31 Aug 2012 Intellasia Finance Vietnam - Hong Kong Business ...

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FINANCE Vietnam finance & business 31 August 2012 FINANCE GDP growth to accelerate in H2 31/AUG/20122 INTELLASIA | DAU TU Inching up trend of the economy is continuing to be recognised. The figures from general Statistical Office (GSO) showed that the index of industrial production (IIP) in August 2012 rose 4.1 percent from July and surged 4.4 percent over the same period last year. Totally, in Jan-Aug, IIP posted a rise of 4.7 percent on year, 0.1 percent lower than the rise of 4.8 percent in the first seven months of this year. According to specialists, these figures showed industrial production, which has big contribution to general economic growth, is on the rebound but it is still a relatively weak. The most difficult phase of the economy has been over, the gradual recovery of the economy has been mentioned by local and foreign economic experts in recent time. To offer more proof, perhaps, in the first seven months of this year, according to figures from the general Department of Taxation, nearly 1,000 businesses resuming operations mainly non-state enterprises can be considered a fairly typical example. With this recovery, although still remaining weak, it is forecast that Vietnam's GDP growth in the third quarter of this year would reach 5.53 percent. In a forecast released not long ago, both HSBC and ANZ have made the same prediction that Vietnam's GDP growth will be faster in the second half of this year when the moves of loosening monetary and fiscal policies are made. According to ANZ, the government's move to give a subsidy package of approximately 29 trillion dong, while enhancing the capital disbursement for development investment, will help GDP growth in Q3 reach above 5 percent, and in Q4, even up to over 6 percent. "As a result, GDP growth for the whole year will be around 5.5 percent," ANZ's experts predicted. If real GDP growth reaches 5.53 percent in Q3, the GDP growth in the first nine months of this year would be about 4.8 percent. This growth is quite low compared with the growth of 5.76 percent in the first nine months in 2011; 6.54 percent for the first nine months in 2010 and 6.52 percent in the first three quarters of 2008. However, it is still higher than the growth of 4.62 percent in Jan-Sep of 2009 - the year of economic recession and also the year of the economy changes quite similar to 2012. In 2009, GDP growth in Q1 and Q2 was 3.1 percent and 4.5 percent respectively. This year, in Q1 and Q2, GDP growth was 4 percent and 4.66 percent. Looking at the quarterly GDP growth rate, it is clear to see the "inching up" of the economy, which is falling into the stagnation situation since the beginning of this year so far. As forecasted by the Ministry of Planning and Investment, in Q4, GDP growth could reach 6 percent and it would be about 5.3 - 5.6 percent for the whole year. In a meeting with leaders of Hanoi People's Committee about two weeks ago, the minister of Planning and Investment, Bui Quang Vinh, also emphasized this. According to the minister, this year's GDP growth will not be able to achieve the goal (6 - 6.5 percent). Meanwhile, according to the prediction of a group of economic experts, economic growth from now till the end of this year depends largely on investment, including public investment, FDI capital and credit growth. While public investment and FDI capital are relatively stable and easy to predict, credit growth could not be determined reliably. The fact showed that despite certain changes, interest rates have fallen, both monetary and fiscal policies have been loosened, production and business activities of enterprise systems still face many difficulties. In such context, credit growth is still quite sluggish and it can only reach about six percent for the whole year. Meanwhile, social investments, despite being faster, even the government has approved to advances 30 trillion dong of the capital plan in 2012, still do not really have the positive changes and clarity. When the "nutrient" to feed the economy grows slowly, the economy does not expect a strong recovery. Intellasia 31 August 2012 2 / 46
FINANCE Vietnam finance & business 31 August 2012 CPI to rise about 0.199pct on higher fuel prices Banking industry on an even keel Vietnam attends Apec finance ministers' meeting 31/AUG/2012 INTELLASIA | VOV Head of Price Management Department (Ministry of Finance-MoF) has said that the latest low adjustment of fuel prices will not affect CPI (consumer price index) significantly. Particularly, without strict control on the prices of other products, the gasoline price hike on August 28, according to specialists, although the rise was curbed, will likely have negative impacts on the macro economy and inflation control target. As confirmed by MoF, when allowing fuel wholesalers to increase the price at no higher than 700 dong/litre, or only about 50 percent against the actual difference between the basic price and the current selling price (by the time before 6:00 pm August 28), the state management agency had considered carefully the impacts of fuel price hike on CPI. Nguyen Tien Thoa, head of Price Management Department (under MoF), said that this adjustment of gasoline price up by 650 dong/litre was equal to the rise of only 1.713 percent. The price hike on other oil was at low level. Therefore, the impact of gasoline price on CPI in this adjustment will be not higher. Thoa also confirmed if fixing other factors and other items to calculate the impact of fuel prices on CPI due to this adjustment, CPI would rise about 0.199 percent. 31/AUG/2012 INTELLASIA | VOV The domestic monetary market has become rather stable after several CEOs of local banks and a financial tycoon were arrested due to alleged illegal activities. On August 20, Nguyen Duc kien, one of the founders of the Asia Commercial Joint Stock Bank (ACB), and also one of the richest tycoons in Vietnam's banking industry, was arrested for conducting alleged" illegal business". Three days after, the police also detained ACB chief executive Ly Xuan Hai on suspicion of "deliberately acting against state regulations on economic management". These events have sent shock waves through the country's financial market and many customers to the extent that they rushed to get their money out of ACB. Fearing that the public lack of confidence could spread beyond ACB, Vietnam's central bank pumped more than $1 billion to ensure the stability of the local banking sector. Speaking about these events with the media on August 25, the central banks' Governor Nguyen Van Binh said that a huge amount of money was withdrawn from the ACB on August 21, 22 and 23 but it dropped significantly on August 25. He said that activities of the ACB and the banking sector have returned to normal. The governor affirmed that the central bank has taken sufficient measures to ensure stable operations of the banking sector and the ACB. From August 21-27, total deposits at the bank reached VND33.44 trillion (US$1.59 billion), including more than VND5 trillion (US$238 million) redeposited. Transactions at the bank have returned to normal, according to Nguyen Thanh Toai, the bank's deputy director. By the end of August, there had been wide fluctuations in the price of gold and exchange rate between the dong and the US dollar in the domestic market. Independent market watchdogs said the gold market became hot over the last week with the gold price jumping to VND44.7 million per tael on August 23 from VND42.6 million in March, while the global price remained stable. The exchange rate between the dong and US dollar also climbed to over VND21,000 per dollar on August 27, up by over VND100 compared with August 23. http://www.saigonmoney.com/2012/08/30/banking-industry-on-an-even-keel/ 31/AUG/2012 INTELLASIA | VOV Deputy Finance minister Truong Chi Trung attended the 19th Apec Finance ministers' Meeting and related meetings in Moscow on August 28-30. Vietnam shared its macro-economic issues and concerns over regional issues and discussed the meeting's joint statement. On the sidelines of the event, Trung had a bilateral working session with his Russian Intellasia 31 August 2012 3 / 46
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