Reuters 3 Nov 2008

Vietnam's central bank said on Monday it was cutting its three main interest rates and lowering the compulsory reserves required on bank deposits as part of efforts to stave off an economic slowdown. The benchmark dong base rate would be cut to 12 percent from 13 percent, effective Nov. 5, the State Bank of Vietnam said.

It will be the second reduction in just over two weeks. The Southeast Asian country has battled inflation and a widening trade deficit for much of the year, tightening monetary policy, but officials appear increasingly concerned that the global credit crisis and looming slowdown could drag down growth.

'Clearly, the focus is shifting to growth from inflation,' said Matt Hildebrandt at JPMorgan Chase Bank in Singapore.

Last week Hanoi estimated the economy would grow 6.7 percent in 2008. Earlier in the year, the government had projected growth of as high as 9 percent. The central bank also said the discount rate at which it buys paper from banks would be cut by one percentage point to 11 percent from 12 percent and the refinancing rate would drop to 13 percent from 14 percent. The central bank uses the refinancing rate for loans to commercial banks. In addition, banks would be required from Nov. 5 to set aside 10 percent on non-term dong deposits and those with terms of less than 12 months instead of the current 11 percent, the bank said. The ratio for compulsory reserves on deposits with maturities of 12 months or longer would be lowered to 4 percent from 5 percent, it said.

For foreign currency deposits with maturities of less than a year the rate was cut to 9 percent from 11 percent, and for maturities of 12 months or more it was cut to 3 percent from 5 percent. The central bank also said on Monday that loan growth in January to October slowed to 19.6 percent from 37.73 percent in the same period last year, while growth in bank deposits slowed to 10.59 percent from 32.97 percent. The bank did not provide the value of the loans and deposits. 'The monetary market and banking activities have stabilised, with interest rates in sharp decline and a surplus in dong funds,' it said. 'Deposits and loans to the economy are expected to pick up,' the bank added. State-run banks began cutting rates on dong loans to prime clients by up to 1.5 percentage points to around 15-16 percent following the central bank's announcement. The central bank raised the base rate three times earlier this year to contain inflation, which approached an annual rate of 30 percent before slipping slightly to an estimated 26.7 percent in October from 27.9 percent in September.

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Reuters 2 November 2008

Vietnam's total bad debts in the banking system are unlikely to exceed 4 percent by the end of the year, a central bank official said. Total non-performing debt as of the end of September was 35 trillion dong ($2.1 billion), or 2.92 percent of overall outstanding loans, Deputy Central Bank Governor Nguyen Dong Tien said in a government banking report seen on Sunday. Banks have set aside reserves of 22 trillion dong to deal with bad debts, Tien said.

Tien's bad debt figures are much higher than those reported by state media last week of around 22 trillion dong at the end of September, and forecast to rise to 30 trillion dong by the end of 2008. "No commercial bank is losing its ability to meet payment," Tien said, adding that total deposits have risen more than 16 percent from the beginning of the year.

Last year Vietnam cut its bad debt ratio to 2 percent of loans totalling around $65 billion from 2.65 percent in 2006. Tien said debt relating to real estate projects now was more than 100 trillion dong, 9.15 percent of banks' total outstanding loans. The real estate market was buoyant until early 2008 when the economy slowed. Property prices have since fallen 30 percent or more in some areas, adding to the volume of bad debt. Vietnam's central bank tightened monetary policy in the first nine months of 2008 as it tried to slow credit growth to its 30 percent target after a 54 percent surge last year. Loans grew only 18 percent in the January to September period from the same period last year, slowing from an annual rise of 30 percent in the first nine months of 2007, the central bank has said. In October, the bank cut its three main interest rates for the first time this year to support the economy and limit the impact of the global financial crisis.

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AP 2 November 2008

Much of Vietnam's capital remained under water Sunday as the death toll from the city's worst flooding in two decades climbed to 17, disaster officials and state media reported. Floods caused by heavy rain have killed at least 44 people in the past week across northern and central Vietnam and sent food prices skyrocketing in Hanoi as much of the capital's transportation system ground to a standstill. Rain had stopped falling by Sunday morning and waters were receding in Hanoi, but many of the city's streets remained submerged under up to three feet of water. "I had to stay in my office for two days because I did not want to swim home in dirty water. It is a total nightmare," said Nguyen Ngoc Khiem, 29, a businessman.

More rain was expected in the city in the next few days, according to the national forecaster. Thirteen more bodies were recovered in Hanoi on Saturday, bring the city's death toll from the floods to 17, the VietNamNet news website quoted police as saying. One person was reported missing. Three people were washed away Friday in the northern provinces of Hoa Binh and Phu Tho, disaster officials said. Two were reported missing in Vinh Phuc province. In central Vietnam, the death toll from a week of flooding stood at 24, with one person missing. "Water levels are lower now after a week of inundating thousands of homes. People have begun to return to their homes," said Nguyen Van Vinh, an official in the central province of Nghe An, where 12 people were killed including four children who were swept away while walking home from school. Authorities in the region are rushing food and medicine to villagers in the area, Vinh said.

Vietnam is prone to floods, which kill hundreds each year.

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SteelGuru.com 1 November 2008

Vietnam News Agency reported that the rising cost of raw materials for small and medium sized enterprises has caused companies to cut back on employee recruitment. Mr Nguyen Thi Minh Tam director of marketing & communications at Navigos Group has forecast that the workforce demand would not increase in the last months of the year because of high inflation. Big companies, however, are still in need of workers.

According to the Viet Nam Association of Textile & Apparel, its small and medium sized enterprises this year did not expand production because of rising input material costs.

By the end of June 2008, the Viet Nam Automobile Industry Corporation had dropped its production to 1,400 units, a drop of 600 compared with the first half of 2005. The decline in auto production has led to a redundant workforce as the corporation was forced to reduce staff. Several of its affiliate companies including the May 1 Automobile Factory have suspended signing contracts for seasonal workers.

Mr Le Hoang Chau chairman of the HCM City’s Real Estate Association said that in recent months property transactions had dropped by 80 per cent. The slump in the real estate market has led to dozens of cuts of salespersons, clerks and translators. This has occurred in securities and insurance companies as well.

According to Vietnamworks.com, an online job recruiter, the number of recruitment request has also declined but demand for highly skilled staff remains high, the latter accounting for 67% of the total recruitment in the last two quarters.

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Bernama 1 November 2008

Vietnam is ready to make a decision to establish a nuclear power programme, following careful research, said Head of the Vietnam Atomic Energy Institute Vuong Huu Tan. Vietnam news agency (VNA) reported that at a workshop on nuclear power, which took place in Hanoi on Friday, Tan affirmed that developing infrastructural facilities for a nuclear power programme needs to undergo three stages and that actually making the decision is the very first step. According to participants at the workshop, to successfully begin construction of the country's first nuclear power plant and carry out a long-term nuclear power development programme, Vietnam needs to develop human resources, an appropriate legal system and technical infrastructure, with the participation of related ministries and agencies. This also forms part of the national energy development strategy, which runs until 2020, with a vision to 2050 which aims to produce nuclear electricity accounting for 15-20 percent of the country's total power output.

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AP 1 November 2008

Faced with mounting public criticism, Vietnam's Health Ministry suspended a widely ridiculed plan to ban short, thin and small-chested drivers. The ministry had recommended that people whose chests measure less than 28 inches be prohibited from driving motorbikes — as well as those who are too short (less than 4 -foot-8) or too thin (less than 88 pounds). When the media revealed the plan this week, it prompted disbelief and scorn among members of the public, who envisioned the police pulling over drivers to measure their chest. Thursday's state-run Tuoi Tre newspaper quoted ministry official Nguyen Huy Quang as saying the proposal would be suspended.

The proposal is part of an exhaustive list of new criteria the ministry has come up with to ensure that Vietnam's drivers are in good health. As news of the plan hit the media this week, Vietnamese expressed incredulity. "It's ridiculous," said Tran Thi Phuong, 38, a Hanoi insurance agent. "It's absurd."

"The new proposals are very funny, but many Vietnamese people could become the victim of this joke," said Le Quang Minh, 31, a Hanoi stockbroker. "Many Vietnamese women have small chests. I have many friends who won't meet these criteria."

It was unclear how the ministry established its size guidelines or why it believes that small people make bad drivers. An official there declined to comment. The average Vietnamese man is 5 feet, 4 inches (164 centimeters) tall and weighs 121 pounds (55 kilograms). The average Vietnamese woman is 5 feet, 1 inch (155 centimeters) tall and weighs 103 pounds (47 kilograms). Statistics on average chest size were unavailable.

The draft, which must be approved by the central government to become law, would also prohibit people from driving motorbikes if they suffer from array of health conditions like enlarged livers or sinusitis. The rules would cover the vast majority of Vietnam's 20 million motorbikes. It would not apply to drivers of cars or trucks.

Motorbikes account for more than 90 percent of the vehicles on Vietnam's chaotic roads, which are among the world's most dangerous. Nearly 13,000 road deaths were recorded last year, and Vietnam has one of the world's highest rates per 100,000, according to the World Health Organization. The majority of accidents involve motorbikes, which many workers in the nation of 85 million need to do their jobs.

When Nguyen Van Tai, a motorbike taxi driver, heard about the proposal, he immediately had his chest measured. Much to his relief, Tai beat the chest limit by 3 inches (7 centimeters). "A lot of people in my home village are small," said Tai, 46. "Many in my generation were poor and suffered from malnutrition. And now the Ministry of Health wants to stop us from driving to work."

Vietnamese bloggers have been poking fun at the plan, envisioning traffic police with tape measures eagerly pulling over female drivers to measure their chests. "From now on, padded bras will be best-sellers," said Bo Cu Hung, a popular Ho Chi Minh City blogger. Newspapers were inundated with letters on Tuesday from concerned readers who worried that they wouldn't measure up. "I'm not heavy enough, what am I going to do?" Le Thu Huong asked in a letter to Tuoi Tre newspaper. "And what about people whose chests are small? Most of them are too poor to afford breast implants!"

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Canadian News, 1 November 2008

A Canadian couple working temporarily in Vietnam are caught in what they call the worst flooding they've ever seen anywhere. Naomi Sanderson of Toronto says it has been raining heavily in the capital Hanoi for 48 hours, and there's "knee deep water throughout the city." Vietnam's weather forecast centre says 350-millimetres of rain fell Friday, making it the country's heaviest downpour in 24 years. Reports say the rain and floods have killed at least 24 people in the past week. Sanderson says the rain was so heavy at times, it seemed to fall "in circles almost." She says some colleagues of her husband, Mike Godding, went outside Hanoi and found fields under "at least two to three feet of water." Sanderson says many Hanoi businesses and restaurants are closed because of the flooding, although Internet service and power at their hotel have not been affected.

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