Vietnam - Vietnam’s economy in 2012: every cloud has a silver lining

Commenting that the national economy is now at the three-way crossroads and that the galloping two-digit GDP growth rate period is over, economists and businessmen still believe that the current difficult period is the time to restructure businesses and the national economy.

This was what the participants heard at the annual 2011 CEO Summit held in HCM City on September 6, by VietNamNet newspaper in cooperation with Vietnam Report Company.

High growth rate period over

Speaking before hundreds of leading Vietnamese businesses, Dr Le Dang Doanh, a well known Vietnamese economist, said that the economic growth has been slowing down, while the inflation rate has been high and the local currency has been depreciating. Especially, the VN Index, which measures the health of the Vietnamese stock market, has also been decreasing most rapidly in the region.

The targeted economic growth rate in 2012 has been set up at 6.5 percent, or much lower than the 7.5 percent level set for 2011, and lower than the targeted level set up for the five-year plan 2011-2015.

“The Vietnamese economy is now at the three-way crossroads,” Doanh said. “If Vietnam successfully carries out the restructure and can take full advantage of its natural resources and labor force, it would see a two-year stabilization period ahead before witnessing a more stable growth in the next years.”

“However, if it does not take drastic measures to settle the current problems, it may fall into even bigger difficulties: the economic development stagnates, and the inflation rate is high as well,” Doanh said.

Edward Chien, Director of Pricewaterhouse Coopers Vietnam, pointed out that a paradox exists in the country, that while the economy grows, the productivity does not increase. High inflation remains the biggest headache for policy makers now.

Meanwhile, Dr Alan Phan, Chair of Viasa investment fund, keeps a more optimistic viewpoint about the national economy. He thinks that though the macro economy is getting worse, this may bring changes and opportunities as well.

In 2001, the national economy also faced big challenges. At that time, a lot of Vietnamese businessmen could take full advantage of the situation to earn money and create their huge assets.

“I feel optimistic now, because the current difficult period could also be the good time for the businessmen who can grab their opportunities,” he said.

Seizing opportunities to survive and develop

Truong Dinh Anh, General Director of FPT (the Corporation for Financing and Promoting Technologies), said at the forum, that every cloud has a silver lining. He said that FPT once injected 35 percent of its capital in non-core business fields. However, in the current big difficulties, FPT has to rethink its investment strategy and decided to cut down the non-core investments to 10 percent of total investment capital.

“Focusing on your core business field will bring strength to you. This is the lesson FPT has drawn,” Anh said.

Dr Alan Phan cited an example which he believes should be seen as a big success story. No one could imagine before that Tra Vinh province, one of the poor provinces in Vietnam, can have an enterprise which makes hi-tech products for export, and earns millions of dollars a year.

“It is the wise choice of the investment field, the professional corporate governance skills which helped the enterprise, owned by Nguyen Nhu Thanh, secure the 12 million dollar investment from a French investment fund,” Mr Alan Phan said.

When talking about the economic performance in 2012, Doanh believes that this would be the year for stronger reshuffle of the government. He stressed that it is necessary to immediately carry out the fiscal and public finance reform and renovate state owned enterprises. It is unreasonable if state owned enterprises borrow foreign loans, but the Ministry of Finance has to pay debts.

Thai Thien

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