In this report, Ken Arakawa, senior investment advisor at the Japan External Trade Organization (Jetro)’s Hanoi office takes an optimistic look at the Vietnamese economic performance and believes the South East Asian country is fit to stand on an equal ground with Japan for mutual benefits.

PM sees financial, transportation sectors as key to escaping economic downturn

Prime Minister Nguyen Tan Dung has emphasised the crucial role the State Bank of Viet Nam is expected to play to ensure Viet Nam weathers through the global recession forecast for next year.

Vietnam’s economy expanded at the slowest pace since 1999 as higher interest rates and lending restrictions earlier this year damped construction and a global recession hurt tourism.

Viet Nam Bank for Agriculture and Rural Development (Agribank), the country’s biggest bank, said it plans to raise total assets by 20% to more than VND450 trillion (US$25.7 billion) next year.

Viet Nam Oil & Gas Group, known as PetroVietnam, agreed Tuesday to a financing deal with the nation’s investment arm to pay for expansion as the group plans to develop overseas oil fields to offset decreasing output.

Vietnam’s crude oil output this year will fall 6.6% from 2007 to an average of 298,200 barrels per day (bpd), the government’s statistics office estimated on Wednesday.

But December crude production is estimated to rise 11.2% from a year earlier to 1.4 million tonnes, or 331,000 bpd, thanks to a series of new oil fields, the office said in a report.

Domestic heavy industry has expanded its market share, but remains unable to gain a bigger share than its foreign counterparts two years after the country joined the WTO.

The country continues to see increasing development prospects two years after joining, said deputy head of the Heavy Industry Department under the Ministry of Industry and Trade (MoIT), Ngo Van Tru.

The prices of consumer electronics will continue to fall in 2009, predict electronics retailers, with a new economic partnership agreement singed with Japan last week likely to accelerate the decline.

Under the agreement, import duties on consumer electronics from Japan will be reduced over the next five-to-10 years, with the first reduction coming in the middle of 2009.

PetroVietnam will sign a deal in early 2009 with BP Plc, Europe’s second-biggest oil company, to supply at least half of the crude needed by the Dung Quat plant, Thang said.

The commodity and service prices in 2009 will continue the downward trend of 2008, and the prices may be half as high of those in 2008, Nguyen Tien Thoa, Director of the Ministry of Finance’s Price Control Department, affirmed.

The government should boost domestic consumption and offer tax breaks to help firms overcome challenges posed by the global economic recession, business executives said at a conference in Hanoi Tuesday.

Le Van Chung, chairman of the Vietnam Cement Corporation, and Dau Van Hung, general director of the Vietnam Steel Corporation, said plans to boost consumption should be in place by early 2009.

Electronics company Sharp and distributor Mitsui Vietnam on Monday announced a recall of more than 2,000 imported cathode-ray tube TV sets with suspect switches.

Viet Nam estimated on Wednesday the pace of its industrial output growth would slow to 14.6% in 2008 from 17.1 percent last year.

December industrial output growth was also expected to weaken to 11.8% from 20.7% in the same month in 2007, the government statistics office said in a report.

Vietnam’s dong declined today versus the U.S. dollar, contributing to the currency’s biggest annual loss in a decade, as the government reported the slowest economic growth since 1999.

Official USD/VND rate: 16,977 -3
Vietcombank buys at : 17,380 unch
Gold shops buy at : 17,450 -30

Vietnam’s central bank set the dollar’s exchange rate lower at VND16,977 Wednesday.

The state-owned Vietcombank sold lower at VND17,486, compared with VND17,489 Tuesday.