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Minister goes on-line to discuss transparency
The Vietnamese Government is committed to building an open and transparent investment environment, Finance Minister Vu Van Ninh told domestic and foreign investors during an on-line video forum on Thursday.
Ninh said the fact that the Government organised the forum was evidence of the Government’s commitment.
"The Vietnamese Government is eager to exchange and give information, as well as listen to and share difficulties with investors," he said.
At the forum, which linked up Ha Noi, HCM City, Hong Kong and Singapore, Ninh and officials from the State Bank of Viet Nam, the Ministry of Planning and Investment and the Ministry of Industry and Trade, the World Bank and other leading financial institutions, gave answers to questions from investors on Viet Nam’s steps to curb inflation.
To give foreign and domestic investors information on Viet Nam’s economic and social situation exactly and adequately, Ninh said that in the first quarter of the year, Viet Nam posted economic growth of 7.4 per cent.
"The country’s industrial production value in the period rose by 16.4 per cent on the same period last year," he said. "In the first five months of 2008, the country attracted US$15.3 billion in FDI capital, increasing 2.34 times over the same period last year. It also recorded a year-on-year increase of 30.5 per cent in export turnover.
"The country also had an increase in rice output in the first months of this year and expects to export 4-4.5 million tonnes of rice this year.
"However," the Finance Minister said,"in the context of world economic fluctuations and inflation affecting the global economy, Viet Nam’s economy was also experiencing a surge in consumer prices and a high trade deficit.
"In the first five months of the year, the consumer price index (CPI) rose by 15.96 per cent. The nation’s borrowings from foreign countries at the end of last year made up 32.7 per cent of gross domestic product (GDP).
"Under the circumstances," Ninh said, "Viet Nam has been carrying out eight groups of solutions to curb inflation, including tightening monetary policies, improving the efficiency of State budget usage, developing industrial and agricultural production, ensuring a balance in supply and demand of goods, intensifying exports, reducing the trade deficit, and practising thrift."
According to the minister, after the fluctuations in the economy, the Vietnamese Government admitted some shortcomings in taking measures to curb inflation.
"However," the minister said, "the situation is still controllable."
Ninh told the video forum that the Vietnamese Government had defined measures to improve the economy’s efficiency, such as boosting equitisation in State-owned enterprises and focusing investment on local factories to avoid dependence on imported materials.
Dialogue with investors
The problem getting most attention from investors was the exchange rate between the Vietnamese dong and US dollar. An investor in HCM City asked what measures the Government would take to control the exchange rate to help Vietnamese importers as the price of the dollar increased.
In reply, the State Bank of Viet Nam’s Governor Nguyen Van Giau said the Vietnamese Government would not devaluate the Vietnamese currency.
"In line with the country’s current regulation, we are not allowed to publicise figures on foreign currency reserves, but with the Prime Minister’s permission and according to the World Bank’s suggestion, I can say that our foreign currency reserve is $20.7 billion, enough to support the market if necessary."
Giau said that the SBV was discussing measures suitable to stabilise the monetary market.
"Currently, the State Bank is pursuing a flexible exchange-rate management policy," he said, admitting that changes would be needed as Viet Nam had not been skilful at controlling the rate.
On the subject of commercial banks’ lending-interest rates, the Governor said the high lending interest rates were the result of measures to curb inflation, admitting they caused many difficulties for enterprises.
"But," he added, "this also forced enterprises to cut inefficient investment projects and reduce production costs to ensure reasonable prices."
The Governor said SBV measures to tighten credit had partly helped control commercial bank lending and cut the bank’s’ average growth in lending from 6.28 per cent in January to 1.22 per cent.
Mentioning the issuing of bonds to international markets, Finance Minister Ninh said Government bond interest rates were now less attractive than commercial bank rates, adding "we will consider adjustment in bond interest rates to raise more capital for the economy".
Under the current situation, he said Viet Nam would cease issuing bonds to international markets and would continue issuing bonds when economic conditions were more favourable.
Finance Minister Ninh said that apart from tightening monetary policies, the Government had also been practising thrift by cutting 20 per cent of public expense and reducing 25 per cent (VND10 trillion) in investments raised through issuing Government bonds.
The Government had also lowered its growth target from 8.5 per cent to 7 per cent, he added, and these solutions would help limit trade deficit and curb inflation.
Ninh said that in the near future, the Government would not increase the foreign ownership ratio in listed companies and unlisted companies, currently at 49 and 40 per cent.
"We will make classifications and issue particular regulations for some sectors, such as banking," he said.
Concluding the forum, Minister Ninh said that the existing difficulties for Viet Nam were temporary.
VNN
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