News / Asia

    Vietnam Merchants Wait for Business, Economy to Pick Up

    Vietnamese merchants in Ho Chi Minh City are waiting for business, and for the economy, to pick up, Jul. 18, 2013. (VOA - L. Hoang)
    Vietnamese merchants in Ho Chi Minh City are waiting for business, and for the economy, to pick up, Jul. 18, 2013. (VOA - L. Hoang)
    On a busy street here, Nguyen Lai is practically hemmed in by the raincoats and camouflage pants that fill his small clothes shop. He has too much inventory, from polo shirts to umbrellas, much of it imported from neighboring Cambodia. But it’s become much harder to sell merchandise in recent years, unlike several years ago when high sales meant he had a lot more variety in stock.

    “Oh, I used to sell so much,” he says one late afternoon, taking a lit cigarette from a friend as a fan blows toward his face.

    The good old days were seven years ago. Things have stagnated since then - for Lai and for the country. It was about the same time Vietnam entered what would become its worst slow-growth period in its recent history as a modern market economy.
     
    A World Bank report this week said Vietnam registered 5 percent growth in the first half of 2013. That matches the rate in 2012, which marked the sixth year in a row that gross domestic product has increased by less than 7 percent. It’s the longest period of slow-growth since Vietnam took a capitalist turn with the Doi Moi reforms of the 1980s.
     
    The last time Vietnam’s economy expanded this slowly, in the late 1990s, Asia was in the midst of its toughest financial crisis. Developing Asian countries now average a 7.5 percent GDP increase, according to the World Bank, compared with Vietnam’s 5 percent. That means the country will report growth that lags behind Indonesia and the Philippines in 2010-2013, something that hasn’t happened for two decades.
     
    The bank report went on to warn that a major risk of the economic malaise is that Vietnamese officials might feel compelled to undertake stimulus measures. Those, in turn, could bump up consumer prices, which is a lingering fear because inflation topped out at 23 percent in August 2011. A jump now would threaten progress as Vietnam “enters the third year of relative stability,” with inflation at 6.7 percent in June, the report said.
     
    Needed reforms
     
    But despite its cloudy outlook, the report should have given more consideration to the government’s planned reforms of banks and state-owned enterprises, according to Pham Ngoc Bich of Saigon Securities.
     
    “It does take time, anything to do with state reform, tax reform, those take time,” Bich said in an interview. “You cannot implement those reforms in a week, right?”
     
    This month, the central bank is scheduled to roll out the Vietnam Asset Management Company, tasked with cleaning up loans that have gone sour. Officials say non-performing loans make up 6 percent of overall lending. But Fitch Ratings questioned how this newborn bank can handle billions of dollars in bad debts when it has just $24 million to work with.
     
    The World Bank praised the asset management company, entirely state-owned, as “the most visible step” Vietnamese leaders are taking to cure the banking sector. But it said that to be successful, the new bank must accurately audit the level of non-performing loans and buy them at market value, not book value.
     
    The process is part of a larger bank restructuring plan that the World Bank faulted as insufficient. It wrote in its report that “the merger of several weak banks has not necessarily created a new healthy bank and therefore their underlying problems remain unaddressed.”
     
    If Vietnam is to avoid the report’s warning of prolonged slow growth, few believe it can be done without overhauling the communist country’s state-owned enterprises. The monoliths are notoriously inefficient and opaque, but the World Bank said efforts to reform them have so far been slow and fragmented.
     
    Still, such reforms point to options for Vietnam, where not all of the report’s findings were dismal. The country is enjoying a trade balance that’s positive for the first time ever. Reserves that have doubled in two years, and the nation is enjoying its largest current accounts surplus. Now the priority is to tackle the commercial banks and the state-owned enterprises.
     
    “Once the ball gets rolling we’ll have positive economic results in the next three to five years,” Bich said. “I’m more confident now than I was two years ago.”

    You May Like

    Clinton, Trump and the 'Woman’s Card'

    Ask supporters of Democratic front-runner in US presidential campaign, and they’ll tell you Republican presidential candidate is playing a dangerous hand

    Russian Censorship Group Seeks Chinese Help to Better Control Internet

    At recent Safe Internet League forum in Moscow, speakers from both nations underscored desire for authorities to further limit and control information online

    Video Makeshift Pakistani School Helps Slum Kids

    Free classes in Islamabad park serve a few of the country’s nearly 25 million out-of-school youths; NGO cites ‘education crisis’

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Turkish Kurd Islamist Rally Stokes Tensionsi
    X
    April 29, 2016 12:28 AM
    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Turkish Kurd Islamist Rally Stokes Tensions

    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Pakistani School Helps Slum Kids

    Master Mohammad Ayub runs a makeshift school in a public park in Islamabad. Thousands of poor children have benefited from his services over the years, but, as VOA's Ayesha Tanzeem reports, roughly 25 million school-age youths don't get an education in Pakistan.
    Video

    Video Florida’s Weeki Wachee ‘Mermaids’ Make a Splash

    Since 1947, ‘mermaids’ have fascinated tourists at central Florida’s Weeki Wachee Springs State Park with their fluid movements and synchronized ballet. Performing underwater has its challenges, including cold temperatures and a steady current, as VOA’s Lin Yang and Joseph Mok report.
    Video

    Video Somali, African Union Forces Face Resurgent Al-Shabab

    The Islamic State terror group claimed its first attack in Somalia earlier this week, though the claim has not been verified by forces on the ground. Meanwhile, al-Shabab militants have stepped up their attacks as Somalia prepares for elections later this year. Henry Ridgwell reports there are growing frustrations among Somalia’s Western backers over the country’s slow progress in forming its own armed forces to establish security after 25 years of chaos.
    Video

    Video Bangladesh Targeted Killings Spark Wave of Fear

    People in Bangladesh’s capital are expressing deep concern over the brutal attacks that have killed secular blogger, and most recently a gay rights activist and an employee of the U.S. embassy. Xulhaz Mannan, an embassy protocol officer and the editor of the country’s only gay and transgender magazine Roopban; and his friend Mehboob Rabbi Tanoy, a gay rights activist, were hacked to death by five attackers in Mannan’s Dhaka home earlier this month.
    Video

    Video Documentary Tells Tale of Chernobyl Returnees

    Ukraine this week is marking the 30th anniversary of the world's worst nuclear accident, at the Chernobyl nuclear power plant. Soviet officials at first said little about the accident, but later evacuated a 2,600-square-kilometer "exclusion zone." Some people, though, came back. American directors Holly Morris and Anne Bogart created a documentary about this faithful and brave community. VOA's Tetiana Kharchenko reports from New York on "The Babushkas of Chernobyl." Carol Pearson narrates.
    Video

    Video Nigerians Feel Bite of Buhari Economic Policy

    Despite the global drop in the price of oil, Nigerian President Muhammadu Buhari has refused to allow the country's currency to devalue, leading to a shortage of foreign exchange. Chris Stein reports from Lagos businessmen and consumers are feeling the impact as the country deals with a severe fuel shortage.
    Video

    Video  Return to the Wild

    There’s a growing trend in the United States to let old or underused golf courses revert back to nature. But as Erika Celeste reports from one parcel in Grafton, Ohio, converting 39 hectares of land back to green space is a lot more complicated than just not mowing the fairway.
    Video

    Video West Urges Unity in Libya as Migrant Numbers Soar

    The Italian government says a NATO-led mission aimed at stemming the flow of migrants from Libya to Europe could be up and running by July. There are concerns that the number of migrants could soar as the route through Greece and the Balkans remains blocked. Western powers say the political chaos in Libya is being exploited by people smugglers — and they are pressuring rival groups to come together under the new unity government. VOA's Henry Ridgwell reports.
    Video

    Video Russia’s TV Rain Swims Against Tide in Sea of Kremlin Propaganda

    Russia’s media freedoms have been gradually eroded under President Vladimir Putin as his government has increased state ownership, influence, and restrictions on critical reporting. Television, where most Russians get their news, has been the main target and is now almost completely state controlled. But in the Russian capital, TV Rain stands out as an island in a sea of Kremlin propaganda.

    Special Report

    Adrift The Invisible African Diaspora