Just a few months ago, everyone was talking about making
The Japanese and the Taiwanese were the first to shift or re-locate its factories in
Since last month,
Over the past decade,
The growth of a middle class has also created demand for motorbikes, fanciful cell-phones and designer clothes.
The new confidence in the government in successfully turning the once centrally planned economy to a vibrant capitalist based economy also heralded a spree of spending as if there is no tomorrow. Inflation started to rise last November and is now in the double digit zone.
Recent data however confirmed that everything is not alright. Official data showed inflation last month hit 25 per cent. Data also showed the trade deficit for the first five months of this year hit US$11.1 billion (S$15.14 billion), close to the US$12.4 billion for all of last year. Soaring imports are the main cause and a slowdown in foreign direct investment to finance the deficit will reduce the already small foreign reserves. This will raise worries that the country could run out of foreign reserves to defend its own currency's value.
One market analyst commented that a sharp devaluation of the Vietnamese Dong is imminent in the coming months and possibly, in the range of 20 to 30 percent. Critics blamed the sorrowful state to the government’s poor and uncoordinated economic policies.
Although some foreign investors are entrenched in the country for the long-term but confidence has largely evaporated from the domestic business sector. Even at giveaway prices for the so-called blue chip companies at the local stock bourse, there are no takers. Credit rating agencies have cut their credit outlook for
The financial industry will be shaken by a mountain of bad loans in the event of such eventuality and to restore confidence, there is high possibility that state banks may need to borrow abroad like from the IMF and World Bank.
In hindsight, those companies who stay put in
Though the West had been persistent in trying to run down