The Hong Kong and Shanghai Banking Corporation (HSBC) has recently assessed Vietnam’s foreign currency rating at BB, or stable level, in its recent report titled “Vietnam: going to the next level.”
The level is equivalent to the rankings rated by the Standard & Poor's and higher than the BB- level rated by the Fitch and Moody’s.
HSBC gave the rather good rating on Vietnam, for the first time, based on the country’s dynamic economic growth, stable politics and progresses in reform process.
According to HSBC’s report, Vietnam has attained impressive achievements in the past year. In the last decade, Vietnam’s economic growth rate reached 7.2 per cent a year. The poverty rate fell from 51 per cent in 1990 to 8 per cent at present.
Vietnam eyes to maintain its high economic growth as a top priority, aiming to raise GDP per capital to $1,000 and bring the country out of the low-income group by 2010.
The report believed that Vietnam can obtain the annual economic growth rate of 7.5-8 per cent in next five years as targeted by the Government.
The document said that Vietnam’s population structure is very favorable for economic development, adding that the people at the working age will increase by 2.3 per cent a year in 2006-2010 while the employment rate will increase by 2.5 per cent a year.
The increasing investment in fixed assets will also help improve production capacity. It made up only 10 per cent of GDP in 1985 but the ratio increased sharply to 33 per cent of GDP in 2004.
The industry and services sectors are developing fast and at a stronger speed than agriculture. These two sectors saw annual growth rates of 8 per cent and 7 per cent respectively and are expected to increase by 10 per cent and 8 per cent in coming time.
The bank, meanwhile, forecast that the need for capital in Vietnam will reach a higher level compared to the estimated figure of $140 billion in the next five years.
Vietnam is about to become a WTO member, which will bring good effects to Vietnam in the long term, the report said.
Vietnam has reasonable prudent monetary policy, helping maintain economic growth and curb inflation rate.
“Thanks to development prospects in terms of capital, human resources, production capability, macro economic reform policies, the Vietnamese economy will develop strongly, especially after the country joins the WTO, although some problems still exist,” the report said.
However, the report also pointed out some challenges facing Vietnam, namely the lack of skilled laborers, the low-efficient production of state-owned enterprises, spreading corruption, week education, and the dependence of its exports on many raw materials.
Besides, the state ownership in companies remains high, at 36.6 per cent in 2004 compared to 35.8 per cent in 2000.
The country’s legal framework is not complete; risk management is limited, while updated economic information is not updated.
However, HSBC believes that in the next six months, Vietnam’s ranking would continue to improve.
VnEconomy, Vietnamnet
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