Dong predicted to hold steady

07-12-2009

HCM CITY — The value of Vietnamese dong, as well as foreign direct investment, will be stable next year but there will be great changes in the real estate sector and the consumer goods market, financial experts have said.

A seminar on "Trends of Viet Nam Market in 2010" held by the CEO Club last Friday gathered around 200 Vietnamese and foreign business representatives to discuss key issues including the exchange rate, bank interest rates and investment trends in Viet Nam next year.

Ashok Sud, CEO of Standard Chartered Bank for Viet Nam, Laos and Cambodia, said Viet Nam was one of the countries good at controlling foreign currencies.

He said that with the new interest support policy for businesses reducing from 4 per cent to 2 per cent and the State Bank of Viet Nam selling US dollars to commercial banks, the exchange rate gap between banks and black market would be narrowed soon.

Sud felt that there would not be a much greater and faster loss in the value of dong, but added the Government had to implement proper financial measures and set real interest rates on deposits that were higher than inflation.

Viet Nam was a top investment destination, with FDI inflows increasing from US$340 million 20 years ago to $71.2 billion last year, noted Sami Nour Kteily, Canadian Chamber of Commerce President in Viet Nam and CEO of the PEB group in Viet Nam, Bangladesh and India.

But capital disbursement was $8 billion in the first 10 months of this year, and expected to increase to $10 billion by the year end, he said.

Kteily said he believed FDI infows to Viet Nam would be stable over the next five years.
But there would be a change in fields of investment next year, with FDI focused on the services sector and manufacturing hi-tech products.

Nguyen Cao Tri, CEO of Ben Thanh Land Investment Corporation, stressed there could be significant property price increases next year in Viet Nam because the country typically experienced a four-year cycle in the real estate sector.

"Viet Nam’s property market has formed and developed rapidly. However, it is a relatively new sector in the country so there are many inadequacies," Tri said. "Our real estate market is significantly ruled by policies that are not standardised or practical."

A Business Barometer survey of senior management officals of manufacturers and suppliers in Viet Nam found that they believed the Viet Nam market had weathered the global economic crisis.

"Around 70 per cent of companies expect double- digit growth in the next 12 months," said Mai Thi Tuyet Hoa, Associate Director of Nielsen Corp, which conducted the survey.

She said most business leaders were looking beyond traditional markets of HCM City and Ha Noi and seeing rural areas as a great opportunity for growth.

Vietnamese consumers were becoming "promotional junkies", she said. They were likely to purchase more goods on promotion, opt for cheaper brands and buy bigger pack sizes to save money, she added.

"To continue to grow in Viet Nam, we need to be more active than ever. This includes (the use of) innovative forms of communication such as the internet, mobile phones and other forms of marketing to ensure the relevance of our brands," Hoa said. — VNS