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Vietnam Proposes Setting Interest Rate Annually, Tuoi Tre Says
http://www.bloomberg.com/news/2010-1...-tre-says.html

Vietnam’s central bank is proposing that the country set interest rates annually and allow companies to negotiate the currency’s exchange rate with banks, Tuoi Tre newspaper reported today.

The central bank has submitted a plan on the changes to Prime Minister Nguyen Tan Dung, the newspaper cited Governor Nguyen Van Giau as saying. The proposals aim to allow policy makers to communicate its long-term stance on interest rates and the currency regime, according to the report.

If approved, the State Bank of Vietnam would announce its interest-rate policy for a year and only adjust the stance when there is a sudden change in economic conditions, according to the report.

Currently, Vietnam sets an official reference rate for the dong, which can be different from the level used by gold shops and money changers, or the so-called black-market exchange rate. The central bank has been releasing monthly statements on interest rates.

Vietnam-US relations see positive developments
http://english.vovnews.vn/Home/Vietn...012/122790.vov
2010 saw a strong development of Vietnam-US relations as both countries maintained effective cooperation in various fields such as national security and defence, economy and education.
2010 also presented an important landmark in 15 year- normalisation of bilateral relations which have served the interests of both nations.

A Radio Voice of Vietnam (VOV) correspondent in the US has interviewed Vietnamese Ambassador Le Cong Phung about the two countries’ achievements in 2010 and prospects for their future cooperation.

It is time to elevate Vietnam-US relations to a higher level

Reporter: What is your assessment of the Vietnam-US relations in 2010 and the prospect of the relation, particularly when the US again showed its interest in Asia over the past year?

Mr.Phung: 2010 was a special year for Vietnam and the US as it marked 15 years of normalisation of their relations. Even though there were no high-level official visits, senior leaders from both countries held many meetings during the whole year to work out plans for future cooperation and consolidate mutual trust.

The US Secretary of State visited Vietnam twice, once to attend a regional forum and once on her official visit to the country. Defence ministers conducted exchange visits for the first time. Vietnamese Defence Minister Phung Quang Thanh visited the US early this year while his US counterpart Robert Gates visited Vietnam in October to attend the ASEAN Defence Ministers’ Meeting Plus.

All these activities demonstrated both countries’ determination to promote bilateral ties for their real benefits, stability and peace in the region and the world. We think that with such significant developments, the Vietnam-US relations will grow and flourish in the near future.

Reporter: Becoming a negotiating partner of the Trans-Pacific Strategic Economic Partnership (TPP) Agreement will facilitate Vietnam’s economic development. How will Vietnamese businesses and US investors benefit?

Mr. Phung: Joining the TPP Agreement is our strategy to promote international integration and boost economic development. Vietnam is the third biggest market in terms of population among nine negotiating nations, therefore, the country is seen as a major and lucrative market for US groups and companies doing business in Vietnam and for those who plan to run businesses in Vietnam.

Brunei, Singapore, Malaysia, Australia, New Zealand and Peru can be seen as major markets but their populations are not as large as Vietnam’s. Consequently, through surveys and exchanges, US investors and exporters are actively preparing for their business in Vietnam if the TPP Agreement is reached.

Reporter: What should be done to further strengthen the Vietnam-US relation in the near future?

Mr. Phung: There is still much that needs to be done because Vietnam and the US have similarities in interests, including long-term, mid-term, and short-term strategies for all fields. As a result, the two countries are accelerating the establishment of a strategic partnership. 15 years after normalising bilateral relations, now is the time for both sides to elevate their relations to a strategic partnership. I hope that this target will be achieved.

Reporter: Vietnam and the US celebrated 15 years of diplomatic ties which was a highlight to review the development process and set directions for the next period. What specific areas will be in focus in the future?

Mr. Phung: After 15 years of normalisation of bilateral relations, the two countries have obtained good results in different areas. Relations between Vietnam and the US during the past 15 years and in the future have been and will be focused on economics, trade and investment. Apart from this, both sides will continue to enhance their cooperation in other areas such as national security and defense, science and technology and education. However, Vietnam wants to set up a strategic partnership with the US based on the major pillars of economic, trade, investment and education ties.

Impossible to impose ideas of democracy, human rights and religion

Reporter: What can we do to narrow the gap between the US and Vietnam in their views on obligations, rights and responsibility towards victims of Agent Orange (AO)?

Mr. Phung: AO issue is the consequence of the war. I suppose that at the back of their mind, Americans still feel that they must take responsibility for the issue in terms of conscience, humanity and politics but they have not yet accepted this responsibility.

However, over the past years, the US have paid greater attention and show more support for Vietnam’s AO victims and helped the country to deal with AO-related issues. Moreover, the US should make more efforts to show its clear responsibility for this issue.

There remain differences between the US and Vietnam in democracy, human rights and religion. How will the matters resolved?

Mr. Phung: We are carrying out dialogues with the US on these issues in the hope that satisfactory results will be obtained. We need to help the US better understand that both sides have different views on democracy, human rights, and religion. Therefore, it is impossible to impose ideas of democracy, human rights and religion of one side on another.

During the exchanges and negotiations, we should get the US to gain a better understanding of Vietnam’s democracy, human rights and religion in which the Vietnamese Government will do its best to promote and protect human rights and people’s rights to freedom of belief and religion.

If such issues are well dealt with, relations between the two countries will grow stronger in the future.

Vietnam dizzy with trade gap with China
http://english.vietnamnet.vn/en/spec...ith-china.html
VietNamNet Bridge – In the two way trade with China, Vietnam has been importing more than exporting to the country. The trade gap has made a new record when it climbed to $12.6 billion, or 105 percent of Vietnam’s trade gap in 2010. Experts have warned that Vietnam’s economy has been too reliant on the neighbouring economy.
Trade gap keeps increasing

Deputy Minister of Industry and Trade Nguyen Thanh Bien admitted that the trade imbalance remains the biggest problem in the trade relation with the neighbouring China

In fact, Vietnam’s exports to China have been increasing steadily in the lat three years by $500 million-1.2 billion a year. However, the export growth is not high enough to the imports increases of $3-3.5 billion a year.

In 2007, the trade gap with China was $9.145 billion, or 64 percent of the whole year’s total trade gap. The figures rose to $11.6 billion and 61 percent in 2008, and then to $11.532 billion and 90 percent in 2009.

In 2010, the trade deficit with China further increases to the alarming level of $12.6 billion, or 105 percent of the whole year’s total trade gap ($12 billion)

It is clear that according to the plan for developing import-export with China for 2007-2015 that the Ministry of Industry and Trade drew up in 2007, Vietnam has failed to ease the trade imbalance with the neighbouring giant.

Dr Nguyen Minh Phong from the Hanoi Socio-Economic Development Institute said that Vietnam is now entering the third alarming level, which is very dangerous. The overly high trade gap with China will make the payment imbalance more serious.

Since 2004, the bilateral trade between Vietnam and China has been prosperous, but China enjoyed the biggest benefits. China made products have been dominating Vietnam’s market and dislodging the products from other countries from the market. China made goods have been accounting for a surprisingly high proportion of the total import turnover, and have been increasing steadily from 19.8 percent in 2008 to 25 percent in 2009.
It is estimated that in 2010, Vietnam had to spend 19 billion dollar to purchase goods from China, or 23 percent of the total import turnover. Meanwhile, Vietnam earns only $6.4 billion from the exports to the country.

The noteworthy thing is that Vietnam has trade relations with nearly 200 countries and territories, but China alone provides ¼ of the input materials needed by Vietnam’s economy.

The figure shows that China’s influences on Vietnam’s economy have become stronger than ASEAN which only accounts for 18.9 percent of Vietnam’s total import revenue, and the EU with 7.2 percent.

Experts said that it is understandable why there continues to be a big trade gap with China. Five years ago, no one could imagine that China would surpass China to become the second biggest economy in the world.

Reducing the trade gap with China, when?

Experts have expressed their worry that the target of reducing the trade gap with China has become more difficult to attain.

The report released by the Ministry of Industry and Trade shows that in 2009, Vietnam’s mineral exports to China accounted for 55 percent of the total export turnover (coal, rubber and crude oil). Meanwhile, in 2011-2012, Vietnam expects to export to China alumina from the Central Highlands’ bauxite project as well.

However, Vietnam now has to gradually reduce the exports of natural resources in order to ensure energy security. In 2009, the crude oil exports was reduced by 24 percent, while in 2010, the coal exports was reduced by 50 percent.

While Vietnam has to reduce the exports of minerals to China, it cannot increase the exports of other products to the country. The exports of farm produce and seafood, the key products of Vietnam, account for only 15 percent of the export turnover to China.

There are five groups of goods that Vietnam has been imported in biggest volumes, including machines and machine parts; petroleum products; steel; fertilizer and materials for garment industry. Meanwhile, China is the big supplier of all the five groups of products.

In 2010, up to 56 percent of imported steel came from China, while 40 percent of fertilizer imports, 70 percent of materials for garment industry, 37 percent of fabric and 17.7 percent of petroleum products also came from the country

Moreover, Vietnam is planning to increase the volume of electricity it will purchase from China to four percent of the total demand. 90 percent of technologies for thermopower plants are sourced from China.

When will Vietnam be able to reduce the trade gap with China?

Three stories about FDI in Vietnam
http://english.vietnamnet.vn/en/busi...n-vietnam.html

VietNamNet Bridge – The most puzzling characteristic of picture the foreign direct investment (FDI) in 2010 is the decrease in the registered capital volume and the increase in the implemented capital. However, it is still unclear if this is a reason for celebration or a reason to worry.

The first story


“Ba Ria-Vung Tau is the typical example when talking about foreign direct investment (FDI) in Vietnam,” Head of the Vietnam Economics Institute Tran Dinh Thien started the story.

Thien related that he came to see the leaders of Ba Ria-Vung Tau province and found out that 18 steel projects in the locality were licensed. “I asked them why so many steel projects were licensed, and if all the projects are listed in the national steel development plan”.

“The answer was that the Ministry of Industry and Trade only allows 6-7 projects only. However, there are still many investment projects. The problem is that industrial zones also have the right to license projects,” he added.

The decentralization in licensing investment projects (local authorities also have the right to grant licenses) has led to the establishment of a series of steel projects, Thien concluded.

“It is impossible to reduce the number of steel projects as licenses have been granted already,” he said

In the first six months of the year, Ba Ria-Vung Tau localities had to revoke licenses granted to four foreign invested projects. In late August 2010, Dat Do district proposed that provincial authorities revoke the licenses of seven projects, and Xuyen Moc District has also made the same proposal.

Also relating the revocation of the project license, Ninh Thuan province’s authorities are considering revoking investment licenses granted before to Ca Na steel complex project. Phu Yen province has also announced it is considering revoking the license of Nam Tuy Hoa Creative City.

The second story

“In recent years, we have paid more attention to the figures of disbursed capital, but we have not paid attention to the socio-economic efficiency of the projects and how they help transform the economic structure,” said Nguyen Tuan Anh, Deputy Director of the Enterprise Renovation Department under the government’s office.

“A lot of foreign invested and joint ventures report losses, but they have still been expanding their business and trying to purchase stakes from Vietnamese partners,” he said, adding that it is necessary to review the efficiency of foreign investment.

When answering questions before the National Assembly on November 23, Minister of Finance Vu Van Ninh also admitted that the ministry has discovered that many out of the 127 enterprises which reported losses, took “virtual loss” and made “actual profit”.

“Our investment policies have led to the price transfer of foreign invested enterprises,” said Nguyen Dinh Cung, Deputy Head of the Central Institute for Economic Management CIEM.

The third story

Over the last 20 years, Vietnam has witnessed three benefits of the FDI situation: the increase in investment capital, the increase in the number of projects, and the increase in the number of jobs created by foreign projects.

“This shows that foreign investment projects are pouring into fields that use many workers,” Cung said.

However, experts have warned that though FDI is helping boost exports and create jobs, it does not help much in increasing the prosperity of the nation. The investment has only helped create jobs with modest pays.

“Vietnam needs to apply a new strategy if it wants to attract high quality FDI and create more value than just creating jobs with modest salaries,” experts said.

Wood exports likely to exceed US$4 billion
http://english.vovnews.vn/Home/Wood-...012/122795.vov
Vietnam’s exports of wood products are expected to exceed US$4 billion thanks to the rising demands and the economic recovery of most of Vietnam’s markets, says the Vietnam Timber and Forest Product Association (Vietforest).
According to the association, the growth rate of the exports of Vietnamese wood products to the US market is estimated at 15 percent this year and the figure for the EU market is roughly 8 percent.

Vietfores Vice President Nguyen Ton Quyen said the taxes for wood exports have reduced from 10 percent to 0 percent and this will encourage wood products exporters.

Some businesses have started their exports to potential markets such as India, Russia, and the Middle East, he said.

Vietnam no longer listed in low-income countries
http://english.vovnews.vn/Home/Vietn...012/122796.vov
Vietnam’s Gross Domestic Production (GDP) increased by 6.8 percent in 2010, making it become a middle-income country with GDP per capita of US$1,168.
The information was released at a press briefing held by the General Statistics Office in Hanoi on December 31.

Under the report, Vietnam was one of the countries which quickly recovered from the global economic crisis. The 2010’s GDP growth rate is estimated 6.78 percent, much higher than the 5.32 percent in 2009 and exceeding the year’s target of 6.5 percent set by National Assembly.

In 2010, industrial production remained stable while export turnover increased sharply. Trade gap was reduced and the tourism sector rose by 34 percent over 2009.

The state budget revenue as of December 15, 2010 was estimated at 109.3 percent and the state budget expenditure was estimated by 98.4 percent of the year’s forecast. Poverty rate reduced by 10.6 percent compared to 12.3 percent in 2009.

However, the finance and monetary markets remained complicated with interest and inflation rates rising at the end of the year. The Consumer Price Index (CPI) increased by 9.19 percent over 2009, exceeding the target of 8 percent.

VietinBank to sell shares to Nova Scotia in Q2 2011
http://www.reuters.com/article/idUSHAN23219420101231

Dec 31 (Reuters) - VietinBank , Vietnam's top partly private lender by assets, aims to conclude talks to sell a 15 percent stake to Canada's Bank of Nova Scotia in the second quarter of 2011, a state-run newspaper said on Friday.

VietinBank has been accelerating talks with the Canadian bank so that "in Q2 2011 the bank will officially become a shareholder of VietinBank", Chairman Pham Huy Hung told the central bank-run Banking Times newspaper in an interview.

Hung also said the International Finance Corporation (IFC) would remit more than $300 million in the first quarter of 2011 to conclude the purchase of 10 percent of VietinBank, or the Vietnam Joint Stock Commercial Bank for Industry and Trade.

In October IFC signed an agreement to buy 10 percent of Hanoi-based VietinBank for $186 million and to extend a $125 million 10-year loan to help VietinBank finance its long-term investment. [ID:HAN156187]

Shares in VietinBank ended flat at 23,000 dong ($1.18) on Friday.

Hung said next year VietinBank would issue bonds on the international markets, including in the United States, to raise funds to meet demand for Vietnam's economic development.

Big advantages, big challenges face Vietnam in 2011
http://www.thanhniennews.com/2010/Pa...101163448.aspx

Vietnam’s economy has seen promising development through 2010, but still faces challenges in 2011.

In an exclusive interview with Thanh Nien Weekly, Minister of Planning and Investment Vo Hong Phuc, discussed where Vietnamese economic growth was headed in 2011.

Despite the challenges of macroeconomic stabilization and inflation, several state-pioneered investment projects promise to facilitate continued economic growth in the country.

Thanh Nien Weekly: How would you assess the achievements and shortcomings of Vietnam’s economy through 2010?

Vo Hong Phuc: 2010 was a challenging year for our country. The global financial and economic downturn continued to affect our economy adversely and natural disasters wrecked havoc in the central region.

Yet, I think 2010 was a successful year. The country saw an economic growth of 6.7-6.8 percent in 2010, higher than the target (of 6.5 percent) set by the government. Inflation has been a big problem, estimated at 9.19 percent, much higher than the target of sub-7 percent. In December alone, inflation had seen a year-on-year rise of 11.75 percent. It was a high rate. As a result, we must take more drastic measures to curb inflation in 2011.

Some say we focus too much on economic growth, and discount macroeconomic stabilization, which leads to inflation?

I would tend to disagree with that. Though the estimated economic growth has exceeded our targets from last year, it is still not much. Management measures have helped the country keep economic growth at a reasonable level.

The main reason for high inflation is our inability to foresee the fluctuation of the world market. In November and December, prices of many goods, equipment, food, and gold soared, which affected the domestic market as well. China, where inflation has been remarkably regulated in the last few years, was also strongly affected this year.

In addition, we were hit by natural disasters through the latter half of 2010. Agriculture was severely affected, which led to a sharp increase in prices.

Since we did not foresee these events befo*****d, the measures the government took came too late and were not effective enough.

As an example, consider the fluctuations in the exchange rate between the Vietnamese dong and the US dollar this year. In most countries, the dollar has dipped and the value of the local currency has increased. However, in Vietnam, the dong has devalued over the dollar, and so the inflation has been doubly affected.

What lessons can we learn from this year?

We should closely follow the global economic climate, forecast early and correctly, and deal swiftly with problems. When problems are not dealt with in time, they snowball into national issues. Take for example the foreign currency exchange rate issue. If we had sold US dollars in time, the exchange rates could have been stabilized.

What are Vietnam’s economic prospects next year? How will this year’s challenges affect us in 2011?

2010 will leave us with both advantages and disadvantages. On the bright side, we will continue to gain from the strong economic growth this year. 2010 saw higher growth than 2009, and the fourth quarter saw higher growth than both the third and the second. In addition, several state-invested projects will facilitate development in 2011.

However, inflation will continue at least until the lunar New Year festival (Tet) in February. Consumer prices will continue to rise and affect the macroeconomic development.

Our foreign currency reserve is also expected to be leaner in 2011. According to forecasts, Vietnam will face an energy shortage in 2011, which will affect development.

We must implement a new model in the roadmap to socioeconomic development within the next five years.

Vietnam has been plagued with problems of weak manpower and poor infrastructure for many years. How will we deal with the problems?

In 2011, we need to continue to upgrade infrastructure, develop manpower and strengthen regulations. Only then can we fulfill our socioeconomic development targets.

Macroeconomic indicators - Vietnamese economy growth fastest in 3 years
http://www.steelguru.com/internation...rs/183859.html

AFP reported that Vietnam's economy grew at its fastest pace in three years in 2010, despite concerns over high inflation, a struggling currency and other risks.

The General Statistics Office said that gross domestic product expanded by roughly 6.8% as compared with the year before, when it rose 5.3%, the slowest rate in a decade. The economy grew 6.3% in 2008 and 8.5% in 2007. GSO figures showed that growth accelerated throughout this year, expanding in the fourth quarter by an annualized 7.3%.

The GSO report said that "These results confirm the effectiveness of measures and solutions taken firmly and vigorously by the government to prevent economic slowdown and to stabilize the macro economy."

In a report this month the World Bank said communist Vietnam's impressive growth had been accompanied by increased economic risks such as falling foreign exchange reserves, high inflation, a struggling currency, and a relatively high current account deficit, the broadest measure of external trade.

According to a GSO estimate, inflation hit 11.8% in December on a year on year basis. The dong has been devalued three times since late last year. Next year the country will follow a more flexible exchange rate regime while using monetary policy to curb inflation.

The GSO reported that Vietnam's trade deficit stayed relatively steady at USD 12.4 billion this year, as exports surged more than imports. Vietnam's donors warned this month that the country's economic growth will be threatened unless the government can control rising inflation and currency weakness.

Ratings agencies Moody's and Standard & Poor's recently downgraded their ratings for Vietnam because of worries about the economy, the banking sector and the problems of nearly-bankrupt shipbuilder Vinashin, a state owned firm.

(Sourced from AFP)

Vietnam opens new international airport
http://globalnation.inquirer.net/new...tional-airport

HANOI—Vietnam has opened a new international airport in the southern Mekong Delta, state media said on Sunday.

The 150-million dollar Can Tho International Airport, built on 20,750 square meters (240,000 square feet) of land, will process up to five million passengers a year, Vietnam News Agency reported.

"The airport provides a big opportunity for Can Tho city in particular and the southwestern area in general to make fast and sustainable development and helps facilitate air travel in the region," Prime Minister Nguyen Tan Dung said at the inauguration on Saturday.

The airport is expected to be a significant boost to the Mekong delta's economy, as well as improving defense, security, and international integration, the agency said.