Cambodia, Vietnam: Semen Gresik Plans to Invest $300m in Neighboring Nations

[reposted from Diverging Markets]

from The Jakarta Globe..

ID/Agustiyanti | August 30, 2012

Indonesia’s biggest cement maker, Semen Gresik, has set aside $300 million for plans to expand its business to Myanmar, Cambodia and Vietnam, the company’s chief has said.

“Expansion overseas is still in the process,” said Dwi Soetjipto, the president director of Gresik, in which the Indonesian government controls a 51 percent stake.

Earlier this month, Dwi signaled that the company was looking at acquiring stakes in cement makers in Malaysia, Myanmar, Vietnam and Thailand as it seeks to expand its reach in the region. He gave no indication of the size of the investment at that time.

But Dwi told Investor Daily last week that the company is still seeking partners as well as making valuations of investment opportunities and acquisitions in the Southeast Asian nations.

“Hopefully, the decision will come out in November,” he said.

Apart from its planned overseas investment forays, expansion at home is also ongoing. Gresik is currently building a cement plant in Padang, West Sumatra, and one in Tuban, East Java.

Semen Gresik booked a 12 percent rise in net income in the first six months of this year as it benefited from increasing cement sales in Indonesia, a product of the nation’s property and construction boom.

Net income rose to Rp 2.1 trillion ($220 million) in the January-June period, from Rp 1.87 trillion in the same six months last year, and revenue increased 14 percent to Rp 8.66 trillion, the company announced last week.

Gresik expects to produce 23 million tons of cement this year and 24-25 million tons in 2013.

Seeking a greater international profile, the company will change its name to Semen Indonesia. That change must be approved by shareholders, which could happen in October or November.

Total cement consumption nationally is expected to reach 52 million tons this year, up from 48 million last year. Production is forecast at 60 million tons this year, from 52 million tons in 2011.

The nation’s $813 billion economy, which expanded by 6.5 percent last year, is forecast to maintain that pace this year.

Gresik’s move follows another Indonesian state-controlled company that is also looking to expand overseas.

The biggest telecommunication company in Indonesia has announced its intention to expand business into East Timor. Telkom has set aside up to $50 million to support the plan.

It will cooperate with the majority Timorese government-owned Timor Telecom, the leading player in that nation’s telecommunications sector.

The president director of Telkom, Arief Yahya, said the neighboring nation of 1.2 million people had a lightly developed telecommunications sector, an appealing prospect for the company.

Telkom also has its eye on Myanmar, Arief has said, as telecommunications penetration there stands at just 5 percent of the country’s 54 million people.

“We don’t know how much the investment is because it is only in early study. We will observe the political conditions and others,” he said.

Telkom is expanding its business abroad amid stiff competition in an increasingly saturated domestic market.

Link to the article:  http://www.thejakartaglobe.com/business/semen-gresik-plans-to-invest-300m-in-neighboring-nations/541099

Vietnam: IT remains core contributor to nation’s growth

[reposted from Diverging Markets]

from Viet Nam News..

by Hoang Nam

HCM CITY — The information and communications technology sector has underlined its position as a key economic driver, creating jobs and contributing to GDP growth despite the downturn, Deputy Minister of Information and Communications Nguyen Minh Hong said.

Speaking at an annual ICT market and technology outlook conference in HCM City yesterday, he said: “The ministry has asked the Government for more support for the industry to boost economic growth.”

The Government also encourages public-private partnerships, and could buy all ICT services from companies, he added.

Last year the country’s ICT turnover topped US$13.7 billion, a whopping 79 per cent increase year-on-year, with hardware accounting for $11.3 billion.

Software and digital content growth was not as high as in previous years, but still managed respectable 10 and 25 per cent rates.

“Total exports of computers, electronic products and components, and telecom equipment were worth over $10.9 billion, a year-on-year growth of 92.2 per cent,” Nguyen Trong Duong, head of the ministry’s ICT department said.

“It was also the first time there was a surplus of exports, with exports being $428 million higher than imports.”

ICT use in governance has continued to increase. Most ministries, other administrative agencies, and provinces have electronic portals, enabling people to access data anytime, anywhere.

More than 100,000 public services are available online, with more, like e-passport, and tax payments to follow soon.

But a big concern is information security, with the average rate of hacker recognition relating to some simple forms being only 16.8 per cent. It was 36.2 per cent for more complex forms and 14.4 per cent for efficiency deterioration attacks and service denial attacks.

The average rate of use of information security solutions was 25.3 per cent in 2011.

“Information security management has been improved but application rates and human resources remain limited,” Duong explained.

ICT training continued to expand with 290 universities and colleges offering ICT (13 more than in 2010) courses to nearly 65,000 students.

At the conference Chu Tien Dung, chairman of the HCM City Computer Association (HCA), tabled the results of a survey of 256 ICT enterprises that accounted for 85 per cent of total business.

It said software exports remained important since the domestic market had not expanded much, and the role of high-tech parks was very important for such exports.

Dung said only 20 per cent of hardware companies broke even, making average profits of around 3 per cent.

There were few products and services based on new technologies, tablets, and smart phones and open source code, he said.

“ICT firms contribute 18 per cent of HCM City’s GDP and authorities should invest more to boost this key industry, especially by providing more funds.

“Hardware and electronics firms should move towards tablets and smart phones.” — VNS

Link to the article:  http://vietnamnews.vn/Economy/229476/it-remains-core-contributor-to-nations-growth.html

Country Focus: The Mineral, Metal and Fuel Resources of Mongolia

[reposted from Diverging Markets]

from AZO Mining..

By Gary Thomas

Welcome to Mongolia

Mongolia is located in Northern Asia, between Russia and China. The total area of the country is 1,564,116 km2 with a population of 3,179,997 as of July 2012. Its climatic condition is mostly desert type.

Mongolia gained independence in 1921 after being under Chinese rule for many years. In an attempt to save the country from an extended recession, the government implemented several reforms, formulated free-market policy, introduced extensive privatization of industrial sectors, and opened a small stock exchange in 1991.

Mongolia’s economy grew by 6.4% and 17.3% in the years 2010 and 2011, respectively. The GDP of Mongolia as of 2011 touched $13.43 billion. This increase is mostly due to revenue from mineral commodity exports. China buys almost 90% of Mongolia’s exports, and Mongolia imports 95% of its petroleum products and electric power from Russia.

Mongolia is rich in natural resources such as oil, gold, silver, iron, coal, copper, molybdenum, tungsten, phosphates, tin, nickel, zinc, and fluorspar. Though the economy of the country is agriculture based, the discovery of several large mineral deposits has attracted a great deal of global interest, which in turn has resulted in the transformation of Mongolia.

Mongolia is rich in natural resources such as oil, gold, silver, iron, coal, copper, molybdenum, tungsten, phosphates, tin, nickel, zinc, and fluorspar. Though the economy of the country is agriculture based, the discovery of several large mineral deposits has attracted a great deal of global interest, which in turn has resulted in the transformation of Mongolia.

Overview of Resources

Mongolia has abundant mineral deposits of uranium, copper, gold, coal, molybdenum, fluorspar, tin, and tungsten. In 2010, six major minerals/metals (copper, gold, molybdenum, silver, and uranium) projects were in the prefeasibility or feasibility stage, and they are expected to be commissioned by 2013.

Export statistics of Mongolia are as follows:

  • Copper increased to 567,000 t valued at $770.6 million in 2010 from 587,000 t valued at $502.0 million in 2009
  • Gold decreased to 5.1 t valued at $178.3 million from 10.9 t valued at $308.4 million in 2009
  • Fluorspar increased to 376,200 t valued at $63.2 million from 314,000 t valued at $48.2 million in 2009
  • Molybdenum ores and concentrate decreased to 4,800 t valued at $52.0 million from 6,700 t valued at $50.3 million in 2009
  • Iron ore increased to 3.5 Mt valued at $251 million from 1.6 Mt valued at $88.8 million in 2009

Metals

Oyu Tolgoi gold mine in South Gobi province is jointly owned by Ivanhoe Mines Ltd. of Canada, the Government of Mongolia, and Rio Tinto plc of UK. Ivanhoe released a development plan in May 2010 to increase annual production capacity to 544,000 t of copper and 650,000 troy ounces of gold for the first 10 years of operation. This mine is believed to be the world’s third-largest copper and gold mine, and has become a hub for massive mining operations generating hundreds of jobs. The Oyu Tolgoi mine accounted for more than 30% of Mongolia’s total GDP in 2011.

Voyager Resources Ltd. of Australia acquired the Argalant copper gold project in 2010.

Industrial Minerals and Gemstones

Mongolia was considered the world’s third ranked producer of fluorspar as of 2010. There are more than 600 proven deposits of fluorite in the country.

The Mineral Resources Authority of Mongolia has released information regarding four known rare-earth mineral deposits in the country.

Details of the deposits are provided below:

  • Tsagann Chuluut placer deposit in Hentiy Aymag: 758 t of monazite
  • Khalzan Burged rare-earth and metals deposit in Hovd Aymag: Columbite, elpidite-armstrongite, pyrochlore, bastnaesite and zircon
  • Mushgai Khudag rare-earth deposit in Omnogovi Aymag: Phosphatic ore and carbonatitic ore
  • Lugiin Gol deposit in Dornogovi Aymag: Nepheline syenite complex with carbonatitic veins and other minerals such as sulfides of iron, lead, copper, manganese, molybdenum, and zinc.

Fossil Fuels

In 2010, the production of coal in Mongolia doubled to about 25 million Mt compared to the previous year. Coal exports are expected to increase to 50 million Mt/yr by the year 2015 as the country has an estimated coal resource of 62.3 billion Mt (Gt), and its unexplored reserves at the Tavan Tolgoi coal deposit is expected to be 6.5 Gt of coking coal. The Tavan Tolgoi mine is considered as the largest coking coal deposit in the world. Experts state that this discovery is likely to triple Mongolia’s economic growth by 2020.

There were nearly half a dozen uranium projects in the development stage as of 2010. China National Nuclear Corp. (CNN C) International Ltd.’s wholly owned Gurvanbulag uranium project is expected to start production this year.

Investment

Mongolia has more than 6,000 deposits of 80 different minerals, which explains the increase of foreign investment in mining to about $1.1 billion in 2010 from $750 million in 2009. Experts feel that the government of Mongolia needs to realize the country’s potential and modernize its mining laws to promote more foreign investment.

One of the first steps by the government toward an open market was in October 2009 when it passed the much-awaited legislation on an investment agreement for development of the world’s largest copper mine, Oyu Tolgoi. The huge coal mine at Tavan Tolgoi is now undergoing a similar legislation processes, reviewed by the National Security Council with results expected during the course of this year.

Another reason for progress in the mining industry in Mongolia is its close proximity to China, which is its biggest trade partner. The demand for mineral commodities in China is constantly spurring the production in Mongolia.

Recently, Mongolia gained global spotlight for its contribution to the 2012 London Olympics by being the official supplier of gold for the newly designed heavy Olympic medals.

In order to exploit this mineral bounty, Mongolia has to prepare itself to meet the challenges of quickly developing the mining sector in a responsible and environment-friendly manner based on advanced industry practices.

With terms like ‘Minegolia’ being coined by experts for the mineral-rich country, Mongolia is definitely on its way to becoming a global player.

Link to the article:  http://www.azomining.com/Article.aspx?ArticleID=106

 

 

 

 

Inflation on the Rise in Zambia

[reposted from Diverging Markets]

from Zambia Reports..

Posted by:  Posted date: August 30, 2012

Zambia’s inflation rate for August has once again increased from 6.2% in July to 6.4% this month.

The Central Statistical Office (CSO) has announce the economic indicator at a briefing today and attributed the rise in inflation to increases in food prices.

“Between July and August 2012, the annual rate of inflation increased for food and non-alcoholic beverages; furnishings, household equipment and routine house maintenance, health, education, and miscellaneous goods and services, while the annual rate of inflation decreased for alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas, and other fuels; recreation and culture; and restaurant and hotel,” said director of census and statistics John Kalumbi.

Kalumbi said the annual food inflation rate was recorded at 7.3 percent in August.

According to a report in Reuters, Zambia’s inflation will remain around 6 percent in 2012 in line with the government’s target of 7 percent, the International Monetary Fund forecast last month, urging the government to remain vigilant on price pressures and tighten policy if needed.

Zambia recorded a trade surplus valued at 383.2 billion Zambian kwacha in July from another surplus of 163.0 billion kwacha recorded in June, the CSO also said on Thursday.

Link to the article:  http://zambiareports.com/2012/08/30/inflation-on-the-rise-in-zambia/

Africa: Could China’s Slowdown Mark the End of Africa’s Decade of Growth?

from allafrica.com..
Source: African Arguments
By Barbara Njau
August 28, 2012

ANALYSIS

Sub-Saharan Africa’s accelerated economic growth over the last decade has been well documented. Feted as the next boom market, especially with the backdrop of the economic slowdown in the West, there has been a tendency by many commentators to hail it as the last frontier for growth.

When I attended the African Development Bank’s summit in Tanzania for the launch of this year’s ‘African Economic Outlook’ (AEO) report, there was a huge sense of optimism about Africa’s economic trajectory. Yet I could not help but wonder whether this was somewhat over-stated.

Much was said about Africa’s decade of growth. The AEO report contended that Africa’s resilience following the 2009 global recession meant that the continent’s growth prospects remain highly positive. Yet less mention was made of how African governments are actively rebuilding their fiscal buffers, which were deployed to cope with the impact of the global recession on their domestic markets. Less still was discussed about what has been done to ensure that African countries diversify their export bases. I also found the discussions on how intra-African trade can be boosted to be disappointingly vague, and I left with several questions unanswered.

The recent report released by the ratings agency, Standard & Poor’s (S&P), put the economic vulnerability of African countries back into focus. According to S&P, China is set to shift from an investment-led to a consumer-led growth model. Having developed its production capacity over the past two decades, the country is now capable of producing domestically more consumer goods as a proportion of its overall consumption. Although the speed at which China’s rebalancing will take place is uncertain, the shift to a consumer-growth model is associated with slowing GDP growth, which has already started.

According to the country’s National Bureau of Statistics, China’s GDP growth will slow from 9.2 percent in 2011 to 8.5 percent in 2012. This matters to Africa because its exponential growth since 2000 has been in tandem with China’s economic boom. Since China’s economic expansion over the last two decades has been mainly investment-led, investment spending by China’s authorities concurrently boosted the country’s appetite for commodities sourced in Africa. This demand precipitated a surge in international prices between 2000 and 2011, and it also improved Africa’s terms of trade, resulting in what became the continent’s own decade of growth.

Yet S&P reports that since 2005 the Chinese government has been fostering a gradual rebalancing of China’s growth. Although the 2009 recession delayed this – the stimulus implemented by the government focusing on infrastructure spending – China’s rebalancing will inevitably take place. The S&P report casts fresh doubts as to whether, contrary to what the AEO report concludes, the growth of African economies is sustainable. African economies in their present state remain highly dependent on their trade with China and none will be immune to the consequences of reduced demand.

According to S&P, for every 1 percent rise in China’s GDP growth, the GDP of low-income African countries like the Democratic Republic of Congo (DRC), Guinea, Mali and Senegal has risen by 0.3 percent. For middle-income countries like Angola, Côte d’Ivoire and Sudan, a 1 percent rise in Chinese GDP has equated to a 0.4 percent rise in their GDP growth.

The boom in China’s capital spending in the past led to a strong increase in imports of metals and minerals. So the African countries that will be most affected by China’s rebalancing will be the metal and mineral exporters. Thus the DRC, South Africa and Zambia are most at risk.

Although oil exporters like Angola, Cameroon, Congo and Nigeria will be less affected in the short term, as Chinese demand for energy products will continue to be underpinned by the growth in its domestic auto markets, they still face serious risks as the changing composition of China’s imports will leave them vulnerable to a gradual fall in demand. As China increasingly powers its growth from within, the pressure on African countries to expand their consumer good exports and manufacturing bases, in order to keep up with shifting global demand, will increase.

Several African countries continue to be over-reliant on their trade with partners outside of the continent. It is puzzling that a clear roadmap which aims to increase intra-Africa trade and diversify trading partners within the continent has not been clearly articulated. Regional integration would help tackle chronic structural gaps related to infrastructure and energy.

Yet long-term regional and national strategies have not been developed by many African countries. Stronger South-South cooperation should extend beyond trade with other emerging economies around the world. African countries should look closer to home and foster trade ties with their neighbours on the continent.

Additionally, Africa’s export portfolio is still primarily based on its raw materials, thus its export earnings remain contingent on price fluctuations. The surge in demand for Africa’s commodities from China led to improved terms of trade in recent years. Yet the impending decline in demand means that Africa’s susceptibility to external shocks is high, and the need for export diversification is another pressing problem not being addressed.

Finally, African countries have been slow to translate the foreign direct investment (FDI) inflows from their trade with China into greater economic opportunity for the populace. Africa still underperforms when it comes to attracting more productivity-enhancing FDI from China that can diversify its economies, develop its private sectors and bring increased transfers in technology.

S&P’s report reveals that for all their achievements, African countries remain beset by structural challenges. If these continue unresolved, should demand from China wane, Africa will likely lose its growth momentum. Commentators could begin looking back to the last decade as a squandered opportunity for sustainable economic growth.

Barbara Njau is the Senior Reporter and Markets Editor of ‘Foreign Direct Investment’ (fDi) Magazine, a bimonthly publication from fDi Intelligence, which is part of The Financial Times Ltd. These are her own views.

Cloud Computing for the Poorest Countries

from The New York Times..Technology/Bits Blog
By Quentin Hardy
August 29, 2012

In Tuesday’s article on Amazon Web Services, I wrote about lots of different data-crunching companies, mostly in the developed world.

In the long term, however, as companies like Amazon, Google and Microsoft sell computing everywhere, the most dramatic changes may be in places most of us do not now see. Already, places without clean water, decent sanitation or steady electricity are using supercomputers.

Cheki is a used car classifieds business that serves up about a billion page views a month, mostly in Kenya and Nigeria. Most of the one million people using the site are looking at it with Android-based smartphones that cost about $70, according to Thomas Shaw, the company’s information technology manager. Imagine things in a few years, when Huawei, which makes most of the devices, gets those phone prices even lower.

This appears to be changing markets in several other countries as well. “There are people in Malawi, Rwanda and Ethiopia looking at the cars, too,” he says. Tariffs on cars are often high in these places, and a big market in another country may be a better way for them to buy.

Unlike the developed world, where speed, agility and cost are factors that make Amazon Web Services attractive, in the developing world it’s good to be on battery-powered phones and servers in California, instead of relying on an often-brittle electric grid. “For Westerners,” Mr. Shaw says, “the whole thing is a little bizarre.”

Jobberman, Nigeria’s largest jobs and careers Web site, also runs on Amazon Web Services. So does M-Pesa, the mobile payments division of Safaricom, a mobile phone provider based in Kenya. Mobile money has become so big that the Africa Development Bank says the new money may be causing inflation. In South Africa, a luxury goods company called 36Boutiques uses Amazon’s service for e-commerce

In India, there is an online nationwide cab-booking service called Getmecab that uses Amazon servers, though the closest ones are in Singapore. There are consultants that teach other businesses to use Amazon.

Amazon itself holds seminars for start-ups in India, Indonesia and many other countries, hoping to foster more consumption of advanced technology among the developing economies. So does Google, for its business applications, and it will very likely do more once its cloud computing offering, part of Google Cloud Platform, gains traction.

It’s quite possible that there are even Amazon Web Services being used in the Amazon. Amazon Web Servicesoperates several large data centers in Brazil.

Link: http://bits.blogs.nytimes.com/2012/08/29/cloud-computing-for-the-poorest-countries/?ref=technology

Vietnam’s Economic Challenges

from Vietnamica..

August 22, 2012 (Vietnamica) — Vietnam is an emerging market economy with 90 million people and exhibits many relevant properties of a transition system. It allows for examination of values and modus operandi of and some basic conditions for entrepreneurship and creativity that could serve the business sector and positive economic reforms. More importantly, economic problems facing the Vietnamese economy, especially the 2007-2012 period, have pushed it to a decisive moment when revisiting theoretical issues of entrepreneurship and creativity becomes critical.

The post-Doi Moi good times…

The genuine process of economic reforms in Vietnam that aimed toward developing a full-functioning market economy started in 1995, also when the United States and Vietnam reestablished diplomatic relations. The national economy grew 1996-2000 at an average growth rate (stated in terms of GDP) of 6.9% per annum. This momentum continued in the 2001-2005 period, with annual GDP growth rate accelerating to approximately 7.5% p.a.  During the 10-year period, Vietnam also saw many meaningful developments for a full-fledged market economy to take off. Also during 2001-2005, Vietnam received commitments of official development aid from donor countries – mostly from developed nations – worth $14.7 billion, of which about $7 billion was disbursed into the economy.

                                                                                            Vietnam’s output in millions of US dollars

Data for the 2006-2010 period show that the economy continued to grow substantially, although the average annual growth rate of real GDP for this period was 7.01%, lower than the prior 7.5% p.a. for the 2001-2005 (GSO 2011). The export-led growth economic model meant expanding exports markets worldwide, including with the U.S. and Japan, especially after Vietnam’s accession to WTO in January 2007. In 2010, Vietnam’s total export revenues reached US$71.6 billion, up 25.5% from 2009, and continued to grow almost 34% in 2011, pushing total exports value to $96.3 billion.

Foreign direct investments (FDI) also soared. As of 2011 year end, 13,667 FDI projects were on going, with a commitment of $198 billion. Exports by FDI enterprises accounted for 59% total exports from Vietnam in the year.

In early 2012, new commitments of FDI capital slowed to $6.4bn, but it is expected that disbursement from previous commitments will likely bring the total during FY2012 to about $10 billion.

… And bad

Despite the good news picture, the party may be drawing to a close.  Chronic economic problems recurred in the 2006-2011 period appeared to prove this.

Vietnam has been a net importer throughout its reform period, since 1986. However, the 2006-2010 period experienced a severe trade deficit, about $12.5 billion per year, or roughly 22% of total exports revenue.  This is a non-trivial increase from the 17.3% ratio of the 2001-2005 period, especially since exports grew faster than the economy’s output expansion.

                                                                                    Vietnam’s Annual Consumer Price Index

The emerging economy of Vietnam proved to be inefficient, with wasteful use of physical and capital resources through an indicator called the “Investment-to-GDP” ratio. The higher the ratio is, the less efficient the output productivity of the economy becomes. In fact, this ratio has gone up over three critical phases: 34.9% (1996-2000) to 39.1% (2001-2005) 43.5% (2006-2010), before falling to 34.6% in the crisis year of 2011. The conclusion: the country had to use more scarce resources to finance and support its growth.

But growth rate dropped too. Vietnam’s total output – measured by GDP – grew more slowly over time. It dropped to an annual growth rate of 5.9% in 2011, down from 6.8% in 2010. Even the critical year 2009, amid the global economic downturn, the growth rate was still 5.3%.

Another way to assess how wasteful the economy has become is the measure ICOR (incremental capital to output ratio).  It measures how many more units of capital investment the economy requires to produce one more unit of economic output. The answer is dismal. Vietnam’s ICOR was around 5:1 during 1996-2005, but increased to around 6:1 from 2006 to 2011.

The result: Vietnam’s growth engine demands 6% increase in input resources to return 1% growth in gross domestic product, while the rest of the East Asian region requires only 3% input increase from the same 1% growth.

Logically, statistics also show that productivity per capita in Vietnam is very low compared to other countries in East Asia, only $2,072/person (in 2010), while that same measure for Japan is $80,307, South Korea $33,638, Thailand $4,854, China $4,087, the Philippines $3,324, and Indonesia $2,859.

Vietnam’s credit supply in 2010 was13.7 times that of 2000, while its GDP doubled in the same 10-year period. By the end of 2011, total outstanding balance of credit was equivalent to 125% of GDP, unnerving the law-makers of Vietnam. Most law-makers voiced their concern about privileges granted to SOEs in acquiring scarce financial (bank credits, subsidy programs, bad debt “restructuring” and even cash injection) and physical assets (land, housing, mines, and other monopolistic pecuniary rights in doing businesses), citing total officially registered borrowings by SOE reaching VND 1,300 trillion ($62.2billion) while their total assets were only $87.7 billion. Total value of equity in these SOEs – held by the state – is estimated at only VND 683 trillion ($32.68 billion).

In the first half of 2012H1, Vietnam’s economy further slowed with expansion of output at a mediocre 4.31% year-on-year. Although optimistic about the chance the economy could be back on track in 2012H2, the World Bank and donors’ community advocated a more cautious growth target of 5.7% for FY2012.

Clearly, there are serious problems facing the Vietnamese economy. Over the first half of 2012, local media constantly reported alarming statistics on worsening economic/business environment in Vietnam with many experts focusing on declining output and tough conditions in which enterprises have been living.To review, the problems facing the Vietnamese economy include: i) frozen bank credit market, which showed negative growth rate in H1; ii) free fall of real estate market in both prices and scale of transactions; iii) deterioration of the already poor performing SOE sector; and iv) sky-rocketing doubtful debts in the economy.
Then, adverse impacts on the business sector

In June 2012, Vietnam’s General Statistics Office (GSO 2012) conducted a nationwide survey on 9,331 business firms of different ownerships (state-owned enterprise and private-sector enterprise; SOE, PSE and FDI) over the past 15 months in operation, ending May 16, 2012 to investigate the economic realities within the business sector, which was released in June 2012. The results show that 8.4% of the surveyed enterprises went bankrupt or shut down. Domestic private sector enterprises show the ugliest picture encountering the current economic turbulence with 9.1% failing, followed by SOE 2.7% and FDI enterprises 2.4%. The most serious problems that had led to the failures according to this business survey are: a) Financial losses due to poor performance: 69.9%; b) Shortage of capital 28.20%; and, c) Inability to compete in the marketplace: 14.70%.

Several major problems that hinder business efficiency according to the surveyed businesspeople are: i) Expensive cost of borrowings (27.2%); ii) Higher costs of business due to inflation (19.5%); iii) Limited access to bank loans (17.4%); iv) Increasing transports cost (9.7%); v) Unreliable electricity supply (7%); and vi) Abrupt changes of policies (7%).

Business failures continued to hamper the economic recovery process. Official statistics said that there are nearly 623,000 businesses formally registered by the end of 2011, of which 79,000 went bankrupt and closed, according to a report by World Bank and VCCI on March 14, 2012. However, tax records tell a different story. Only about 400,000 enterprises continue to operate, since all firms in operation should maintain their monthly tax declaration and transactions with local tax division.

Most recently, in June 2012, a poll by the most read local online newspaper unveils the fact that an overriding portion of surveyed people – almost 85% – feel the economy is still in troubled times in 2012Q2, after a very turbulent 2011.

Link to the article:  http://www.vietnamica.net/vietnams-economic-challenges/?goback=%2Egde_153873_member_150999619