2006 Vietnam Economic Forecast: Ten Remarkable Points

Vietnam is forecast to achieve gross domestic production (GDP) in 2006 of US$60 billion. However, with high determination of the Vietnam’s government and all the people, it is possible for the country to reach GDP of US$62.9 billion this year. Vietnam will be able to reach GDP growth rate of 8 per cent in 2006 because it obtained high rate in 2005 of 8.4 per cent with the latest quarter (the quarter fourth) recorded at 9.2 per cent. GDP per capita will rise to US$720 by the end of this year.

 

2. Export revenue to approach US$40 billion 

In 2005, this was the first time Vietnam’s export revenues had passed the US$30 billion benchmark, reaching US$32.2 billion. In 2006, export value will record US$37.3 billion if the country reaches the export growth rate of 16 per cent. It will also record US$39.5 billion if growth rate is at the high level of 23 percent. If Vietnam becomes a WTO member and gets other favourable conditions, it will be able to earn US$40 billion from exports.

 

3. WTO accession is possible
There have been many signals showing that Vietnam will be able to finish bilateral negotiations with 4 remaining partners early this year for WTO accession (the United State is an important partner). Besides, with the great determination of Vietnam (including: law-making committees of the National Assemble, government’s reforming committees as well as enterprises’ preparing efforts), becoming a WTO member in 2006 is within reach.

 

4. SOEs reforms to see breakthroughs 

After being sluggish for a long time, Vietnamese government has brought out an action plan for reforming State-owned enterprises (SOEs), which will be a basis for positive changes in 2006. Particularly, enterprises in important sectors such as banking and power and corporations and consortiums will carry out privatisation in 2006. Besides, the establishment of strong economic groups and holding companies will be enhanced in 2006 in order to improve competitiveness of the economy before further integrating into the world economy.

 

5. Efforts to erase bird flu epidemic 

Tackling the bird flu epidemic has been a major focus of the Vietnamese government. The government will spend more money to control any epidemic outbreak. It will also guide farmers and companies to change the direction of breeding and the way of processing fowl into gathered industrial direction. Nevertheless, in order to do this, it needs not only governmental determination, but also a change in thinking of each individual and local authority. If this becomes true, Vietnam will be a unique country in fighting bird flu.

 

With participation of 6 mobile phone service providers, 2006 will see a boom in mobile phone subscription with a forecast of 3.5 to 4 million new subscribers. This is also a year when customers will see sharp reduction in mobile phone prices and fees for using the service.

 

From Jan 1, 2005, tax rates on imported electronic products have been reduced to from between 0 to 5 per cent, and prices of those goods will decrease by 15 to 20 per cent as a result. Imported car tax rates and special consumption tax rates have been reduced by Vietnamese government, leading to the fact that 11 car joint ventures could not maintain their current expensive prices. The consequence of competition will be lower consumption prices for local consumers.

 

7. Construction of giant works 

In 2006, capital mobilised from both local and foreign sources will mount up to around VND375 trillion (US$23.6 billion), in which, domestic capital will account for 67 per cent and foreign capital 33 per cent. In 2005, the resource from foreign direct investment (FDI) recorded at around US$6 billion, official developing assistance (ODA) disbursement at nearly US$2 billion, FDI disbursement at around US$3.5 billion. A series of hydropower plants will be quickly built namely: Son La hydroelectric factory, Hai Phong thermo-power plant, Na Hang hydroelectric factory. Dung Quat oil refinery will be comprehensively built. Large roads, many bridges along the Red River, including Bai Chay bridge will be continuously completed. Many new urban areas will be developed.

8. Large firms to be listed on local stock exchange 

Late last year, more than one thousand billions of VND worth of bonds of the Bank for Foreign Trade of Vietnam (Vietcombank) were sold out successfully, showing that investors are paying much attention to securities of those firms and therefore when listed on the local securities exchange the local stock market will become effective. Participation of banks and firms operating in some sectors such as power and telecommunication will help heat up the local stock market.

 

At a monthly session late in 2005, the Vietnamese government expressed concern and showed the determination to enhance national economy competitiveness and growth rate quality in the demand of integration in 2006. In order to do this, the government must to save, fight corruption and waste. It is strongly adhering to reforming governmental enterprises including the privatization process.

At the end of 2005, Vietnam Airlines welcomed the its 6 millionth traveller of the year. Two days before this, Vietnam Aviation also received the 14 billionth traveller including 3.5 billion foreigners. In 2006, if the avian flu epidemic is erased, Vietnam will be able to receive 4 million foreigners to Vietnam.