February 1, 2010
China Sustains Expansion as Inflation Pressures Grow

Feb. 1 (Bloomberg) — China, the world’s third-biggest economy, sustained its manufacturing expansion in January as export orders jumped and inflation pressures grew, two surveys showed today.

A purchasing managers’ index released by HSBC Holdings Plc and Markit Economics rose to a record. A second survey, by the Federation of Logistics and Purchasing, recorded the second- fastest growth since 2008. India reported an acceleration of manufacturing today and Australia posted an expansion.

“These numbers should reinforce the case for policy tightening in the months ahead, including a move towards a stronger yuan,” said Brian Jackson, a Hong Kong-based emerging markets strategist at Royal Bank of Canada.

The benchmark Shanghai Composite Index of stocks fell 1.5 percent as of 2:47 p.m. local time, extending this year’s slide to 10.2 percent. Twelve-month non-deliverable yuan forwards indicated that traders expect the Chinese currency to appreciate 2.8 percent in the next year against the dollar. The yuan has been pegged to the U.S. currency for the past 18 months.

Export Gains

The HSBC index rose to a seasonally adjusted 57.4 from 56.1 in December and the survey showed the biggest gains in input and output prices since July 2008. Export sales rose at a “near- record rate,” a statement on Markit’s Web site said, without giving numbers.

The government-backed Purchasing Managers’ Index fell to a seasonally adjusted 55.8 from 56.6 in December, an e-mailed statement showed. Growth in output and orders slowed. Export demand quickened and an index of input prices rose to the highest since July 2008.

The figures may partly reflect disruptions from cold weather and snowstorms, JPMorgan Chase & Co. and UBS AG. said. Credit Suisse AG cited “credit tightening” for smaller gains in orders.

The credit boom has added to the risk of surging inflation and asset bubbles in the economy that Nomura Holdings Inc. says will contribute a third of global growth this year.

Lending Surge

Banks lent almost 1.6 trillion yuan ($234 billion) last month, the Economic Information Daily reported today on its Web site. That’s more than a fifth of the banking regulator’s target for lending this year.

China’s growth accelerated to 10.7 percent, the fastest pace since 2007, in the fourth quarter of 2009 on a 4 trillion yuan ($586 billion) stimulus package and record lending. Across Asia, South Korea reported today the biggest gain in exports in more than 20 years and Indonesia, Thailand and South Korea said inflation accelerated.

‘Crucial Stage’

“China’s economy is at a crucial stage of moving from rebounding to stabilizing” with exports set to make a bigger contribution to growth, said Zhang Liqun, a researcher at the State Council Development and Research Center. “In the meantime, companies may face a tougher environment with rising costs and intensified competition.”

Companies benefiting from the nation’s rebound include Chongqing Changan Automobile Co., which said Jan. 27 that 2009 profit may have climbed more than 4000 percent on higher sales and cost controls. China Railway Construction Co. said the same day that profit likely increased more than 50 percent from 3.6 billion yuan a year earlier because of the nation’s extra infrastructure spending.

The economy may gain momentum this quarter as exports surge 30 percent, making an interest-rate increase more likely as inflation rises, according to China International Capital Corp. China’s 10.5 percent expansion this year will compare with the global economy’s 4.2 percent, Nomura forecasts.

Faster Growth

The nation’s growth may accelerate to 12 percent this quarter, triggering a rate increase as early as this month as inflation rises to 3 percent, according to Sun Mingchun, an economist at Nomura in Hong Kong.

China is pursuing a “proactive fiscal policy” and moderately loose monetary policy,” Vice Premier Li Keqiang reaffirmed in a speech on Jan. 28 at the World Economic Forum in Davos, Switzerland.

The manufacturing index, released by the logistics federation and the Beijing-based National Bureau of Statistics, is based on replies to questionnaires sent to purchasing executives at more than 730 companies in 20 industries. It started in 2005.

The official PMI surveys mainly large and state-owned companies, while HSBC’s sample of more than 400 is weighted more toward smaller businesses and export-related companies, said Xing Ziqiang, an economist at China International Capital Corp. It began in 2004.

—Kevin Hamlin, Li Yanping. Editors: Paul Panckhurst, Lily Nonomiya.

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Filed under: china econ 
February 1, 2010
HOSE 2009-2010

taitran:

Mức vốn hóa toàn thị trường tính đến cuối tháng 12 là 620 nghìn tỷ đồng, tương đương gần 38% GDP năm 2009. So với thời điểm cuối năm 2008 (225 nghìn tỷ đồng) mức vốn hóa đã tăng gấp gần 3 lần. Số lượng công ty niêm yết tăng hơn 30% (453 công ty) và số lượng tài khoản tăng hơn 50% so với năm 2008 (đạt 793 nghìn tài khoản).

Tính đến tháng 12/2009, giá trị danh mục của nhà đầu tư nước ngoài trên thị trường chứng khoán đạt khoảng 6,6 tỷ USD, tăng gần 1,5 tỷ USD so với đầu năm 2009.

Tính đến nay, đã có 959 công ty đại chúng (không tính 457 công ty niêm yết) đăng ký với UBCK. Trong đó có khoảng 600 công ty đã đăng ký lộ trình đưa cổ phiếu vào giao dịch trên thị trường tập trung (2 sàn niêm yết hoặc UPCoM).

Trong số này đã có 50 công ty đã được chấp thuận đăng ký giao dịch trên UPCoM, 100 công ty hiện đang trong quá trình hoàn thiện hồ sơ.

***

Dự kiến trong năm 2011, HOSE sẽ đầu tư phần mềm trị giá 30 triệu USD, được mua từ Hàn Quốc đồng bộ với HNX, Trung tâm lưu ký, UBCKNN… HOSE cũng nghiên cứu xây dựng bộ chỉ số Index mới dựa vào phân ngành các DN niêm yết. Năm 2010, HOSE cố gắng để 100% các CTCK đều tham gia giao dịch trực tuyến.

***

2013 – 2020, UBCKNN sẽ tiến hành nhất thể hóa 2 sàn giao dịch chứng khoán với 2 phương án được dự kiến là:

Phương án 1, tiến hành cổ phần hóa Sở GDCK Tp.HCM (HoSE) và Sở GDCK Hà Nội (HNX) gắn liền với việc thành lập 1 công ty quản lý phần vốn của nhà nước tại 2 sở này.

Phương án 2, tiến hành hợp nhất sở GDCK Tp.HCM và sở GDCK Hà Nội trước khi tiến hành cổ phần hóa.

***

2010 sau khi nâng cấp hệ thống công nghệ, HoSE sẽ áp dụng thời gian giao dịch vào buổi chiều từ 13h – 14h30p

***

http://cafef.vn/20100122081259302CA31/nam-2010-co-the-tien-hanh-giao-dich-buoi-chieu-tai-hose.chn

3:08am  |   URL: http://tumblr.com/Zrh1VyLlakH
January 27, 2010
Apple Tablet
Ice: Apple tablet would've been less than it is if not for the magic marketing
Ice: Kindle would've been something if it has the marketing like this
TaiTran: I don't use Apple products. I do use Amazon :-??
1:55pm  |   URL: http://tumblr.com/Zrh1VyLFpdb
(Notes: 3)
  
January 22, 2010
Obama - the way to control Wall Street. step by step.

Obama - the way to control Wall Street. step by step.

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(Notes: 5)
  
January 22, 2010
Banks face revolutionary reform

Barack Obama wanted a regulatory reform bill on his desk by the end of last year. It did not happen.

Rather than wait impatiently on the sidelines, the president on Thursday came up with new restrictions on Wall Street. which will further delay a bill – and add to the lobbying frenzy that surrounds it.

In a surprise move, Mr Obama adopted the ideas of Paul Volcker, the former Fed chairman, including a prohibition on commercial banks trading purely for their own account and a ban on owning hedge funds and private equity firms.

Tim Geithner, Treasury secretary, who is facing increased hostility from Democrats for not adopting punitive measures against Wall Street, had not taken up Mr Volcker’s proposals but did not fight the president’s decision.

Officials said banks would have to choose between owning an insured depository on one hand and owning proprietary trading operations or stakes in hedge funds and private equity firms on the other. They would, however, be able to continue proprietary trading related to their customers’ businesses.

Amid continuing uncertainty over the detail of the reforms, bank executives said they believed they could continue to own hedge funds as long as they did not invest their own funds.

Congress members on both sides of the aisle declined to commit to the Obama plan in interviews with the Financial Times. But Judd Gregg, a Republican member of the Senate banking committee, and Jack Reed, a Democratic counterpart, both said they had been attracted to Mr Volcker’s ideas during private meetings and were interested in considering them.

“This problem has not just been too big to fail, it’s been too big to manage,” said Mr Reed. “A lot of these organisations – they have the core of a bank but that is overwhelmed by very sophisticated subsidiaries and trading programmes.”

Mr Gregg said he was “willing to listen”. “I’m a little concerned that this, however, is less about financial reform and more about the politics of the day and an attempt to get a populist message going and use the banks as a whipping boy, which I don’t think is constructive.”

Rob Nichols, president of the Financial Services Forum, which represents leading institutions in Washington, said: “Trading, proprietary or otherwise, did not lead to the financial crisis.”

Although aides sought to distance the proposals from the Democratic defeat in Massachusetts, Mr Obama was spoiling for a fight on Thursday as he announced his second crackdown on Wall Street in two weeks following last week’s $90bn levy.

“I welcome constructive input from folks in the financial sector. But what we’ve seen so far, in recent weeks, is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common sense rules of the road that would protect our economy and the American people,” he said.

Mr Volcker has intellectual clout and political capital in Congress, which will be needed as the administration tries to gather support for its new proposals. Ironically, it was the Treasury and the White House – where Mr Volcker heads an economic advisory board – that had given his ideas the cold shoulder.

One man who had supported Mr Volcker and pushed a version of his plan through the House is Paul Kanjorski, a Democratic member of the House financial services committee, who passed an amendment allowing regulators to force a sale of a risky division.

Thursday’s move by Mr Obama removes the regulators’ leeway and Mr Kanjorski celebrated the toughened approach to what he called the “super core” of the industry’s problems.

But officials struggled to explain the link between this plan and the financial crisis. Senior Treasury officials have long argued that the crisis had very little to do with own-account gambling by banks with insured deposits. Many of the institutions that got into trouble were not traditional commercial banks.

Sceptics, including within the administration, said it would prove hard to put an end to the kind of own-account activities Mr Obama wants to stop without also impeding client-based in-vestment banking he wants them to continue.

Moreover, there is apparently nothing in the proposal to stop former investment banks such as Goldman Sachs and Morgan Stanley simply giving up their newly acquired banking charters and reverting to being non-banks.

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(Notes: 1)
  
Filed under: ft banking crisis 
January 22, 2010
President Obama calls for the biggest regulatory overhaul since the 1930s

By Tom Braithwaite in Washington and Francesco Guerrera in New York

The global banking industry was thrown into turmoil on Thursday after President Barack Obama , responding to public rage over the financial crisis, proposed the most far-reaching overhaul of Wall Street since the 1930s.

In reforms that could force the restructuring of some of the biggest names in US finance, including JPMorgan Chase and Goldman Sachs, Mr Obama promised that “never again will the American taxpayer be held hostage by a bank that is too big to fail”.

Flanked by Paul Volcker, the former Federal Reserve chairman, who has advocated the move for months, Mr Obama called for banks to be banned from running their own trading desks and “owning, investing in or sponsoring” hedge funds and private equity groups.

Tim Geithner, the Treasury secretary, who has come under attack from Democrats on Capitol Hill, backed the plan, officials said, even though his own regulatory proposals have stopped well short of the sweeping Volcker reforms.

Republicans responded coolly, but did not reject the proposals out of hand. Richard Shelby, senior Republican on the Senate banking committee, called for more details and new hearings.

Others accused the White House of adopting a populist message to divert attention away from the blow delivered by the Democrats’ defeat in the Senate race in Massachusetts.

The measures, which require congressional approval, hark back to the response to the 1929 stock market crash that ushered in the Glass-Steagall Act, separating commercial and investment banking, which remained in law until 1999.

Shares of the big Wall Street banks fell as Mr Obama announced the proposals, but those of regional banks rose.

Mr Obama called for new rules – beyond current regulations restricting banks from holding no more than 10 per cent of US deposits – that would place unspecified size limits on institutions.

“In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments to reap a quick reward,” said Mr Obama. “And these firms have taken these risks while benefiting from special financial privileges that are reserved only for banks.”

Congressional aides and administration officials said a lot of detail remained to be decided. Barney Frank, chairman of the House financial services committee, said he would support new rules if they allowed banks to dispose of newly banned operations over three to five years and thereby prevent a “fire sale”.

Bankers said the lack of detail and the likelihood of a protracted debate in Congress would give them the chance both to lobby for changes and to adapt their businesses, with, for example, Goldman possibly giving up the financial holding company status it adopted in the financial crisis.

Read More

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Filed under: ft banking crisis 
January 21, 2010
Is there a real threat of inflation?

taitran:

Is there a real threat of inflation?

Created:
20 January 2010
Updated:
21 January 2010
Written by:
Martin Li

YES, says Charles Gibson

Of course there are inflationary pressures. Just because they aren’t yet fully apparent does not mean that they don’t exist. The only question is when they will express themselves. There are two very good reasons why they will. First, the US monetary base has almost doubled since 2007 under the influence of quantitative easing (QE). To put that in context, after 2008 the next highest rise in the monetary base was 16 per cent in 1999 and, before that, 11 per cent in 1978.

As US Federal Reserve chairman Ben Bernanke himself put it: “Like gold, US dollars have value only to the extent that they are strictly limited in supply. But the US government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost.” His predecessor, Alan Greenspan, similarly argued that it takes approximately three-and-a-half years for a policy of QE to feed through into inflation statistics.

For those who say that it is possible to reverse such a rise, we would observe that only twice in the 49 years between 1960 and 2008 has the US monetary base contracted and never by more than 4 per cent. As such, the genie is already out of the bottle.

The second reason why there will be inflation is that it is greatly in the government’s interest. Over the past three years, the government debt burden (US and UK) has risen from 40 per cent to 100 per cent of GDP. This is an almost impossible level to reduce via taxation - and certainly one that is politically unacceptable. If, however, the government can keep the nominal level of the debt stable for 10 years, while the economy grows at 7 per cent a year, then the debt to GDP ratio will halve quite naturally to a more palatable 50 per cent.

Given that the real economy is unlikely to grow at more than about 2.5 per cent a year, the balance will have to be made up by inflation - perhaps 4.5 per cent a year for 10 years. As such, we still expect inflation to surprise on the upside (notwithstanding this week’s UK statistics), on which basis real assets such as commodities will be attractive investments.

Charles Gibson is head of mining research at Edison Investment Research

NO, says Jane Foley

It cannot be denied that energy prices are rising. However, the temporary nature of present price rises suggests they should not significantly alter medium-term inflation expectations. Stable inflationary expectations combined with excess capacity in industry and high levels of unemployment should continue to bear on wage deals and inhibit the ability of retailers to pass on higher costs.

Fear of future inflation was given a major boost when some central banks (including the Bank of England and the US Federal Reserve) last year embarked upon the policy of quantitative easing. The apparent printing of money associated with this course of action supported the opinion that higher inflation must be a longer-term consequence of the plan.

A year down the road and there is next to no evidence to suggest that QE has prompted a significant rise in inflation. As in the eurozone (where QE was largely avoided), growth in M4 (broad money) in the UK remains very disappointing, suggesting that QE’s reach to the real economy has been meagre. Granted, cheap funds probably fed last year’’s speculative rally in commodities such as oil, but underlying inflation in the west remains relatively low.

Energy prices remain a main driver of the rises in the consumer price index. In the UK, base effects surrounding last year’s temporary reduction in VAT are also impacting. Insofar as both of these effects are likely to be temporary, inflation is likely to fall back to more moderate levels in a few months’ time. Oil prices have already fallen 5 per cent from their January high as the market reins back its growth expectations for 2010 in the wake of disappointing US economic data and monetary tightening in China.

Last year’s rally in oil happened despite the fact that oil inventories remained persistently above their seasonal average. This smacks of speculation and the supply pressures suggest that prices will remain more vulnerable to negative fundamental news than to positive news going forward. Stripped of volatile items such as energy, underlying inflation remains benign in the US and the eurozone and low in the UK.

Jane Foley is research director at FOREX.com

http://www.investorschronicle.co.uk/YourOpinion/article/20100120/b538ee2c-05bb-11df-9122-00144f2af8e8/Is-there-a-real-threat-of-inflation.jsp

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January 21, 2010
Lessons to learn from emerging market success

Jonathan Garner is a Managing Director and Chief Asian and Emerging Market Strategist at Morgan Stanley

Emerging market equities returned 75 per cent in dollars in 2009, outperforming developed market equities by around 50 per cent. Over the past decade they have returned more than 100 per cent in dollars with dividends reinvested, versus negative returns for developed market equities.

At Morgan Stanley, we estimate that emerging market economies will grow their gross domestic product by 6.5 per cent in 2010 against just 2 per cent for the advanced economies. But that is not the reason why we expect further outperformance of emerging equity markets.

In a recent Insight column in the Financial Times (“Busting the myth of Brics”), Peter Tasker argued that strong GDP growth in emerging markets was not a reason to invest in their stock markets. He cited academic work showing the lack of positive correlation between GDP growth and stock market returns. Long term bulls of emerging stock markets are also aware of this work. Rather, we have focused on the ability of companies in emerging markets to outperform their developed peers, selling both globally and into local markets.

Currently, the trailing return on equity (ROE) for the MSCI EM benchmark is  12 per cent versus 7 per cent for the developed markets MSCI World benchmark. On our estimates, 2010 is likely to be the 10th year in a row when the ROE of emerging market companies is superior to developed market firms. In fact, ROE in emerging markets has already troughed well above the prior cycle low, while developed markets may now be troughing at a level which is well below. For this track record one is asked to pay a 2.1 times price to book multiple and a trailing price/earnings (p/e) multiple of 18 times which is a 35 per cent discount to developed markets. The forward p/e multiple on consensus earnings is 14 times. These valuations are hardly in bubble territory and well below prior peaks in 2007, 1999 and 1993.

Our analysis of data for 650 non-financial companies in emerging markets shows that the main driver of superior return on equity is operating efficiency. Corporate leverage has remained low after the deleveraging of the 1997/98 cycle. This is important because, in true bubbles, like Japan in the late 1980s, not only were equity valuations far higher than in EM today, but higher levels of corporate leverage flattered ROE in the upswing. They also reinforced the economic and stock market downswing once the bubble burst.

A further resort of the bears is the argument that the economic growth of China, the largest index constituent in MSCI EM, is characterised by over-investment and under-consumption. Official data indicates that Chinese households consumed just 36 per cent of GDP in 2008, whilst gross fixed capital formation amounted to 47 per cent of GDP. Our analysis suggests that Chinese household consumption spending, properly counted, is probably much larger both in absolute terms and as a share of GDP (perhaps $2,800bn or 50 per cent of 2008 GDP).

A key area of understatement of both consumption and GDP is in relation to the income generation of those working in the services sector, especially in small companies. Its counterpart is under-estimation of services spending by households. China’s official statistics currently suggest that while the dollar value of Chinese household consumption of tradeable goods amounts to 38 per cent of the US total, consumption of services amounts to just 6 per cent of the US total.

The ratio of consumption of housing services is lower still at just 3 per cent of the US total. Hence, in per capita terms, the data indicates that the average Chinese person consumes $38 per annum of housing services versus over $5,000 per capita in the US ($500 per capita in Brazil). It is most unlikely that this reflects reality on the ground, in particular, given the transition to private rental markets and owner occupancy since the late 1990s housing reforms. China’s statisticians also continue to struggle to account for the burgeoning development of consumer services in areas such as financial services and insurance, communications, private medical provision and recreation.

Consumption clearly played a key role in China’s rapid exit from recession in 2009. China ended 2009 as the world’s largest market (in unit terms) in cars and mobile phone handsets and seems likely to overtake the US as the largest flat screen television market in 2010. There was also a far more rapid take up of property market inventory than most analysts expected, given the ratio of prices to official household income data.

There is every reason to believe the secular bull market in emerging market equities is more robust than the sceptics suggest. The burden of proof is on developed market companies to deliver the structural improvement in return on equity achieved by their EM peers after the crisis of 1997/98.


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Filed under: ft market business 
January 18, 2010
Nation full speed ahead in WTO

Professor Claudio Dordi, team leader of the Multilateral Trade Assistance Project, EU-Vietnam, in an interview with VIR’s Binh Chau.

Vietnam has enjoyed its first three years as a WTO member. What do you think of the country’s implementation of its WTO commitments, and how has it taken advantage of the opportunities brought about by its membership?

Soon after its accession to the WTO, Vietnam was hit by a number of negative economic events. First, there was a very high inflation rate, mainly due to an excess of liquidity following a spectacular increase in foreign investments. Next, there was a sudden rise in the price of raw materials and commodities, and, later, the international economic and financial crisis.

Most analysts recognise that Vietnam has implemented its WTO commitments properly, even though some problems still exist, especially in service sectors such as distribution and with customs-related procedures.

What the international community has realised is that Vietnam has become a reliable international trading partner. Its accession to the WTO has had two important and immediate effects, which are not measurable straight away. Firstly, on the imports side, although unusual global economic conditions have been a feature of its first three years as a WTO member, Vietnam has continued to implement its commitments without any particular delay. Indeed, on the domestic side, it is clear that Vietnam did not apply protectionist trade policies in this period.

Secondly, the worst economic crisis of the global economy since the 30s has affected Vietnam only partially. This is even due to the important role played by WTO rules, which limited the recourse of members to trade protectionist measures. What would have happened, in such an economic and financial crisis, if Vietnam were not a member of the WTO?

Regarding the way Vietnam has exploited the opportunities brought about by its WTO membership, I think that it is too early to come to a conclusion. From the point of view of the institutional membership, however, Vietnam has benefited from the advantages of the rights granted by its WTO membership.

Since 2007, Vietnam has participated in all relevant WTO organs and it is fully integrated into the WTO system. All ministries are aware of the implications of WTO membership. The situation is different in the business sector, where many enterprises still seem unaware of the opportunities offered by participation in the WTO.

Several weeks ago, the Minister of Trade and Industry, Vu Huy Hoang, announced that only about 20 per cent of Vietnamese enterprises had made use of the opportunities brought about by the country’s WTO membership. What are the main reasons for this?

The unsatisfactory level of exploitation of the opportunities brought about the WTO membership by Vietnamese enterprises can be explained from different perspectives. First of all, it should be pointed out that the Vietnamese value added is still low in many exported products. This makes it difficult to accumulate the necessary capital for further investments in the country, for upgrading technological equipment and for Vietnamese enterprises to adopt a more aggressive strategy in international markets, preventing them from fully benefiting from the reduction in trade barriers.

Secondly, for private enterprises, and especially for small- and medium-sized ones, it is difficult to understand the complications of a number of trade instruments, such as the rules of origin, customs classification and other trade-related policy measures.

For example, in many cases, enterprises prefer to export the goods without benefiting from the preferential treatment afforded by a free trade agreement or by the generalised system of preferences because the administrative burden of applying for such preferences is too great.

During her December visit to Vietnam, former US Trade representative Susan Schwab suggested Vietnam should be more vocal in Doha negotiations and should join the WTO’s Government Procurement Code to open up more markets for its exports. Do you agree with her? Why? In your opinion, in what areas of negotiations should Vietnam have a stronger voice?

The situation of Vietnam in Doha negotiations is peculiar and different from most of the others WTO members. As a “very recent accessed member” (VRAM) Vietnam is not required to deepen its commitments to WTO obligations outside of those agreed to during the procedure of accession.

For this reason, Vietnam’s “wait and see” attitude during the Doha negotiations is reasonable. Moreover, this attitude does not mean that Vietnam does not participate actively in Doha negotiations, especially in NAMA (non agriculture market access), rules (anti-dumping, subsidies) and agriculture.

Participation in the Government Procurement Code has its pros and cons. Of course, allowing foreign enterprises to participate with the same rights to the Government Procurement procedures will increase the potential of Vietnam in attracting foreign investments, and will improve the credibility of Vietnam as a trading partner.

However, it should not be forgotten that Vietnam is still a developing country and Vietnamese enterprises still lack competitiveness. Participation in the Government Procurement Code could have negative consequences, in the short term, for Vietnamese enterprises.

The best solution would be a sort of “programmed accession” to the code, i.e. a declaration by the government providing a deadline for participation in the code. This would set a deadline for enterprises wishing to improve their competitiveness and efficiency (including SOEs). It would provide a signal to other WTO members that Vietnam is carrying on its policy of improving its market economy structure.

In 2010, according to its WTO commitments, Vietnam will open its market much wider and deeper than it has in the past three years. Do you have any recommendations for Vietnam to prevent further trade deficit and protect its domestic production in compliance with WTO regulations?

Vietnam’s trade deficit is caused mainly by the import of materials and machinery. This is somewhat the price to be paid for its rapid development. Any move to protect domestic production would amount to an increase of the costs of imports, and, as a consequence, an increase in the cost of production in Vietnam.

Moreover, it should be remembered that Vietnam’s main exports have a very high foreign content. Increasing the cost of its imports would reduce its competitiveness on the export side. Furthermore, protecting domestic production could increase costs for consumers and could slow the restructuring of inefficient national enterprises.

The best way of fighting the trade deficit is to increase the value of what is produced in Vietnam, widen the value chain, change the patterns of production, promote the most competitive sectors (private) and force the restructuring of the least competitive ones, especially SOEs.

4:46am  |   URL: http://tumblr.com/Zrh1VyKJc82
January 18, 2010
Slideshow: Dubai’s grand building dream falters

4:02am  |   URL: http://tumblr.com/Zrh1VyKJRwV