28 April, 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
NEPAL – ASIA
Nepal earthquake: Church and international community coming to the aid of survivorsThe Italian Bishops’ Conference has pledged € 3 million in emergency medical assistance. The South Korean Church has allocated funds for the displaced. India, Pakistan and China are already on the ground. A Chinese airline has hiked ticket fares to evacuate its nationals. Israel is selective in its help, airlifting 25 children of surrogate mothers and gay couples.
VATICAN
Pope prays for Nepal quake victims, hopes they receive "fraternal solidarity"A good shepherd is like Christ, someone who “is a guide, who participates in the life of His flock. He pursues no other interests, for He has no other ambition but to lead, nurture and protect his sheep. All of this comes at the highest price, that of the sacrifice of His own life.” When the pope met the crowd at the window of his study, two new priests stood by his side.
VATICAN
Pope remembers and prays for "latest tragedy" of migrants, "our brothers and sisters" who "are seeking happiness"At the Regina Caeli, Pope Francis says he is praying for the hundreds of victims in a sinking off the coast of Libya. An appeal to the international community to "act decisively and promptly." "Every baptized person is called to witness in word and deed, that Jesus is risen, He is alive and present in our midst." The Christian message "is not a theory, an ideology or a complex system of precepts and prohibitions, or moralism, but a message of salvation, a concrete event, even a person: the Risen Christ, the living and only Savior of all" . The Pope will be in Turin on June 21 to honor the Shroud, the exposition of which begins today.

Dossier

by Giulio Aleni / (a cura di) Gianni Criveller
pp. 176
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.