Vietnam is planning to open its markets to more foreign-owned securities companies. The plan is part of a broader effort to privatize state-run companies and encourage more foreign investment. But a string of high-profile corruption cases and worries about rising prices, are a concern for many Vietnamese.
After a decade of rampant growth, Vietnam’s economic prospects have darkened in recent years. Debt-mired banks, badly managed and corrupt state-owned businesses and high inflation have finally taken their toll.
As smaller businesses struggle to get loans and more people lose their jobs, the country’s leaders have promised change. In July, the government announced it would restructure some of the most dominant state-owned groups, including PetroVietnam. However, the arrests of banker tycoon Nguyen Duc Kien last month for undisclosed financial crimes rocked investor confidence and the stock market plunged.
Early this month, in a move some observers say was an attempt to boost the stock market, officials announced a decree allowing foreign banks, securities companies and insurance firms operating in the country to buy up to 100 percent of the shares in an existing securities company. Economists have welcomed the move, saying it laid the ground for privatization by encouraging competition and a more level playing field.
Hanoi-based economist Vuong Quan Hoang, from the University of Brussels, says it is an important step for the future.
“For foreign securities companies, I think this is going to be a good thing," said Hoang. "Even if the sentiment right now is not great, then we should not rule out the possibility that some time in the future, not far away, then probably the next wave of investment could happen.”
However, Hoang notes that the impact of the decree will likely not be felt for another 12 months, when the economy is more stable. Meanwhile, Hoang says there is a lot of work to be done and the worst is not yet over.
“Right now there are issues with the real estate market, which is something big, and the interconnection between the real estate market, the securities market and the banking system," Hoang added. "What you saw over the past few weeks was only the tip of the iceberg.”
There are already growing signs of public discontent about the state of the economy.
This week, a group of 20 students demonstrated outside the state-run oil and gas giants Petrolimex and PetroVietnam protesting petrol price hikes.
Economics student, Hoang, 23, was among the protesters.
Hoang says higher oil prices lead to higher inflation and poor people are already finding it difficult to make ends meet. Hoang adds that every price increase puts more pressure on the country’s poorest, people he feels are being ignored by the government. He says corruption is a big part of the problem.
Hoang also says people are expected to pay bribes to receive the most basic services, like hospital treatment. Students often need to bribe teachers so they will get favorable marks in their exams.
In a communist country, economics and politics are intrinsically linked. However, as the issue of reform becomes more urgent, some observers have become more wary about voicing their opinion on the economy for fear of getting in trouble with authorities.
Speaking before the protest on Sunday, Nguyen Thi Hoi, 24, said she is not afraid to express her views.
Hoi said, as long as the protesters followed the law, there is no reason to be scared.
Observers have welcomed the government’s efforts to reform, but economist Hoang says until there is a long-term road map people will continue to worry about the future. Meanwhile, the pressure continues to mount on members of the government to change the economic tide and give hope to those living on the margin.