Top Ten Economic Events in Vietnam 2008

Economists, contributors, reporters and editors of Saigon Times Group selected the ten most outstanding economic events in Viet Nam in 2008 as follows:

1. Inflation rocketed to around 23% for all of 2008 and was attributed to Vietnam’s inefficient monetary and fiscal policies, coupled with the world’s high prices of food, crude oil and other communities. The State Bank of Vietnam had hiked the prime rate three times to a record high of 14% per year by June but later lowered it five times to 8.5%.

2. For the first time, the Government revised down the gross domestic product growth target two times within one year, from the 8-8.5% range to 7% and then 6-6.5%, due to the impact of the global economic downturn on Vietnam’s economy. The trade deficit was estimated at around US$18 billion, a 10-year high.

3. The alarm bell went off over the worsening environmental pollution. The high-profile pollution scandal involved Taiwanese-invested monosodium glutamate maker Vedan which discharged untreated wastewater into the Thi Vai River in Dong Nai Province. But what concerned the public was that State environment agencies and local authorities did not show their accountability for, nor fulfill their managerial role in the pollution issue.

4. Volatile prices of commodities and production materials dealt a blow to Vietnam’s economy. Many industries were rescued by the Government. However, consumers did not benefit much when prices of crude oil, steel, steel ingots and fertilizer plunged, even though they suffered most when prices of these goods leapt.

5. Melamine laced dairy products caused great anxiety among consumers as well as huge loses for companies because of the inconsistent and inaccurate handling of the issue by the authorities. For example, the Ministry of Health initially decided to destroy the melamine tainted milk but in December allowed the presence of a certain amount of melamine in food.

6. Foreign direct investment attraction emerged as a bright spot of Vietnam’s economy, with commitments exceeding US$64 billion, and disbursements amounting to US$11.5 billion, US$3.5 billion higher than in 2007. However, the FDI disbursement is forecast to fall sharply in 2009 since developers of megaprojects are projected to struggle with financial problems.

7. Real estate and stock prices tumbled after both markets overheated. According to the central bank, loans for the property market had amounted to VND115 trillion (over US$6.5 billion) by October 2008, 9.5% of the total outstanding loans in Viet Nam.

8. Viet Nam could have earned more from rice exports when the export price had soared to US$1,200 a ton. The Government ordered a suspension of the signing of new rice contracts in early April 2008 to ensure food security for the country. Three months later, companies were allowed to re-export rice but the price plunged to US$600 a ton. The December export price continued falling to around US$350 a ton. The losses were attributed to the poor export management capacity of the relevant State agencies and to the poor forecasting ability of advisory agencies for the Government.

9. More natural disasters hit the country and wreaked greater havoc. In particular, the prolonged cold spell in the north in early 2008 killed large numbers of cows and buffaloes and the flooding in Hanoi and neighboring localities in late October caused big loses. By November 2008, floods had killed 84 people and left five people missing as well as inflicted crop, housing and infrastructure damages worth VND6.32 trillion (more than US$360 million) in 17 cities and provinces.

10. Vietnam’s image has been seriously affected after former executives of Pacific Consultants International (PCI), the consultant for the Saigon East-West Highway and Water Environment project in HCMC, admitted at a Japanese court that they had paid US$820,000 in kickbacks for Huynh Ngoc Sy, former head of the project management unit. As a result, Japan has held off current and new official development assistance loans for Vietnam until Vietnam had cleared the corruption case. (Saigon Times)