: Super User; Vietnam; 09 February 2011; Hits: 1494

What Next after Vietnam Congress?

CONTINUING economic instability, a tense relationship with China, and no prospect of political relaxation. These are some of the main conclusions it is possible to draw about the outlook for Vietnam this year after the country’s ruling Communist Party ended its five-yearly congress last month.

Vietnam Needs an Economic Rethink

HOW long is Vietnam going to remain Asia’s odd man out? While the US dollar has been losing its value against almost all other currencies in Asia, it is appreciating against the Vietnamese dong. And while the nation’s gross domestic product is expanding rapidly, Vietnam is virtually the only country in the region struggling to contain a rising trade deficit.

Investors, keep an Eye on Vietnam

VIETNAM may be an interesting country to watch over the next few years. Although it is going through a bad patch now, several factors suggest that the Indo-Chinese state could rebound quickly. This is especially so if a less favourable business environment in China encourages foreign companies there to look for alternative investment locations.

Key Political Risks

Vietnam has a relatively stable government, but there are growing concerns about the health of the nation's banking sector. The main external risk relates to territorial disputes with China over islands in the South China Sea.

WATCH OUT FOR:

Signs of instability in the banking system. According to the central bank, bad debts now total 8.6 per cent of outstanding loans, double figures published in March 2012.
The extent to which senior officials are willing to promote greater accountability and transparency in ailing government enterprises, and the degree to which the local media is permitted to report corruption cases.
Territorial disputes in the South China Sea that lead to a revival of anti-Chinese sentiment, including major demonstrations.
Efforts to improve relations with the United States in the hope that this would help counterbalance Chinese influence.
Social unrest arising out of land disputes and the corruption of local officials.