Vietnam's economy to remain strong

HANOI - Vietnam's economic performance in the first half of 2004, supported by a better business environment and robust external demand, suggests that gross domestic product (GDP) growth will remain above 7% in 2004 and 2005, according to a major Asian Development Bank (ADB) report just released.

The Asian Development Outlook 2004 Update issued on Thursday by ADB, is an update of the Asian Development Outlook 2004 released in April. Asian Development Update is ADB's flagship economic publication analyzing and forecasting economic trends in the Asia-Pacific region.

Strong domestic demand and exports are likely to push GDP growth to 7.5% in 2004 and 7.6% in 2005 after the 7.1% growth registered in 2003, the report says.

Domestic demand is forecast to increase by 8.7% and 8.1%, and exports by 16.3% and 12.0% in 2004 and 2005, respectively. Risks to the outlook include rising inflation and possible public health scares.

Inflation is likely to reach about 9% by the end of 2004, due to higher food prices and rising international commodity prices, and then ease to 6.0% in 2005. Inflation above these levels could exert upward pressure on the country's prime interest rate, real wages and the foreign exchange rate.

Avian flu needs to be closely monitored by the public health authorities as the disease has been reported as recurring in 11 provinces over recent months, though there has been no serious spread of avian flu to humans. Domestic demand will be supported by a continued expansionary fiscal stance. Industry is likely to grow by about 10% in both years due to higher international oil prices that benefit Vietnam as a net oil exporter. Growth in services is estimated at 7.5% in both years.

The agriculture sector, which includes fisheries and forestry, will likely grow by 2.5% in 2004, partly because of slower growth in traditional agriculture and forestry, but it is likely to edge up to 2.7% in 2005 due to the expansion of fishery activities.

With the ending of the Multifiber Arrangement quotas at the end of this year, members of the World Trade Organization (WTO), including many of Vietnam's competitors, will secure greater export opportunities. Vietnam, yet to enter WTO, will still face constraints on its garment exports. But a new quota with the United States and an expanded quota with the European Union, as well as market diversification are likely to make the prospects reasonable for garment exports in 2005.

The trade deficit is forecast at $3.8 billion in 2005, narrowing from ADB's April forecast of $4.5 billion due to a better than expected export performance and higher prices for export commodities such as crude oil, rice, pepper, tea and coffee in the first half of 2004. Remittances from Vietnamese living abroad have become a major source of foreign exchange, exceeding both foreign direct investment flows and official aid flows.

The Asian Development Outlook Update says, "The economy needs to create jobs faster than it has in recent years to absorb the greater numbers of new entrants to the labor market."

(Asia Pulse)


http://www.atimes.com/atimes/Southeast_Asia/FI24Ae04.html

Lets hope Vietnam doesnt turn into a mini China (it certainly looks that way) where they will expand and get "rich" at all costs, environmental and all.

Lets hope Vietnam doesnt fog and choke its cities and polute its alreadu toxic rivers. Lets hope the country will not have the worlds top 10 most polluted cities.

What a concidence. This is fresh off the front page today:

true. but what can u expect? the current chinese leaders are all technocrats. their horizon is not very broad.

haha well what do you expect??? Vietnam commie regime copied the China's economy plan anyway

We should be working towards a more sustainable development future.

It's probably is too late to advocate the overthrow of the commies now that communism has proven to be an utter failure. The current crop of morons is a little more pragmatic than Castro and will eventually adopt China's method of controlled capitalism. With a smaller geography and population, VN will shed itself of the commies sooner than China will.

Good news! We should be catching up to China in no time..

According to UN & WB , VN's Nominal GDP grew 8,4% in 2005,
However, the inflation (CPI ) also rose at same level @ 8,3 % <== This is the dark side of the story ,
So, what was the Real GDP rosen then ?

Good job Vietnam!!!

yeap, what U said is really true and so critical, indeed !
Can U realize that under a planned economy ?
So what could U do ? have U any other suggetion to go around that anyway ??

A planned economy stinks!

Real GDP growth is 8.4%, which means it's adjusted for inflation. You don't think that the Vietnamese economy grew by 0.1% do you?

I think the current government understands the importance of fighting corruption - its willingness to go all the way in fighting it is an entirely different matter entirely, because fighting corruption successfully means striking at their own - and striking hard and striking systematically, no matter how well connected they are.

At any rate, unless I am incorrect, the shenanigans at the Transport Ministry are having an unwanted, perceptible, negative impact on economic growth this quarter so corruption IS a serious issue.

Nah Duh corruption is a serious issue. The issue is whether they will do anything about it. They themselves are involved in corruption along with their families. As a matter of fact, the whole political and bureaucratic system is rotten by corruption. For them to act decisively is for them to chop their arms and legs off.

Don't expect any serious attempt to clean the whole system in the near future or medium future. In the mean time, the losers will still be the people.

My concern is whether this economic growth coincides with an increased standard of living. The average Vietnamese is struggling. Does Vietnam impose minimum wages for workers of any particular industry? I suppose tackling the corruption epidemic is long overdue and a task that wont be easily accomplished, but I would like to see implementations of a uniform industrial relations law so that workers would see some of the benefits of an economy that is proving strong.

The original article was written in Sep 2004. Here is a recent article describing the current situations.

http://news.bbc.co.uk/2/hi/asia-pacific/4766846.stm

Communist debate grips Vietnam
By Nguyen Giang BBC Vietnamese Service
In Vietnam, February and March are supposed to be a good time for relaxation, after the exuberant Lunar New Year. More and more people are questioning the party's direction
But Vietnamese media have been absorbed since the end of January in a difficult and sensitive debate - over the leadership of the Communist Party, or rather a lack of it. Online news services and newspapers have run discussion forums and printed articles containing questions which were impossible to ask a few years ago. The debate had become so heated that the party's newspaper has recently stepped in to try to prevent it from "running in a dangerous and harmful way". It all began early this year with a formal request by the party leadership for people's views on its political platform in the run-up to its 10th National Congress, expected to take place in the next few months. This has provided a rare opportunity for many intellectuals, journalists, lawyers and even government officials to criticise what is perceived to be widespread corruption and abuse of power by a number of the party mandarins. For example, economist Bui Kien Thanh said on a webcast talk show on Vietnamnet, one of the country's leading online news services, that "if the party is genuinely serious about democracy, they must allow Vietnamese people to choose their political leadership". Pluralism has worked well in economy over the last 20 years, now it's time to try political pluralism too Le Cong Dinh, lawyer
Another guest speaker, Nguyen Dinh Luong, also made very direct comments, saying: "There have been many lies about the government's economic achievement, and in general, a lot of political diseases in the system, due to bad policies and poor leadership." Nguyen Dinh Luong is no dissident, but a high government official who represented Vietnam at the US-Vietnamese Trade Agreement negotiations some years back. In the south, pro-reformist Tuoi Tre newspaper has launched a series of articles by Nguyen Trung, a former diplomat and currently an adviser to Prime Minister Phan Van Khai. These have criticised "lack of democracy" in the party, and claim it has lost its direction after two decades of economic reforms. Online users have flooded Tuoi Tre's forum with comments about Nguyen Trung's views. Some have gone so far as to question the party's control over government departments and over almost every aspect of the economy. The Communist Party of Vietnam currently has a final say in the nomination of all senior government officials to important posts in all ministries and state-owned co-operations, where many corruption cases have recently been investigated. Gambling scandal In January, Vietnamese police arrested Bui Tien Dung, a senior government official who was alleged to have bet more than $2m (£1.1m) of state money in illegal football gambling. Such cases have given the forum participants the opportunity to make their point. Recently the debate has moved from underground bulletins and online letters by dissidents and religious groups to public life. And more people have joined the discussion, by sending out letters to the media to call for political change. Some have even called for a pluralistic political system. Open discussion, through all sorts of letters disseminated around the country, is harmful Nguyen Duc BinhParty chief ideologue
"Pluralism has worked well in economy over the last 20 years, now it's time to try political pluralism too," Le Cong Dinh, a lawyer in Ho Chi Minh City, told the BBC's Vietnamese Service. Such talk must be alarming the conservative faction in the party. In a late February issue of Nhan Dan newspaper, the party's chief ideologue, Nguyen Duc Binh, launched an attack on those who had questioned the principle of socialism. A better place to discuss socialism and the future of the party, he argued, should be an internal magazine, instead of in the national and regional press. He said, for example, that a new plan to allow businessmen to join the party was "unnatural". "Open discussion, through all sorts of letters disseminated around the country, is harmful," he said. Nguyen Duc Binh's intervention suggests that those expecting a big change in Vietnamese politics may be wrong. However, modern Vietnam has changed so much that it is difficult for the party to stick to the traditional interpretation of Marxism-Leninism. Do Ngoc Ninh, director of a party think-tank in Hanoi, dismissed Nguyen Duc Binh's view as "his own private opinion". Twenty years of economic reform have also encouraged a number of young professionals, such as lawyers Le Cong Dinh, Le Quoc Quan and journalist Phan The Hai, to speak out about politics. And, still in their mid-30s, they can afford to wait for change.

Vietnam's largest-ever vessel was launched on April 6 by the Ha Long Shipyard and the Vietnam Shipbuilding Industry Corporation (Vinashin).

Deputy Prime Minister Nguyen Tan Dung and a number of senior officials from relevant ministries and northern coastal Quang Ninh province People's Committee attended the ceremony.

The 53,000 tonne HL01-Florence is the first of the 21 cargo vessels that the Vinashin's Ha Long Shipyard was contracted by British Graig to build at a total cost of over US $400 million.

The ship is 190 m long, 32.26 m wide and has a 64,000 cubic metres hold, as designed by Denmark-based Carl Bro Marine company.

The Ha Long Shipyard had invested trillions of VND to improve its capacity, including VND 231 billion (US $14.5 million) in facilities for the contract.

The construction of the second 53,000-tonne ship will commence soon. (VNA)


http://english.vietnamnet.vn/biz/2006/04/558031/

Addressing a press conference, ADB Vietnam's head of Economics and Programmes Unit Omkar Shrestha said, "We expect to see an (Vietnam's) economic growth of 7.8% in 2006 and 8% in 2007. These are quite respectable and high growth rates."

While the bank's growth forecast for this year was slightly lower than the Government's target of 8%, the Asian Development Outlook 2006, a ADB annual report forecasting economic trends in Asia, said the momentum in domestic demand was likely to be maintained through sustained growth in FDI inflows, private remittances and tourism receipts.

On the production side, industries and services would continue to drive development with projected growth rates of 10 and 8%, respectively, and inflation would remain moderate at about 5-6% over the next two years.

Vietnam had further improved its business environment, and official recognition of the private sector's contribution to the economy was increasingly explicit, improving the prospects for further reforms toward a market-based economy, the report said.

"With an improved business environment, we expect the private sector to become the main engine for growth," Shrestha said.

Private investment, which accounted for 46% of the total investment in the past, was expected to grow by more than 50% in the next five years.

According to the report, agriculture was forecast to expand by 2.7% in two years, somewhat weaker than in the past four years due to softer prices expected for some agricultural commodities.

Although the export environment in the country looked favourable, the report predicts exports to grow slightly below the recent rate as world prices for certain commodities such as rice dip.

The country's fiscal policy was expected to remain supportive of the economic growth as income from trade taxes may decline in the coming years as a result of the nation's open market policy.

Meanwhile, tax collection would increase from the continued rapid expansion in both the number and size of private firms, providing a much broader tax base for medium and long-terms.

Commenting on the country's 2006-10 socio-economic plan, which puts GDP growth at 7.5-8%, industrial growth at 10.2%, services at 8.2% and poverty reduction at 16%, the ADB report said these targets were achievable.

The bank also expects Vietnam to join the World Trade Organisation this year, maintaining the momentum towards domestic reforms. AFTA and WTO memberships would speed up the introduction of new technologies, increase productivity and lead to the development of a more competitive economy.

The report also warns of Vietnam's challenges including a possible slippage in the Government's commitment to implementing reforms and corruption, which could discourage investment.

But this risk currently appears low, considering the nation's commitments to integration, acceleration of restructuring State-owned enterprises, promotion of the private sector, financial sector development and Government's actions to control corruption.

Shortage of power was a third potential problem, given the high 14-15% estimated annual growth in demand, according to the report, which adds that a reliance on hydropower, which accounts for 56% of the power supply, leaves the energy sector vulnerable.

"It is now time to invest in the power sector," said Ayumi Konishi, Country Director, ADB Vietnam, warning that the failure to meet the demand could hamper economic development.

According to the report, the country's economy grew by 8.1% last year, about 0.3% lower than the Government estimate, but was still a sound achievement in the face of avian flu, droughts and rising import prices of several products.

(Source: Viet Nam News)