Thread: Latest news on the Dong!

Moody’s downgrades Vietnam sovereign debt
http://www.ft.com/cms/s/0/d23cfbf0-0...#axzz18EwFRIEx

Vietnam attends Asia-Middle East dialogue forum
http://english.vovnews.vn/Home/Vietn...012/122372.vov

A Vietnamese delegation led by Deputy Foreign Minister Doan Xuan Hung, is attending the third Asia-Middle East Dialogue Ministerial Meeting (AMED III) in Bangkok on December 15-16.
Themed, “Strengthening Cooperation towards Common Prosperity,” the meeting focuses discussions on political, economic, socio-cultural and environmental issues as well as measures to promote strategic partnership among countries that used to have traditional ties via the Silk Road.

Participants will also share experiences and views on challenges Asia and the Middle East are facing such as terrorism, piracy, food security, energy and climate change.

Addressing the opening session, Thai Prime Minister Abhisit Vejjajiva said Asia continued to be dynamic and grow stronger, and it was becoming the centre of the world's trade while the Middle East continued to be the source of power and the driving force that moves the world's economy and industry forward.

The two regions have a combined GDP of US$8 trillion and hold more than 60 percent of the world's total foreign currency reserves, he said.

He called for countries to increase cooperation for common prosperity.

The two-day meeting drew the participation of governmental officials, business leaders and scholars from 36 countries in the two regions.

Hanoi property market profitable for another 10-20 years
http://english.vietnamnet.vn/en/busi...-20-years.html
VietNamNet Bridge – Continued price increases and the lack of transparency are considered the two biggest problems of the Hanoi’s real estate market. However, experts still believe that the prices will not decrease in medium term.
The information that 252 real estate projects have been put on the table of the Hanoi’s authorities and awaiting the approval may surprise many. People may fear an oversupply, which would lead to the sharp price falls. Some analysts indeed believe that 2011-2013 will be a difficult period for the Hanoi market, when the oversupply will force the prices down.

However, experts and participants at the workshop discussing the prospect of the real estate market in 2011 held by the Hanoi Real Estate Club, all said that the Hanoi market will not be gloomy in the coming years, and , investors will still be able to make profit for another 10-20 years.

The market will still be bustling

The policies encouraging Vietnam’s real estate market development have been more reasonable and more truly reflect the market performance, which has been cited by Nguyen Van Minh, Secretary General of the Vietnam Real Estate Association to prove his opinion that the 15-year old Hanoi real estate market will continue to develop strongly.

The most convincing evidence is the Government’s conclusion about the market development plan under which by 2012, the Government will submit to the National Assembly the draft bill to replace the currently valid Land Law. Meanwhile, the newly released decrees stipulate that the land use right fee imposed on real estate developers must be calculated by the prices close to the market prices. Once real estate developers have to pay more for land, they will not be able to sell at low prices.

Also according to Minh, when the strategy on the real estate market development is approved, when the development process and the opportunities in different market segments become clearer, the market would be even more bustling.

Meanwhile, the urbanization pace remains low, at 28 percent, but Vietnam is expected to enter a new stage with higher development pace of 30-70 percent.

Regarding the market demand, the housing and population count carried out in 2009 showed that the percentage of temporary and not permanent accommodations is very high, at 86.3 percent. As such, with the high GNP income growth rate, the demand for houses to improve the living conditions is still very big.

“The housing market segment will still be bustling in five or 10 years,” Minh concluded.

Hanoi – a market with specific characteristics

Besides the factors related to the supply and demand, Hanoi, as the country’s political and economic centre, has also other specific features, including the sensibilities to the Government’s policies. The real estate values in Hanoi include very high values of the land use right.

Real estate developers complain that there are many legal documents stipulating the real estate market management. However, the problem is that the legal documents guide the implementation of different laws. Therefore, it always takes real estate developers a lot of time to follow procedures for investment projects.

“In order to get the license for a project in Hanoi, real estate developers sometimes had to spend 9-10 years,” said Nguyen Trung Vu, General Director of The Ky Real Estate Corporation. It is clear that the tardiness in the implementation of projects also makes the prices higher, because the complicated procedures means developers waste time on waiting.

Vietnam likely to meet economic growth target of nearly 7 percent
http://english.vovnews.vn/Home/Vietn...012/122110.vov

Vietnam has overcome the negative impacts of the global financial crisis and become one of the most effective economies in the Asia-Pacific region.
This statement was made by delegates at the Consultative Group Meeting which opened in Hanoi on December 7.

The event was attended by Deputy Prime Minister Pham Gia Khiem, Minister of Planning and Investment Vo Hong Phuc, and Director of the World Bank in Vietnam Victoria Kwakwa as well as representatives from bilateral, multilateral and non-government organizations (NGOs) in Vietnam.

Addressing the meeting, Minister Phuc emphasized that donors and international communities have effectively cooperated with the Vietnamese government and people to help the country overcome difficulties in its process of renewal and international economic integration.

Mr Phuc hoped that in the future, donors will continue to support Vietnam in implementing its ten-year strategy (2011-2020) and the socio-economic development plan (2011-2015) and help it make perfect the socialist-oriented market economy, and develop human resources, especially highly-qualified staff.

Participants agreed that Vietnam has overcome the impacts of the global financial crisis with a GDP growth rate of 6.5 percent in the first nine months, and 7.2 percent in the third quarter alone. Vietnam is likely to meet its economic growth rate target of nearly 7 percent this year.

Delegates also said that Vietnam should speed up reforms in state-owned enterprises and state investments as well as give priority to social, environmental and economic projects.

Please keep the news coming. Thank You.

What’s Behind Vietnam ETF’s Surge?

http://blogs.barrons.com/focusonfund...am-etfs-surge/

This blog has been following with interest the recent surge by a tiny frontier market tracked by the Market Vectors Vietnam ETF (VNM).
Today, analyst Eric Dutram at ETFdb.com takes a look at the sector breakdown of the ETF and fundamental story behind the big move up by such a tiny market.
In the past month, the ETF’s up nearly 17%, according to Morningstar. But for the year, it has gained about 9%.
The article points out that favorable regulatory actions are the catalyst as the country tries to hold down interest rate spikes.
But it’s somewhat light on concerns expressed by the IMF and other leading analysts. Put into a longer timeframe, Vietnam by some views remains a relative laggard.
A post here on Dec. 9 pointed to a quote by an analyst in a Bloomberg report:
“Since 2008 the dong has been caught in that danger zone where the economy is growing below par and still running a trade deficit,” Stewart Newnham, Asian currency strategist at Morgan Stanley (MS), told a conference in Ho Chi Minh City.
Anyone interested might want to take a more diversified approach using the The Guggenheim Frontier Markets ETF (FRN) or a broader fund that leans towards that part of the world.

What is the best way to invest in Vietnam for a novice investor ?

Vietnam needs more coherent economic policies - suffers downgrade
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Updated December 17, 2010 12:30:43
http://www.radioaustralia.net.au/con...2/s3095949.htm

The challenges facing Vietnam's economy are taking their toll. High inflation, a shaky currency, a debt crisis at a large state owned company and now a ratings downgrade. Ratings agency Moodys has lowered Vietnam's sovereign debt rating and issued a warning of a looming crisis.But not everyone agrees things are all that bad.

Presenter: Karon Snowdon, finance correspondent
Speakers: Paul Gruenwald, chief Asia economist, ANZ Bank, Singapore; Dr Adam McCarty, chief economist, Mekong Economics, Hanoi
Listen: Windows Media
SNOWDON: A credit downgrade for a country is a serious matter.

GRUENWALD: We think its fairly serious. The way we view Moody's downgrade is that it's kind of formalisation of the concerns many people are having about the macro-policy stance.

SNOWDON: Paul Gruenwald is the Chief Asia Economist for the ANZ bank based in Singapore.

In cutting the country's rating by one notch, with a negative outlook, Moody's says while a debt crisis was probably not imminent, it warned that contradictory economic policies are adding greatly to the risk.

That means trouble paying debts and that sends shivers down the spines of financial markets. Six banks were also downgraded, money is leaving the country and the currency has lost a third of its value against the US dollar in three years. Moodys considers the currency is stil overvalued.

Plus the state-owned shipbuilder, Vinashin has asked for a delay on a 600 million dollar repayment due on Monday on a 4-billion dollar commercial loan. The government hasn't stepped in with help for what's considered a strategic company.

Paul Gruenwald agrees policies aren't working to control inflation - now at 11 per cent and the trade deficit is a worry.

But he says while a debt default would be serious, it's not certain to happen.

GRUENWALD: So it's not clear whether they're going to default but if they do, it's a government-guaranteed company so it looks like it would be seen as a government default in the eyes of the markets.

SNOWDON: And that has serious implications for the government's ability to borrow and carry on in the international markets, yes?

GRUENWALD: That's absolutely right, that's why we think the government will be extremely careful and tread carefully about any prospect of default. It would be a turbulent event in the markets for Vietnam if it did happen.

SNOWDON: Has the government of Vietnam ever defaulted?

GRUENWALD: It did default in the pre-reform era, back in 1985, but since the reforms started in the 1990s the government has not defaulted.

SNOWDON: Vietnam's debt problems don't approach those of some European countries by a long shot but Chief Economist with Mekong Economics, Adam McCarty, says there's a risk uncertainty could spread to include other indebted state owned companies .

MCCARTY: The macro-economic indicators are a bit shaky for Vietnam. I don't think there's a real balance of trade crisis or serious situation there. But I think the Vinashin thing is a bit of uncertainty about that from the government's side, so there's a big difference betwwwn having a large loan that's government guaranteed and one that is maybe government guaranteed.

SNOWDON: Another credit agency, Fitch, downgraded Vietnam back in July to much criticism at the time.

And problems were brewing then, while not so long ago many considered Vietnam among the most promising economies in South East Asia.

Adam McCarty says with a young well-educated population it still is.

MCCARTY: We'd be really panicking in Australia if we had 11 per cent inflation, but here if they can get it down to 7 per cent, that's fine and they can continue growing at 7 per cent.

SNOWDON: Both economists believe the problems are short term.

GRUENWALD: What they want to do of course is grow by more than 7 per cent, but in certain environments in ceraint states of the world, that's not possible. We're in one of those states right now, so yes they do have to raise interest rates and yes that will slow down growth temporarily, until they can stabilise the economy and then when things normalise then they can try to go back towards 7.

Russian province looks for Vietnam investment
A presentation day was held in Riazan province of Russia on December 16 to introduce Vietnam’s potential for economic investment in trade and tourism.

Vietnamese Ambassador Bui Dinh Dinh said although Vietnam and Russia have set up a strategic partnership, bilateral trade and investment remained modest.

“The two economies have the potential for mutual assistance instead of competition that would bring in huge interest for both sides in several sectors, including industry, tourism, technology and human resources, especially at the local level”, said the Vietnamese diplomat.

Deputy Governor of Riazan Alexander Reviakin expressed his hope that the presentation day would enable Vietnamese partners to better understand of advantages offered by the central Russian province.

Executives from industry, tourism and trade sectors, with supporting documentaries, leaflets and posters, took turns to brief Vietnamese investors on their sectors’ strengths and stimuli offered in taxes and land leases, especially for those investors interested in special economic zones based in Rizan province.

The presentation day in Riazan took place after a Vietnamese diplomatic and business mission conducted a market survey in the central Russian province in June.

VNA
http://english.vovnews.vn/Home/Russi...012/122444.vov

Vietnam urged to remove obstacles in infrastructure
http://english.vovnews.vn/Home/Vietn...012/122471.vov

In the next five to ten years, Vietnam will need around US$70-80 billion to upgrade its infrastructure which is considered one of the main tasks to improve its competitive edge in the region and to further integrate into the international economy.
In 2010, Vietnam has been successful in transitioning from a low-income country to a middle-income country by fullly tapping domestic advantages and improving business environment for both local and international investors. However, Vietnam still faces challenges in terms of infrastructure, which has a negative impact on businesses’ operations.

Hank Tomlinson, President of the American Chamber of Commerce in Vietnam said that there were still shortcomings to the development of Vietnam’s infrastructure, especially in building roads linking to provinces and cities, bridges as well as strategic roads near seaports. This has negative impact on direct foreign investment in the country as these limitations are the reason why many US investors do not want to invest in Vietnam.

One specific limitation is high transportation costs. According to businesses, transportation costs in Vietnam now accounts for a higher proportion of GDP than in other nations in the region. For example, these costs make up 13 percent of GDP in Indonesia and Malaysia, 18 percent in China while it is 25 percent in Vietnam.

Maersk Line Vietnam & Cambodia General Director Peter Smidt-Nielsen said that there are many reasons why transportation costs in Vietnam are higher. However, it is obvious that poor infrastructure is an important factor including traffic jams, lack of transparency and forecast, and backward means of transportation which often do not meet the regulations on weight limit.

To solve these issues, Vice President of the Australian Chamber of Commerce, Brian O’Reilly said that Vietnam should pay attention to the Public-Private Partnership model which will make important contribution to improving infrastructure in Vietnam. In addition, it is necessary to improve administrative formalities, especially those related to infrastructure projects and contracts.

Vietnam has been successful in improving access to infrastructure services over the past 20 years. However, many things need to be done to improve the country’s competitive edge and remove obstacles to the further growth of the national economy. As Vietnam continues to make progress in developing its economy, it is also necessary to continue to adjust policies and institutions accordingly, said deputy minister of Planning and Investment Dang Huy Dong.

According to international surveys, although Vietnam has made major development achievements, it has not resolved issues of infrastructure effectively. This has become the biggest hindrance in improving Vietnam’s business environment. Removing this obstacle will allow Vietnam to continue toward a positive and sustainable economic growth rate and the realization of its goals in the next decade.