shalom, a major supporter of peace between Israelis and Palestinians. According to the great statesman and peace activist, Iran only wants to be a regional power in the Islamic world, able to trade with everyone, inspired by a sophisticated experience that goes back thousands of years. Iran, which faces backward-looking Gulf monarchies and emirates, could be a great ally against Daesh. Meanwhile in Israel Netanyahu, politicians and the media continue to blunder.

Dossier

Copyright © 2003 AsiaNews C.F. 00889190153 All rights reserved. Content on this site is made available for personal, non-commercial use only. You may not reproduce, republish, sell or otherwise distribute the content or any modified or altered versions of it without the express written permission of the editor. Photos on AsiaNews.it are largely taken from the internet and thus considered to be in the public domain. Anyone contrary to their publication need only contact the editorial office which will immediately proceed to remove the photos.