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US financial storm passing over Vietnam
The world finance market seems to have had a weight lifted after the US FED slashed the interest rate to 0.25%. Vietnam’s finance market is also believed to have survived the most difficult period. However, experts say the market will still bear impacts of the US’s storm.
Banks try to avoid storm
Dr. Nguyen Dac Hung, from the State Bank of Vietnam, said that besides State Bank’s deposits, 80% of which are being put in central banks, Vietnam’s commercial banks have been depositing at high credit-ranking foreign banks, which spells that Vietnam’s money remains safe.
However, in order to prevent risks, Vietnam’s commercial banks have been trying to restructure their deposits at foreign banks, having shifted deposits to Hong Kong or Singapore.
By the end of October 2008, Vietcombank had withdrawn 40% of its deposits from the US and other places to put in the State Bank of Vietnam and some other banks in regional countries. It has also closed some Nestro accounts in foreign countries
Vietnam’s foreign currency reserves have reached $23 billion. The US currently has bank branches in Vietnam, which are still operating normally. The banks are also still operating in the US, with none of them having been dissolved, swallowed or sold.
Export, overseas remittance, FDI will be influenced
According to the General Statistics Office, Vietnam’s export turnover has been decreasing continuously over the last few months.
The export turnover in November 2008 reached $4.8 billion, representing a 4.8% decrease over October 2008. The total export turnover in the first 11 months of 2008 is estimated to reach $58.54 billion, an increase of 34% over the same period last year. However, if not considering price increases of five export items (crude oil, rice, coal, rubber, coffee), the export turnover growth rate would be only 19%.
Due to the lower demand and payment capability of the importers, the orders from the US, EU and Japan for apparel, pepper, cashew nuts and woodwork have decreased by 20-30%.
General Director of a import-export company complained that it is now very difficult to seek new export contracts.
Regarding the FDI, in the first 11 months of the year, some 900 projects were licensed. If counting on the capital of the operational projects, which plan to increase capital, the total registered capital in these 11 months reached over $60 billion, or three times higher than that of the same period of 2007. However, this just demonstrates the increase of registered capital, while it also shows the decrease in the number of projects and implemented capital, just $10.050 billion, which does not come in accordance with the considerable increase of the registered capital.
Explaining this, economists have said that a considerable proportion of the capital that foreign investors use in Vietnam comes from loans they borrow from foreign banks and from banks operational in Vietnam. With the current situation regarding US and foreign banks’ liquidity, foreign investors will find it more challenging to borrow money from banks.
Hung, from the State Bank, said that according to a newly-released survey, of $60.097 billion, European and US investors just account for 5%, while 95% belong to Japanese and Asian investors, a region that has not been influenced much by the financial crisis.
Regarding the expected volume of $8 billion overseas remittance, Dr. Ha Quang Dao, from the HCM City Banking University, said that this is the forecast given before the financial crisis broke out. Dao believes that the overseas remittance in late-2008 and early-2009 will not reach the expected level, as the remittance mainly comes from the US and the EU, the regions that have been severely affected by the crisis.
Tien phong
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