VIETNAM ECONOMIC HIGHLIGHTS: IMPORT LICENSING, RICE EXPORT

UNCLAS HANOI 000847 SIPDIS SINGAPORE FOR TREASURY TREASURY FOR SCHUN USTR FOR DBISBEE STATE FOR EEB/IFD E.O. 12958: N/A TAGS: EFIN EAID ECPS ECON ETRD VM SUBJECT: VIETNAM ECONOMIC HIGHLIGHTS: IMPORT LICENSING, RICE EXPORT TAX, OTC MARKET COMING, OPTIMISM GOING ¶1. This cable is part of an ongoing series on developing economic stories in Vietnam. More transparency is expected for OTC securities market -------------- -------------- -------------- ¶2. According to Mr. Nguyen Vu Quang Trung, Deputy Director of the Hanoi Securities Trading Center (HaSTC),the over-the-counter (OTC) market, where unlisted stocks are traded, will begin operations in the near future. A contact at HaSTC told the Embassy that they have completed the technical preparations for the new market and are only waiting for the government's approval of the trading regulations. Currently, Vietnam's unlisted stocks are traded on a gray market via internet websites, or face-to-face in coffee shops or restaurants. There are no regulations governing this trading. The formalized OTC market is expected to help unlisted companies have their shares traded in a more transparent manner, and to help the government oversee unlisted share transactions. SMEs more cautious about economic outlook -------------- ¶3. According to the quarterly Asia-Pacific Small Business Confidence Survey, conducted by research company TNS, the number of Vietnamese small businesses which are still optimistic about the domestic economy has declined considerably. The survey assessed Asia Pacific businesses' confidence in their countries' economies. It polled approximately 3,000 small and medium enterprises (SMEs) operating in Hong Kong, China, Taiwan, Singapore, India, Vietnam, South Korea, Malaysia and Indonesia. In the survey, companies were asked about their views on the local economic outlook in the next six months and their plans to increase or reduce investment and staff. Sixty- seven percent of Vietnamese SMEs polled predicted that economic growth would continue at the same pace or get better, a considerable reduction from the 90 percent figure in the first quarter survey. About 44 percent of SMEs said they would hire more workers compared with 60 percent in the last survey. Fifty-one percent of SMEs, however, plan to increase investment during the remainder of the year. Study predicts IT and electronics sector will slow -------------- -------------- ¶4. According to a market research conducted by GfK Vietnam, the local information and technology (IT) and electronics market will reach US$4.07 billion in turnover this year, up 27 percent compared to last year. IT products were estimated to grow by 41 percent, household electronics by 34 percent, and telecommunications by 18 percent. The study predicted that mobile phones, which accounted for 23 percent of the IT and electronics market last year, will lead the market for the next several years. Although estimated growth for this year is lower than the 33 percent growth achieved last year, consumer goods experts said it was still good given the country's overall economic performance. According to Doan Hong Viet, Chairman and President of IT Product Distributor The Gioi So (Digital World),the Vietnamese IT market is much smaller than other IT markets in Southeast Asia but it is growing at the highest rate. Some businesses, however, are concerned for the future of the market. Increased tax and a depreciating dong will make imported mobile phones more expensive. Nguyen Duc Tai, President of The Gioi Di Dong (Mobile World) said his company now opens just one new outlet every month instead of two to three as earlier expected. Others firms are reviewing their sales targets and many have started to offer discount plans and reduced prices to attract more consumers. MICHALAK