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

Photogallery Americans Celebrate Thanksgiving With Feasts, Festivities

Holiday traditions include turkey dinners, 'turkey trots,' American-style football and New York parade with giant balloons More

Video For Obama, Ferguson Violence is a Personal Issue

With two years left in term, analysts say, president has less to lose by taking conversation on race further More

Video Italian Espresso Expands Into Space

When Italian astronaut Samantha Cristoforetti headed for the ISS, her countrymen worried how she would survive six months drinking only instant coffee 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.
South Africa Sees Male Circumcision as Way to Reduce HIV Infectionsi
X
November 28, 2014 3:31 PM
South Africa remains plagued by AIDS despite massive government and NGO efforts on prevention and life-sustaining Anti-Retro-Viral programs. But the country has opened up another front to reduce new HIV infections: promoting circumcision. Emilie Iob reports for VOA News from a pioneering circumcision center in Orange Farm, Johannesburg.
Video

Video South Africa Sees Male Circumcision as Way to Reduce HIV Infections

South Africa remains plagued by AIDS despite massive government and NGO efforts on prevention and life-sustaining Anti-Retro-Viral programs. But the country has opened up another front to reduce new HIV infections: promoting circumcision. Emilie Iob reports for VOA News from a pioneering circumcision center in Orange Farm, Johannesburg.
Video

Video To Make A Living, Nairobi Street Vendors Face Legal Hurdles, Physical Violence

The Nairobi City Council has been accused of brutality in dealing with hawkers in the Central Business District - in order to stop them from illegally selling their wares on the streets. Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video For Obama, Ferguson Violence is a Personal Issue

Throughout the crisis in Ferguson, Missouri, President Barack Obama has urged calm, restraint and respect for the rule of law. But the events in Ferguson have prompted him to call — more openly than he has before — for profound changes to end the racism and distrust that he believes still exists between whites and blacks in the United States. VOA White House correspondent Luis Ramirez reports.
Video

Video Online Magazine Gets Kids Discussing Big Questions

Teen culture in America is often criticized for being superficial. But an online magazine has been encouraging some teenagers to explore deeper issues, and rewarding their efforts. VOA religion reporter Jerome Socolovsky went to this year’s Kidspirit awards ceremony in New York.
Video

Video US Community Kicks Off Thanksgiving With Parade

Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.

All About America

AppleAndroid