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

Multimedia Social Media Documenting, Not Driving, Hong Kong Protests

Unlike in Arab Spring uprisings, pro-democracy protesters in Hong Kong aren't relying on Twitter and Facebook to organize, but social media still plays a role More

Bambari Hospital a Lone Place of Help in Violence-Plagued CAR

Only establishment still functioning in CAR's second city is main hospital More

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.
The Legacy of Jimmy Carter: The Preacher from Plainsi
X
October 01, 2014 10:45 AM
It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video The Legacy of Jimmy Carter: The Preacher from Plains

It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video Hong Kong Protests Draw New Supporters on National Holiday

On the 65th anniversary of the founding of Communist China, Hong Kong protesters are hoping to stage the largest pro-democracy demonstration since the 1989 Tiananmen protests. VOA's Brian Padden visited one of the protest sites mid-day, when the atmosphere was calm and where the supporters were enthusiastic about joining what they are calling the umbrella revolution.
Video

Video India's PM Continues First US Visit

India's prime minister is on his first visit to Washington, to strengthen political and economic ties between the world's oldest and the world biggest democracies. He came to the U.S. capital from New York, the first stop on his five-day visit to the country that denied him an entry visa in the past. From Washington, Zlatica Hoke reports Modi seemed most focused on attracting foreign investment and trade to increase job opportunities for his people.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid