* Five Good Events:
1. Vietnam economic growth reached 8.4 per cent in 2005, the highest level over the past nine years, listing the country among the top growing economies in Asia and the world. The economic structure continued to shift to more industrial and less agricultural proportions in GDP. Industrial production value maintained their high growth rate of 17 per cent. Private industrial sector growth achieved 24.6 per cent while that of the foreign invested sector was 20 per cent and the State-run sector, 9 per cent.
2. Vietnam succeeded in its first sovereign bond issue on the New York Stock Exchange. Vietnam sold out US$750 million worth of ten-year dollar-denominated bonds with an annual coupon of 6.875 per cent within a minute on October 27. Most notably, the issue attracted much interest, with foreign investors registering to buy up to US$4.5 billion, about six times higher than the offered volume.
3. Two giant power projects kicked off, including Southeast Asia’s largest hydroelectricity plant in northern Son La province and the country’s first oil refinery in central Quang Ngai province.
4. FDI and ODA pledges reached record levels. Combined capital of newly-licensed FDI projects as well as raised capital in existing projects mounted to US$5.8 billion, the highest level in the past eight years and up about 38 per cent against 2004. More important, among new investment projects, there were many big projects by prestigious groups, showing the tendency of multinational groups’ to choose Vietnam as a production base for global consumption. New ODA agreements signed in the year also pledged as much as US$3.74 billion for Vietnam.
5. The Government gave the green light to large State enterprises including the Bank for Foreign Trade of Vietnam (Vietcombank), Electricity of Vietnam (EVN), the Vietnam Posts and Telecoms Corporation (VNPT) and the Vietnam Dairy Joint Stock Company (Vinamilk) to go public in the near future, paying the way for them to list on the local bourse. Vietcombank already achieved a great success during its first bond issue to raise chartered capital mid-this month. Through the two auctions, Vietcombank snapped up total revenue of VND1.36 trillion (US$86.4 million), compared with the targeted VND1.2 trillion. Meanwhile, Saigon Thuong Tin Commercial Joint Stock Bank, or Sacombank, was also the first commercial joint stock bank of Vietnam to be allowed by the State Bank of Vietnam to get listed on the stock market. It will probably list in 2006.
* Five Bad Events:
1. Returning bird flu and serious drought and storms hit the local economy hard in 2005. The reoccurrence of the bird flu epidemic was estimated to make a direct loss of VND3 trillion (US$190 million) to the country’s agriculture sector from early 2004 till the end of last year. It killed or forced the culling of up to 5.7 million poultry, and infected 66 people, killing 24 in 2005 alone. Meanwhile, serious drought since early last year caused water shortage for 1.4 million people and total losses of up to VND2 trillion (US$126.6 million) to the local agricultural sector. Storm Damrey, the seventh to hit the country in the year, caused total losses estimated at nearly VND400 billion (US$25.3 million).
2. The inflation rate stayed at 8.4 per cent, well surpassing the initial target of 6.5 per cent. This was mainly attributed to soaring prices of food and foodstuff due to the spreading bird flu epidemic and the higher prices of fuels and materials for production in the global market. Also, the price of gold in Vietnam broke the 25-year high record to surpass VND10 million per tael.
3. Many bad problems occurred to the electricity sector. They include a serious power shortage in the north mid-year, causing serious economic losses for local enterprises; the detection of the scam involving the installation of poor electricity meters in Ho Chi Minh City; and the proposal to replace all incandescent bulbs with compact fluorescent lamps that encountered wide public opposition.
4. Local firms faced many barriers in overseas markets, including a ban on Vietnamese basa fish in three US states and the anti-dumping lawsuit against Vietnamese footwear in the EU market.
5. The real estate markets in big cities such as Hanoi and Ho Chi Minh City were frozen following past speculation trends, forcing many trading firms to the brink of bankruptcy.
(Selected by Vietnam Panorama at www.vietpan.com)
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