Hanoi - Vietnamese economists Thursday worried about a return of inflation after calls were made at a national advisory body meeting for the government to launch a second stimulus package to boost the economy.
Vietnam's National Committee for Monetary Policy (NCMP) met Tuesday to review Vietnam's macroeconomic policies since the start of the global economic downturn. Several experts at the meeting called for another economic stimulus package, in addition to the 1-billion-dollar stimulus package the government began implementing in January.
By JAMES HOOKWAY and PATRICK BARTA
HANOI -- Vietnam boasts one of the developing world's most resilient economies this year, but economists fear the success masks serious problems, as loose state-directed lending risks pushing Vietnam into a new speculative bubble.
Those concerns were highlighted Tuesday, when Fitch Ratings downgraded Vietnam's local currency rating, citing "a steady deterioration in the country's fiscal position" and a banking system that's "vulnerable to potential systemic stress" as the government floods the economy with credit.
The central bank said this week it expected a balance of payments deficit of US$1 billion in 2009 and that its currency reserves would remain at above $20 billion.
The central bank has been selling dollars in recent weeks to support the dong but supply and demand for the greenback remained out of balance due to psychological factors and dollar hoarding by exporters, it said in a report.
“Solving the problem of forex hoarding by businesses once and for all and having a reasonable exchange rate is difficult math, not only for Vietnam,” the central bank report said.
Many businesses in Hanoi have ridden out the economic slowdown and shown signs of recovery thanks to their all-out efforts and the government’s economic stimulus packages.
Despite the gloomy picture of the world economy, the city’s industrial production value over the past 7 months has increased by 5.1 percent year on year to hit nearly VND44,000 billion. Many businesses have even achieved growth rates of between 18-54 percent, including those manufacturing precision tools, machinery, oil products, office equipment and chemicals.
Domestic fast food businesses are struggling to gain market share from their foreign counterparts, which have come to dominate this high-potential market, Vietnam News Agency (VNA) reported Monday.
Foreign franchises like KFC and the Republic of Korea's Lotteria so far dominate this market. KFC expects to open 12 additional restaurants this year, raising its total nationwide to more than 80 shops. Lotteria, currently with 56 restaurants, also has plans to open two dozens more.
The comprehensive free trade agreement between Japan and Vietnam that will come into effect later this year is the latest manifestation of the crucial role that Japan has played in Vietnam’s evolution from command economy to market-oriented one.
The domestic car market is still hot, pumped up in part by temporary tax reductions. For many models, car buyers have to put down a deposit and wait several months to get deliveries. The tax breaks will expire on December 31.
Tran Dac Sinh, Director General of the Exchange in Ho Chi Minh City (HOSE), discussed the prospects of the stock market in 2008.
VietNamNet Bridge – Local airlines are complaining that they cannot charter aircraft, virtually destroying their business plans. Pacific Airlines has delayed launching its new domestic routes, while Vietnam Airlines fears it cannot arrange enough planes to open the Vietnam-US direct route.
VietNamNet Bridge – Vietnamese seafood exporters have released that Spain and Portugal have refused to import Vietnam-sourced swordfish and tuna.
Immediately after hearing the decision, relevant agencies had a working session with EU officials about the issue.