As the economy recovers, the country’s two major economic hubs, HCM City and Ha Noi, have set high goals for GDP growth in 2010, 10 per cent and between 9 and 10 per cent, respectively.

HCM City People’s Committee vice-chairman Nguyen Thanh Tai told the local councillors last week that the city aimed to achieve a total GDP value of more than VND411 trillion (US$22.5 billion). He also stressed the quality of economic growth, which will be a key issue in the year.

To improve quality, the committee has set 22 key targets for socio-economic development, including 16 major programmes on social growth and environmental protection.

This year’s economic performance has not been robust because of the widespread impact of the global economic downturn.

HCM City’s GDP grew by only 4.1 per cent in the first quarter, which increased to 5.2 and 6.3 per cent in the second and third quarters, respectively. The final quarter is expected to reach 10.3 per cent.

"With this momentum, 10 per cent in GDP growth for next year will be within our reach," said the vice chairman.

The export sector was the hardest-hit in the city’s economy this year, falling by 17.7 per cent to an estimated $18.38 billion, compared to the targeted growth rate of 16.5 per cent set out early this year. Despite the sharp contraction, Tai said export revenue next year should grow by 12.9 per cent.

Other key targets set for next year include budget revenue of VND144.2 trillion, a year-on-year increase of 12 per cent, total investment of VND172 trillion, or almost 42 per cent of the GDP, and 270,000 jobs.

The city will focus next year on improving administrative procedures and gathering all investment resources to ensure high and sustainable economic growth.

Meanwhile, the People’s Council of Ha Noi pushed the per capita annual income target up to VND37.5 million ($2,030) from the previous VND32 million.

It also wants to create 135,000 new jobs and reduce the number of poor households by 1.6 per cent.

Nguyen Duc Kien, vice chairman of the National Assembly, urged the capital city to speed up both social and economic development. He said the city should focus on human and financial resources in order to complete important projects.

First local credit ratings

The first report ever published on the ratings of Vietnamese banks was released last Wednesday by Viet Nam Credit Information & Rating Co, or Viet Nam Credit. The report assesses the health and outlook of nearly 50 local banks based on both financial and non-financial criteria, using data from audited bank financial statements in 2008.

The Viet Nam Credit Index is composed of 18 criteria including capital adequacy ratio, liquidity, business efficiency, managerial ability and experience, brand, quality, service and asset expansion.

Asia Commercial Bank (ACB) is the only financial institution in the country which has achieved the A rating, which recognises institutions, with low transaction risks, that are still subject to unexpected fluctuations and a changing economic environment.

Nine major banks – Sacombank, Eximbank, Vietcombank, Military Bank, Techcombank, Vietinbank, VPBank, BIDV and Habubank – were ranked BBB, which means they have relative high safety but are at risk under unfavourable conditions.

Southeast Asia Bank, Saigon Bank, Agribank, DongA, Viet Nam International Bank, Maritime Bank, Lien Viet, Saigon-Hanoi Bank and Ocean Bank are graded BB. They were deemed vulnerable under unfavorable business and financial situations.

The B rating is given to VID Public, HDBank, ABBank, Tien Phong, the joint venture Vinasiam, Global Petro, joint-venture Indovina, Sai Gon, Nam Viet, Mekong Housing Bank, PG Bank and Southern Bank. This grade is designed for those who have possibly lost credit solvency but are still capable of carrying out financial commitments.

The CCC ratings (high-risk and low capability of financial commitments given the unfavorable economic conditions) include small commercial banks such as joint-venture Shinhanvina, Viet A, joint-venture Viet Nam-Russia Bank, Vietbank, North Asia, My Xuyen, Western Bank, Oriental, Dai A, Dai Tin, First Bank, Gia Dinh, Viet Nam Tin Nghia and Kien Long.

Viet Hoa Bank is the only listed as grade D, which indicates bankruptcy.

The report has no banks as AAA (highest ability for meeting financial commitments) and AA (high ability for financial commitments but lower than AAA). Viet Nam Credit also set up a CC rating for those who are encumbered with debt and have low credit solvency, as well as C for those are at risk of bankruptcy and are trying to pay off debt.

The State-owned Agribank leads in terms of total asset value and capital lending and mobilising, accounting for 21.8 per cent, 27.7 per cent and 25.25 per cent, respectively. The ACB, however, leads in return on equity ratio, at 28.46 per cent.

Better investment climate

Speakers at a conference last week in HCM City called for further improving Viet Nam’s investment environment to facilitate foreign investment projects and help the country attract more outside capital. This indicates that the country should speed up its programmes if it wants to draw more foreign investment, especially during difficult economic times.

Kyoshiro Ichikawa, senior investment advisor to the Planning and Investment Ministry’s Foreign Investment Agency, said that a Japan External Trade Organisation survey showed that businesses in the Mekong area wanted to cut production and logistics costs, shorten lead time of production and expand production networks.

"They also expect improvement of the road network as well as the East-West Economic Corridor and Southern Economic corridor in the Mekong area, which will facilitate cross-border trade and investment," said the advisor.

Abe Shinya representing Panasonic Viet Nam Company said challenges include qualified human resource, sufficient infrastructure of transportation, electricity and water and logistics, as well as domestic support industries.

Shin Nam Shik, chief representative of Korea Trade and Investment Promotion Agency (KOTRA), pointed to the problems Viet Nam should address to attract investment from his country.

"More and more Korean investors are thinking of Viet Nam as one of the prospective destinations for their capital, but there are still difficulties for Korean investors to tackle," he said, pointing to the increasing cost to do business in Viet Nam. "The cost for land rent and wages is rising too fast, which should be properly regulated to help foreign companies manage and absorb its effects."

"Another barrier is unclear administrative procedures, as a transparent legal and administrative system is the prerequisite for attracting investment from advanced and high-level enterprises," he said, adding that there were too many ambiguities in some laws and regulations.

The KOTRA official also voiced concerns about less developed infrastructure, including the transportation system, telecommunications facilities and power shortages, all of which have contributed to investors’ slow disbursement of funding.

« Back

hits: 211