Vietnam fights inflation to boost FDI

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Struggling with sharp price rises, bad bank debts and slowing growth, Vietnam has lost investors’ confidence over the past years. Calling for firm action, the country’s prime minister Nguyen Tan Dung has now pledged to bring inflation down to a decade low as the nation seeks to boost foreign direct investment and cope with the aftermath of a credit boom that’s hobbled the banking industry.

Dung said in an interview with Bloomberg on November 28 that overseas investment will rise “sharply” in the next two years as officials now start to overhaul state enterprises and recapitalise banks.

The situation in Vietnam so far has lead to a 21 per cent slide in investment pledges from abroad this year. Inflation hit 20-plus per cent in two of the last four years.

Dung said inflation in 2012 will be about 7 per cent and in 2013, “when we will have even better control of it,” at about 6 per cent. According to official data, Vietnam’s consumer prices rose 7.1 per cent in November 2012.

Growth for Vietnam in 2013 is forecast at 5.5 per cent, a slowdown from the 7 per cent average recorded since the “doi moi” market-opening reforms began in 1986.

The central bank said that the ratio of non-performing loans as of September 30 was at 8.82 per cent, and that it aims to lower the ratio to below 3 per cent by 2015.

The ruling Communist Party has identified restructuring state-owned companies as one of its main areas of focus through 2015. The government wants speed up a share-sale programme to sell stakes in large enterprises such as Vietnam Mobile Telecom Services and Vietnam Airlines.

The country also aims to capitalise on its advantage as a low-cost manufacturing location, which is mainly attractive for textile and electronics firms that want to relocate operations from China where labour costs have been rising significantly over the past years.

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Reading Time: 2 minutes

Struggling with sharp price rises, bad bank debts and slowing growth, Vietnam has lost investors’ confidence over the past years. Calling for firm action, the country’s prime minister Nguyen Tan Dung has now pledged to bring inflation down to a decade low as the nation seeks to boost foreign direct investment and cope with the aftermath of a credit boom that’s hobbled the banking industry.

Reading Time: 2 minutes

Struggling with sharp price rises, bad bank debts and slowing growth, Vietnam has lost investors’ confidence over the past years. Calling for firm action, the country’s prime minister Nguyen Tan Dung has now pledged to bring inflation down to a decade low as the nation seeks to boost foreign direct investment and cope with the aftermath of a credit boom that’s hobbled the banking industry.

Dung said in an interview with Bloomberg on November 28 that overseas investment will rise “sharply” in the next two years as officials now start to overhaul state enterprises and recapitalise banks.

The situation in Vietnam so far has lead to a 21 per cent slide in investment pledges from abroad this year. Inflation hit 20-plus per cent in two of the last four years.

Dung said inflation in 2012 will be about 7 per cent and in 2013, “when we will have even better control of it,” at about 6 per cent. According to official data, Vietnam’s consumer prices rose 7.1 per cent in November 2012.

Growth for Vietnam in 2013 is forecast at 5.5 per cent, a slowdown from the 7 per cent average recorded since the “doi moi” market-opening reforms began in 1986.

The central bank said that the ratio of non-performing loans as of September 30 was at 8.82 per cent, and that it aims to lower the ratio to below 3 per cent by 2015.

The ruling Communist Party has identified restructuring state-owned companies as one of its main areas of focus through 2015. The government wants speed up a share-sale programme to sell stakes in large enterprises such as Vietnam Mobile Telecom Services and Vietnam Airlines.

The country also aims to capitalise on its advantage as a low-cost manufacturing location, which is mainly attractive for textile and electronics firms that want to relocate operations from China where labour costs have been rising significantly over the past years.

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