[Vnbiz] Vietnam's position on economic issues

[Craig Stevenson]

Very openly, on Thursday they offered between 18,000 and 18,500, even at
those rates, buying Gold just seemed terribly expensive.  On Friday,
16,200.  We all know that the Mafia, government officials, and powerful
people can do pretty much what they want everywhere around the world, and,
of course, Vietnam is no exception, but for common folk, such as me, the
rate was 16,200 at Gold shops and they were out of dollars, and I had
dollars, but I was trying to buy a necklace and at those prices, the price
was just too much.

A tael = 37.5 grams
An ounce on the gold market worldwide = 31.1 grams (normal ounce 28.4 grams)

Nearing 19,000,000 a tael, and we have a significant, 10% or more, rate
above, already exorbitant, worldwide gold prices, too rich for my blood, at
least my taste.

I figure I'll wait it out.  As everyone else should.   Hopefully, short term
excess leads to better choices among the people (ie less Chinese imports)
and no borrowing for speculation (either Real Estate or Stock Market) and
better allocation of capital (for what purpose would oil companies and banks
run resorts and high-rise developments, and how could they compete with
world-class hoteliers and property managers, they can't, why bother, but to
solidify the wealth, power, and position of select groupings of elites.
Hopefully the economy gets better at allocating capital and becomes less
dependent upon feeding a consumptive frenzy among some groups of people.  It
amazes me that the guys and girls who serve me Pho have nicer cell-phones
than I do, how could that be, it is a dangerous push toward consumption, and
an emphasis of image before substance, sorry, but it is a precious waste of
resources.

Craig

On Sun, Jun 8, 2008 at 9:12 AM, Tran Dinh Hoanh <tdhoanh at gmail.com> wrote:

> [ Vietnam Business Forum ]
>
>
> Dear Craig & CACC,
>
> I am glad you say "it seems," Craig.  Of course, everything must "seem" to
> look official.  I imagine you will never see a sign with the free market
> rate anywhere in Vietnam (except probably in some small ares of the
> country where no one knows who the SBV is and no one cares about what the
> SBV says).  All the signs at all the exchange places have the official rate
> (That is how the rate is OFFICIAL!).
>
> (The daily rate shown on VNExpress is always the official rate,  which of
> course gives me very little news value. The only way I know the free market
> rate is that once in awhile, VNExpress has an article on the exchange rate.
> Other than that,  most of the time, I am blinded on this matter).
>
> If you want to sell your USD at the gold shop at the offical rate, the shop
> is happy.  Buying at the official rate is a diffdrent thing though. Chances
> are the answer is "Sorry, we're out of USD already.  Want some gold instead,
> sir?"
>
> When government really enforces the official rates, only regulars in the
> "market network" are able to do business with each other at the free market
> rate.  If at the gold shop, then it is in the back of the shop, not the
> front. However, where government may harass, most of the free market
> exchanges are not at the shops, but at more private locations.
>
> As a matter of terminilogy, there is a recent noticebale change.  Since the
> beginning  of time, it has always been "black market rate" (gia cho den).
> But very recently, probably within several weeks or several months, the new
> term pops up on the media--"gia tu do" (free price) or "gia do la tren thi
> truong tu do" (the USD price on the free market).  This could be a subtle
> sign of a very significant change in policy.  Probably the "black market"
> was slowly allowed to become (legally tolerated) free market.
>
> I think the SBV now is trying to reverse its own (quiet) policy, which, I
> repeat, is not very wise move.  I think the SBV shoul just let the market
> work and utilize the exchange rate to push export.  If it wants it can use
> the offical rate to help import and to withdraw some VND circulation to
> reduce inflation pressure, until it runs out of USD to do that, then it can
> simply let the market take over.  Holding the VND too high against the USD
> not only distorts the economy so much (which makes more difficult the
> planning for all other things like export, import, price controls, inflation
> control, etc.) but also greatly increases the chance for speculative
> currency attacks from international players.  Don't give them the reason to
> form a wolf pack.
>
> Have a great day!
>
> Hoanh
>
> On Sun, Jun 8, 2008 at 2:52 AM, Craig Stevenson <cstevenson2000 at gmail.com>
> wrote:
>
>> [ Vietnam Business Forum ]
>>
>>
>> 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
>>
>> --
>> Tran Dinh Hoanh, Esq., LLB, JD
>> Washington DC
>
>
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