In Hanoi, inflation could wipe out 20 years of economic growth
Hanoi (AsiaNews/Agencies) - With inflation at 18.44% in the first six months of 2008, Vietnam is raising the price of fuel and granting subsidies to a greater number of families. Meanwhile, it wants to allow ExxonMobil to develop its energy resources, but is meeting with tough opposition from China.
Yesterday, Vietnam raised oil prices by 31%, and fuel prices by 36%, from 14,500 to 19,000 dong (72 euro cents) per liter, to reduce the subsidies that the state extends to keep prices low. Inflation was at 12.63% in 2007, but it is estimated that this year it will reach 24-28%: the Asian Development Bank has warned that there is a risk of eliminating all the economic progress made in the past 20 years, and plunging the population back into hunger.
To help those most in need, the "poverty threshold" has been raised to 300,000 dong (11.3 euros) per person per month in the countryside, and to 390,000 (15 euros) in the cities. It is estimated that there will soon be 3.2-3.4 million "poor", 16.5-17.5% of the population. The government grants them various subsidies, and provides easy credit terms for poor students.
The foreign trade deficit is also on the rise, especially because of the rising costs of energy and food. Families spend 40% of their income on food.
Meanwhile, in June Hanoi permitted ExxonMobil to explore and develop its oil fields in its territorial waters. But this brought protests from China, which claims the right to develop most of the waters of the South China Sea.
Yesterday foreign ministry spokesman Liu Jianchao said that "China's position on the South China Sea matter is clear and consistent. Everyone knows about it". He was referring to the "warning" addressed by Beijing to the multinational company, telling it not to begin exploration. Sources for ExxonMobil confirm that the area belongs to Vietnam, but that the pressure from Beijing is not "easy to ignore".
But Hanoi insists that its right to the coastal waters is consistent with the UN Convention on the Law of the Sea, and foreign ministry spokesman Le Dung said that Chinese companies can also explore if this is authorized according to Vietnamese law. Experts maintain that China wants to force Vietnam to carry out joint exploration. Hanoi is sure of its rights and has interests in having outside companies develop its resources, in order to make use of these without making the necessary investment, but Beijing is capable of blocking foreign investors and the development of the oil reserves. (PB)