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Vietnam Raises Interest Rates to Tackle Inflation


26 May 2008

Vietnam has raised interest rates to tackle double-digit inflation and a Canadian casino and resort group says it will build a sprawling beach resort in the country. Claudia Blume in Hong Kong has more on these and other stories in our weekly summary of business news from the Asia-Pacific region.

The State Bank of Vietnam sharply raised its benchmark interest rate to 12 percent from 8.75 percent, in an effort to curb surging inflation and tighten lending. Commercial banks are allowed to offer depositors rates of up to 18 percent.

Consumer prices rose more than 21 percent in April compared with a year ago, the biggest increase since the early 1990s. The Vietnamese government is worried that popular anger about higher prices could lead to unrest and has made tackling inflation its top priority.

In other news from Vietnam, the government has given the green light to a Canadian group to build a $4.2 billion casino and beach resort in the south of the country. Asian Coast Development Limited says it will build its Ho Tram Strip project in the seaside province of Ba Ria-Vung Tau, close to Ho Chi Minh City.

The complex will include two five-star hotels, restaurants, a golf course and a Las Vegas-style casino. Construction will start in the second half of this year. Vietnamese citizens are not allowed to gamble, but there are a number of casinos in the country catering to tourists.

Australia's wheat exporter AWB says its first-half profit nearly doubled. Due to increased sales, AWB's net income jumped to $21 million in the six months ending in March, up from $11 million a year earlier.

AWB's managing director Gordon Davis says the strong result indicates the company has turned a corner, despite many challenges. Wheat crops had been poor as a result of severe droughts. AWB was also shaken by the loss of its export monopoly at the end of 2006, after an inquiry found the company had paid bribes to Iraq's former leader Saddam Hussein.

"The business has delivered a solid result that demonstrates a resilience and also from my point of view demonstrates that the management team are focusing on the right priorities to grow shareholder returns and that's clearly something the company's has been, has had a disappointing performance on in recent years," he said.

The growth of China's toy exports has slowed dramatically in the first three months of this year. Exports from January to March grew by just three percent, down from a growth rate of 23 percent in the same period a year earlier. Exports were hurt by higher production costs, a stronger currency and growing international concerns about the safety of toys made in China.

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