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Wednesday, November 21, 2012

Not all economic doom and gloom -Under siege Vietnam still has rosy long-term economic prospects, according to a new report.

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Ernst&Young's "Rapid-Growth Markets Forecast" report, released late last month, said Vietnam stood out as a high-potential economy and its on-going difficulties would be a "temporary phenomenon."

"Vietnam has a young and well-educated population of almost 88 million, modest labour costs, growth of 6 per cent targeted next year and scope for further economic restructuring. Its long-term attraction for foreign investors is underpinned by improvements in the economic environment and expectations of sustained high growth," the report said.

The firm expects Vietnam's economy to annually grow by almost 6 per cent over the next 25 years, making it the third-fastest growing country among rapid growth markets.

The impressive potential is headlined by the country's per capita income was expected to grow six-fold during the next 25 years, while the number of households earning over $30,000 per year would rise from less than 6,000 last year to more than 60,000 in 10 years' time.

Meanwhile, manufacturing wages were currently estimated to be half those in China and Thailand, which should encourage a movement of operations to Vietnam to diversify production and take advantage of lower costs.

London-based Legatum Institute in early November, 2012 also trumpeted its Prosperity Index 2012 surveyed of 144 nations, with Vietnam ranking 53rd, up from 62nd in 2011 and 61st in 2010. Vietnam was ranked 39th in economic health, 73rd in entrepreneurship and opportunity, 55th in safety and security, 61st in governance, 80th in education and health, and 35th in social capital.

The government last week also reported that Vietnam's socio-economic situation in this year's first 10 months continued witnessing "positive changes" with measures to taming inflation and stabilising the macro-economy continuing to prove "effective."

Specifically, the index for industrial production (IIP) for October rose 5.8 per cent against September's 4.6 per cent. The IIP ascended 4.1, 3.2 and 2 per cent in August, July and June, respectively.

Minister of Industry and Trade Vu Huy Hoang told the National Assembly that local production continued to better perform month-on-month. "Specifically, the inventory level in the processing and manufacturing sector has reduced from 34.9 per cent by June 1, 2012 to 20.3 per cent by October 1, 2012, which was even lower than the 21.1 per cent on-year rise seen in October 1, 2012."

The government also reported that October, 2012 saw about 6,000 newly established enterprises, while the number of enterprises stopping operations remarkably decreased, with 1,000 in October. This compares to nearly 5,000 in September, 5,000 in August and 4,000 in July. In this year's first 10 months, more than 57,000 enterprises were newly established, while some 41,200 enterprises dissolved and ceased operations.

The Government Office's Minister Vu Duc Dam said such figures reflected the economy's rebound and many enterprises were still performing well.

For instance, Tuong An Vegetable Oil reported that in this year's first nine month, its revenue totaled VND2.94 trillion ($141.34 million) with after-tax profit of nearly VND34.4 billion ($1.65 million). Also, Thien Nam Trading and Import-Export Joint Stock Company said its pre-tax profit for 2012 was expected to be VND50 billion ($2.4 million).

Danang Rubber Company reported that its profit totaled nearly VND218 billion ($10.48 million) in this year's first nine months, up 57.24 per cent on-year and exceeding 26.34 per cent of this company's profit target for 2012.

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