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Image : Will Vietnam become an emerging market in three years?

Will Vietnam become an emerging market in three years?

person Orange Themes access_time Nov 20,2016

The Vietnamese stock market has been listed by Morgan Stanley Capital International (MSCI) as a frontier market. Will it be upgraded into an emerging market in three or five years?

Image : US unemployment rate falls to 4.9% on solid job creation

US unemployment rate falls to 4.9% on solid job creation

person Orange Themes access_time Nov 04,2016

The US economy added a solid 161,000 jobs in October while the unemployment rate fell to 4.9 percent, according to Labor Department figures released Friday. In a show of steady momentum in the world's largest economy, the department revised upward

Image : Local airlines plan new services, more seats in peak summer travel season

Local airlines plan new services, more seats in peak summer travel season

person Orange Themes access_time May 31,2017

Bao Moi - Domestic airlines are planning to launch new routes and operate additional flights to meet growing demand during the peak summer travel season.

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Remnants of old subsidized economy must go

access_time Mar 07,2017 chat_bubble_outline 46 views

As at the end of 2015, the government was acting as debt guarantor for a total of VND459 trillion ($21 billion) in State-owned enterprise (SOE) debts. 

Remnants of old subsidized economy must go

Electricity of Vietnam (EVN) had $9.7 billion in debts, the Vietnam Oil and Gas Group (PetroVietnam) $2.4 billion, and the Vietnam National Coal and Mineral Industries Group (Vinacomin) $647 million, according to figures from the Ministry of Finance (MoF).

“Even though Vietnam has been moving towards a market economy, SOEs are still receiving incentives like in the old subsided economy days,” economist Mr. Bui Kien Thanh said. 

“If this continues, the government will be stuck with higher public debts while SOEs will never mature.”

Vietnam’s total outstanding public debt was estimated at 64.98 per cent of GDP in 2016 and is inching towards the ceiling of 65 per cent. 

Minister of Finance Dinh Tien Dung was quoted in local media in November as saying that “public debt in the past five years has climbed 18.4 per cent on average and three times faster than economic growth.”

Figures from MoF reveal there were a total of 652 enterprises that were 100 per cent State-owned as at December 31, 2015, with total assets of VND3,000 trillion ($131.34 billion), up 1 per cent compared to 2014, while owner equity went up 8 per cent, to VND1,376 trillion ($60.24 billion).

But these SOEs had posted total annual revenues of just VND1,588 trillion ($69.52 billion) as at the end of 2015, the same as in 2014. 

Notably, the seven State-owned corporations that accounted for 65.5 per cent of owner equity earned total revenues of only VN960.8 trillion ($42 billion), down 3 per cent compared to 2014. 

“The attitude that their debts are covered by the government has led to ineffective operations by SOEs,” Mr. Thanh said.

“The reform of SOEs must go way beyond just equitization”, Mr. Eric Sidgwick, ADB Country Director in Vietnam, told VET. 

“It has to go to corporate governance, restructuring, greater transparency, greater accountability, and getting rid of non-core businesses.”

2016 was the first year that business startups set a new record, with over 100,000 being created. 

However, despite positive recent changes, Vietnam’s business environment still lags behind other countries and especially other ASEAN countries. 

The environment is also far below the expectations of the business community. 

Local businesses still face difficulties accessing capital sources and must pay higher interest rates than in other countries, together with inherent hardships in capable human resources, infrastructure, and public administration in land, taxes, customs, and trade.      

Vietnam has set a GDP growth target of 6.7 per cent in 2017, equal to the target set for last year, while inflation is targeted at 4 per cent against the 5 per cent targeted for 2016.

VN Economic Times

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