Economy needs to focus on industries with key advantages (SOEs)

Jun 6, 2012. Nguyen Tu Anh from the Department for Economics Research spoke to the publicationThoi Bao Kinh Te Sai Gon (Sai Gon Economic Times) about the troubles of Vinashin and Vinalines.

What lessons can we learn from the losses at these State-owned corporations?

It’s a critically important lesson on management. A large flow of funds was poured into these State corporations and they somehow became unmanageable. They incurred losses but no one knew.

Does that have anything to do with the strategy to pick certain sectors as top priorities for development?

In the past, we picked too many sectors as priorities. These sectors weren’t chosen based on competitive advantages: for example, the auto industry.

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Vietnam’s drive to fix its weak banks could be stalling

May 4 (Reuters) – Moves to shrink the number of banks in Vietnam and reform its financial sector may be stalling, which could hurt efforts to put the country’s economy on a solid footing for the long-term.

Financial sector reform is one of three pillars in a program of economic restructuring Vietnam unveiled late last year, and on March 1 the government approved and published a broad plan for bank reform.

But banking reform could be stalling because authorities have higher priorities. The merger of up to eight banks, planned for the first quarter of this year, did not take place. The central bank changed the timeframe to the first half.

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Vietnam to Buy Bad Debt From Banks to Ease Risk of Collapse

Mar 5, 2012 Vietnam will buy bad debt from lenders under a plan approved by Prime Minister Nguyen Tan Dung this month, as the Southeast Asian nation seeks to prevent a collapse in the banking system.

The finance ministry will buy collateralized bad-debt from commercial banks to strengthen their balance sheets, under a plan to overhaul the industry by 2015 that was approved by Dung. Vietnam aims to cut bad-debt ratios at state-owned banks to below 3 percent by 2015, according to a statement posted on the government website on March 2.

The nation has stepped up efforts to fix a banking system hobbled by bad debt after rapid credit growth in recent years fueled a trade deficit and Asia’s fastest inflation.

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Vietnam maps out growth plan to 2015

Vietnam’s National Assembly has finished mapping out the country’s road to prosperity until 2015 but government cuts to investment capital could mean funding for the ambitious targets is hard to come by.

In a move which is key to the country’s economic future over the next few years, the National Assembly last week adopted a resolution on Vietnam’s plan for socio-economic development for the 2011-2015 period and another resolution on the same content for next year. The government said the resolutions were especially important for preparing resources for realising ambitious targets.

Vietnam’s overall goal for the 2011-2015 socio-economic development plan is to achieve rapid and sustainable economic development which is closely linked with economic restructuring and renewal of the growth model with the aim of boosting the economy’s quality, effectiveness and competitiveness.

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Vietnam able to avoid “middle income trap” – ADB Official

Rajat Nag Managing Director General of the Asian Development Bank (ADB) has described the “middle income trap” as one of challenges for Vietnam as it gains the middle income country status and at the same time said he believes in its ability to avoid the trap.

“I think all middle income countries are susceptible to the middle income trap. Vietnam of course will not be an exception. But we believe that Vietnam wil get out of the middle income trap. It should take urgent measures right now,” he said.

Vietnam has recognised this problem and the government has adopted its socio-economic development plan for the next decade since January this year, he said, adding that there are three challenges in adopting this plan, namely reform of State-owned enterprises, improvement of the quality of human capacity and meeting infrastructure challenges.

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