News / Asia

    Vietnam's Economy a Rising Star After Global Slump

    Vietnam's economy is bustling, having bounced back from the global downturn due in large part to the government's stimulus package.

    The Communist Party has set a target of 8 percent average growth a year over the next five years. The Ministry of Planning and Investment expects growth of 7.5 percent in 2011, up from 6.5 percent this year.

    Vietnam's economy has weathered the worst of the global downturn, according to Danny Armstrong, Vietnam director for Australia's Commonwealth Bank.

    "If you consider what we've just come through - the worst global financial circumstances in 80 years - the Vietnamese economy last year grew at 5.3 percent when most economies - most developed economies were in reverse - I would suggest the outlook for growth is pretty bright," said Armstrong.

    Economic stimulus plan

    The government introduced an $8.5 billion stimulus package to reduce the damage from the global financial crisis in 2008. And monetary authorities have depreciated the currency, the dong, which makes exports more competitive overseas.

    The stimulus package played a key role in preventing a recession, said Ayumi Konishi, country director for the Asian Development Bank. But Konishi believes it is time to begin reducing the support.

    "The government should be able to phase out the first round of this stimulus package," said Konishi. "That should really do what was intended to do. The important thing is the stimulus package also increasingly includes large portion of the infrastructure support or the infrastructure investment."

    Weak infrastructure

    Many in business say the government needs to focus on improving its infrastructure. Roads, ports and power plants can not keep up with rising demand.

    And that problem is a big one for business, said the Commonwealth Bank's Danny Armstrong.

    "I guess the key complaint has been a lack of reliability of electricity over the last year or two. There's been a lot of comment about that in the media; still requirements there to improve port facilities. Roads … certainly in Ho Chi Minh City, if you have a look at traffic on the roads, the road infrastructure is growing a bit so, [but] infrastructure still has some way to go," he said.

    Vietnam is working on the problems. Thirty new coal-fired power plants are expected to start operating soon, and there are plans to build more.

    Currency devaluation poses risks

    But some of the government's actions lead to other worries, and economists say the country still faces economic challenges, including inflation and concerns over corruption and government controls.  The decision to depreciate the dong has prompted worries about inflation. And while it was intended to boost exports, a weaker currency raises prices for imports.

    And like other emerging economies, Vietnam has seen capital rapidly flowing into its markets from slower-growing countries.

    Real estate prices, for instance, have risen rapidly in the past year, adding to concerns of bubble.

    Nagesh Kumar, the chief economist at the United Nations Economic and Social Commission for Asia and the Pacific, says the inflows reflect rising real estate prices elsewhere in Asia including China, India and Indonesia.

    "This is an issue which is affecting most of the Asian emerging economies. This is because of the crisis there were injections of liquidity all across the world and that is now finding its way to Asian economies because they are doing so well. Because of these capital flows the property prices and stock prices are going up," said Kumar.

    Vietnam's Ministry of Construction says this year real estate accounted for almost 22 percent of all foreign direct investment in the country.

    Foreign investment

    Vietnam benefits from rising costs in China, a dynamic which forces some companies to shift their operations, analyst Armstrong points out.

    "If you don't want to have all your eggs in the China basket, then think about Vietnam as an alternative, that has a cheap but young and trainable workforce in a relative sense, has political stability, has relatively favorable investment conditions and a welcome mat out for foreign investment," he said.  

    Overall foreign investment is recovering slowly after dropping during the global slowdown. For the first nine months of the year, foreign direct investment was 12 percent lower than it was a year ago, at $11 billion, well under the government's target for 2010 of $22 billion. Vietnam's main investors are from Taiwan, South Korea, Japan, Malaysia and Singapore, as well as the United States and Europe.

    Some foreign investors are worried because the international credit ratings agency Fitch downgraded Vietnam's rating. Fitch blamed inconsistent state policies, external finances, and weak domestic banks for the downgrade.

    Also foreign investors, in regional surveys, have expressed concern over corruption and intellectual property rights in Vietnam. In addition, they say that Vietnam's complex business laws undermine its attraction to investors.

    You May Like

    US Lawmakers Vow to Continue Immigrant Program for Afghan Interpreters

    Congressional inaction threatens funding for effort which began in 2008 and has allowed more than 20,000 interpreters, their family members to immigrate to US

    Brexit's Impact on Russia Stirs Concern

    Some analysts see Brexit aiding Putin's plans to destabilize European politics; others note that an economically unstable Europe is not in Moscow's interests

    US to Train Cambodian Government on Combating Cybercrime

    Concerns raised over drafting of law, as critics fear cybercrime regulations could be used to restrict freedom of expression and stifle political dissent

    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.
    Baghdad Bikers Defy War with a Roari
    X
    June 28, 2016 10:33 AM
    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Baghdad Bikers Defy War with a Roar

    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Melting Pot of Immigrants Working to Restore US Capitol Dome

    The American Iron Works company is one of the firms working to renovate the iconic U.S. Capitol Dome. The company employs immigrants of many different cultural and national backgrounds. VOA’s Arman Tarjimanyan has more.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video New York Pride March A Celebration of Life, Mourning of Loss

    At this year’s march in New York marking the end of pride week, a record-breaking crowd of LGBT activists and allies marched down Manhattan's Fifth Avenue, in what will be long remembered as a powerful display of solidarity and remembrance for the 49 victims killed two weeks ago in an Orlando gay nightclub.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.

    Special Report

    Adrift The Invisible African Diaspora