Vietnam and the world will continue to suffer negative impacts of the global financial crisis, economic recession and political upheavals in many countries, said specialists at a recent seminar on “Vietnam Economy in 2011 Prospects for 2012 - Opportunities for Commodity Futures Trading” hosted by the Vietnam Chamber of Commerce and Industry (VCCI).
In the opening remarks delivered at the seminar, Dr Vu Tien Loc, VCCI President, underscored the importance of conference in economic analysis, orientation and forecast for 2012 as it would help companies to orient and map out production and business strategies and future commodity trading. He stressed that Vietnam needed to lower inflation to a single-digit rate.
The picture of the Vietnamese economy in 2011 was presented by Dr Nguyen Minh Phong, Director of Research and Development Department, the Hanoi Institute for Socioeconomic Development Studies. The Vietnamese economy faced five major shocks: frequent changes in exchange rate (devaluing the local dong by 9.3 percent from February 11, 2011), petroleum prices (raising 17-24 percent) and electricity prices (adding 15.2 percent from March 1, 2011); aggressive wars on foreign exchange markets and long-standing difference in domestic and global gold prices; surge in bad debts at banks and collapse of black credits; giant slumps on real estate and stock markets; and extraordinary rise in loss-making enterprises.
In the first 10 months of 2011, more than 57,000 companies registered for establishment (a drop of 10 percent in number and 64 percent in capital from the same period of 2010) but more than 5,800 companies were officially dissolved, nearly 11,500 companies halted operations and nearly 31,500 companies stopped paying taxes although they were not registered for bankruptcy. The number of dissolved and non-functioning companies increased nearly 22 percent from the year earlier. Vietnam’s public debt faced tremendous challenges like underestimated growth; fast-rising debt service but with declining safety ratios; and ineffective public debts.
Therefore, Dr Phong stressed that with weak internal economic strength in 2011, Vietnam will continue to face serious challenges because world economies are forecast to be gloomier in 2012, especially world-leading economies like the United States, China and the European Union. Moreover, the economy may be dragged by stagnant stock and property markets; worsening debt crises in many countries; volatile prices of foods, materials and particularly gold; weakening of hard currencies like the US dollars and euro, and slight appreciation of Chinese Yuan, Japanese Yen and Russian Ruble.
According to Dr Phong, the Vietnamese economy will also have important development opportunities in 2012. Growth momentum will continue to be maintained. GDP growth reached 7 percent a year in the 2006 - 2010 period – higher than Thailand (3.6 percent), Malaysia (4.5 percent), the Philippines (4.9 percent), Indonesia (5.7 percent), and Singapore (6.5 percent). Soaring exports (estimated at US$70 billion in the first nine months) are expected to trim this year’s trade deficit to US$10 billion, equal to 10 percent of exports, much lower than the target of 18 percent expected by the lawmaking National Assembly.
Besides, the country will have a more positive foreign exchange market where exchange rates are more stable. Public debt will be kept at a safe level. Energy security and food security are guaranteed.
From his anticipations of challenges and opportunities facing the Vietnamese economy in 2012, Dr Phong also recommended macroeconomic measures like controlling inflation, stabilising macro economy, balancing economic indicators, improving investment environment, and facilitating enterprises to expand operations and markets.
Dr Phong emphasised the importance and urgency of economic restructuring. He said economic restructuring means applying a modern economic structure where industry and services are economically dominant (usually accounting for 80 - 90 percent of GDP as in industrialised countries.) Moreover, restructuring also brings sustainable development, changes quality and quantity of the economy to form a modern sustainable economic structure, and facilitate the development of new structures.
As regards opportunities for commodity futures trading, Master Nguyen Duy Phuong, Director General Department of Vietnam Commodity Exchange (VNX), stressed that commodity trading is still a relatively new and attractive investment channel on the Vietnamese financial market. Prices of agricultural commodities are often driven by derivatives on the world market. Therefore, companies expect a domestic intermediary to form an entity to regulate the market, hedge price fluctuations, and stabilise business operations. Mr Phuong added that VNX will promote introductory activities and support member companies to cooperate with commodity exchanges and partners in the world in 2012.
The seminar witnessed a Memorandum of Understanding (MoU) signed by VNX and Enterprise Development Foundation (VCCI).
Dang Yen
Vietnamese
