[Vnbiz] Vietnam's position on economic issues

Sat Jun 7 23:52:29 PDT 2008

FYI, at least yesterday, it seems that the Gold Shops, at least in Hanoi,
were trading at official SBV rate, VND to USD.

And Gold is way to high....

Craig

On Sun, Jun 8, 2008 at 11:02 AM, Linh Phuong Pham <linh10 at gmail.com> wrote:

> [ Vietnam Business Forum ]
>
>
>  Hi A Hoanh,
>
> I think I used to have emails coming in daily digest. How could I change
> the subscription please?
> Many thanks,
> eLinh
>
> Tran Dinh Hoanh wrote:
>
> [ Vietnam Business Forum ]
>
>
>
>
> ------------------------------
>
> Dear Brothers Binh & Nam & CACC,
>
> Brother Binh, I guess most of us Vietnamese are very cynical about the
> government.  During my lifetime this far, I have never known of any
> government that is trusted by our people (probably with the exception of the
> pre-1975 Northern government during the War time.  When in war against
> a foreign power, we tend to unite strongly behind our anti-foreign-invastion
> leaders).  I think this cynicism has several deep-rooted causes: First,
> historically, dominating governments, from the Chinese to the French, were
> supposed to be bad guys.  Second, the old authoritarian culture made even
> our own governments very authoritarian.  That generally generated a
> communication gap between the government and the people. Third, the
> government did in fact enjoy its authoritarian role too much, so it
> generally expected the people to listen and obey, didn't allow the people to
> question, and didn't care much about spending time to explain things to the
> people and got their consent.  And of course, today with so corruption, the
> people even have more reasons to doubt government officials' words.
>
> But let me tell you, Binh.  Cynicism is a disease that we have to conquer.
> Distrusting people can never congeal into a strong entity.  Both the
> government and each of us individually have to work to build trust among us,
> if we want our country to become a great nation eventually.
>
> Now, brother Nam's questions:
>
> 1.  It is possible that commercial banks do not have enough USD. It may
> also be that commercial banks require a lot of paperwork, to sell you USD
> for an import deal.  I don't think anyone can just knock on the door of a
> commercial bank and ask for USED.  It may also be that commercial banks are
> not too excited about selling USD at the official price that is 10% lower
> than the free market price.
>
> The SBV has to have a good grip on the USD circulation because the USD has
> such an incredible influence on Vietnam's economy.  But I do question the
> wisdom of intentionally keep the VND over-evaluated against the USD.  It may
> be good to do that when you have some serious economic shock.  But after
> that, the exchange rate should be allowed to gradually back up to market
> rate.
>
> The further we are from the market mechanism, the more burdens the
> government has to carry on its back. Imagine a guy carrying on his back 50kg
> of food subsidy, 50kg of food price control, 50kg of oil subsidy, 50kg of
> gasoline price control, 50kg of exchange rate control.  How is he going to
> function under all that weight?  I am not saying that the government should
> just throw all that away, but it should try to shed as much weight as it can
> at a gradual speed that doesn't produce much shock to the system.   Some of
> the weight, such as some specific form of subsidy, especially subsidy to
> farmers or poor consumers, may still be there for a long time.  But most of
> the dead weight should be shed away as soon as we can.
>
> 2.  According to the PM, foreign indirect invesment can be repatriated
> freely.  I think money brought in the country to buy stocks may be
> considered indirect investment. I am not sure about the mechanism, but I
> imagine you can repatriate that kind of money through the commercial banks.
>
> Direct investment, like capital contribution from foreign invested
> companies, can only be repatriated upon the termination of the join-venture
> contract or the dissolution of the foreign invested company.
>
> Profits from foreign invested companies, however, can be repatriated
> quarterly or annually.
>
> Those are legal repatriation.  There are ways to bring USD out of the
> country illegally.  One of the common ways a company may do is to inflate
> its import invoices.  Say, importer A in Hanoi asks its friend exporter B in
> New York to send him a 1000 cell phones.  The cell phone actually costs $20
> a piece, but the invoice will say $100 a piece. That $80 is capital leaving
> the country illegally.  And importer A will be able to claim an
> additional expense of 80,000 USD as a tax deductible expense in Vietnam.
>
> For individuals with money (i.e., people with underground money), I see a
> different method.  These folks usually  have children schooling overseas.
> They visit their children often.  Every time the son or daughter comes back
> to Vietnam for a visit or the parent leaves Vietnam to visit the child
> overseas, they will bring out a bunch of cash, either within the legal limit
> (20K USD?) or higher than the legal limit.
>
> Of course, another really illegal way is to hire pilots and air
> stewardesses to bring huge amount of cash out, as we see often in the
> criminal news.
>  3.  How long can SBV put their decision on foreign exchange into effect?
> I am not sure I understand the question.  All SBV decisions on foreign
> exchange rates are already in effect, at least in theory.  And if the SBV
> changes a decision, it can choose whatever effective date it wants.  The
> question about enforcement is another thing.
>
> I understand very well how the USD dollar is being traded around the
> country (I grew up with that kind of system before 1975).  The free market
> will always have its free price.  It is impossible for the SBV to stop it.
> But if the SBV is very dilligent, it can enforce it with major
> importers/exporters (which is big enough to distort the economy).
>
> Hope this helps.
>
> Have a great day!
>
> Hoanh
>
>
> 2008/6/7 Mercedes Benz <myhometheatre at gmail.com>:
>
>> [ Vietnam Business Forum ]
>>
>>
>> Dear CACC,
>>
>> I have some questions in mind when reading your comments:
>> 1. It is not easy for an importer to go to either one of commercial banks
>> to buy USD. It is because even commercial banks do not have much USD.
>> 2. How can "foreign big guys" take out the USD from the market?
>> 3. How long can SBV put their decision on foreign exchange into effect?
>>
>> Could you please CACC help me these concerns?
>> Thank you much!
>> Nam
>>
>> 2008/6/6 Tran Dinh Hoanh <tdhoanh at gmail.com>:
>>
>>> [ Vietnam Business Forum ]
>>>
>>>
>>> Dear CACC,
>>>
>>> The following article is about the Vietrnamese government's position on a
>>> numer of issues that we have discussed lately:  Eventual devaluation of the
>>> VND upto 40%?  No.  Vietnam needs IMP support (for the dong)?  No.
>>> Balance of payment:  Still has 1 billion USD in surplus.
>>> Indirectr-investment capital flight:  Vietnam is not worried about it and
>>> will not try to stop it.  High USD exchange rate on the free market:  SBV
>>> doesn't like it and will enforce its offical rate thoughout.  (I don't like
>>> this SBV position. Obviously SBV is trying to keep the USD low (and the VND
>>> high) to hold down inflation.  This is a lot of work and generates other
>>> pressures from distorting the economy too much..  The situation like a
>>> couple of days ago is much better:  Allowing the USD to go up to its true
>>> value (in the free market) would help export, and keeping USD low in the
>>> commercial banks would help import, and withdrawing VND back through the
>>> sell of USD to commercial banks to reduce inflation.  This arragement won't
>>> work well in the long term, but for a short while, it may work out very
>>> well).
>>>
>>> Have a good day!
>>>
>>> Hoanh
>>> __
>>> --
>>> Tran Dinh Hoanh, Esq., LLB, JD
>>> Washington DC
>>>
>>   ------------------------------
>
> _______________________________________________
> To subscribe/unsubscribe, please contact admins atvnbizadmin at vietlinks.net
> Info at http://mail.saigon.com/mailman/listinfo/vnbiz
> Archive at http://groups.yahoo.com/group/vnbiz/
> or http://groups-beta.google.com/group/VNBIZforum/
> or http://mail.saigon.com/pipermail/vnbiz
>
>
> _______________________________________________
> To subscribe/unsubscribe, please contact admins at
> vnbizadmin at vietlinks.net
> Info at http://mail.saigon.com/mailman/listinfo/vnbiz
> Archive at http://groups.yahoo.com/group/vnbiz/
> or http://groups-beta.google.com/group/VNBIZforum/
> or http://mail.saigon.com/pipermail/vnbiz
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mail.saigon.com/pipermail/vnbiz/attachments/20080608/3422e66b/attachment.html 