UPDATE: Vietnam PM Puts Together Measures To Avert Recession
Friday November 28th, 2008 / 6h19
(Adds background on Vietnam's economic growth.) HANOI -(Dow Jones)- Vietnam's Prime Minister Nguyen Tan Dung has put together a package of measures to help prevent the economy falling into recession but the government has yet to detail what those measures will be. The prime minister, who met with officials from various ministries late Thursday, said the impact of the global financial crisis is increasingly spreading to Vietnam and hurting its exports, tourism and especially the stock market. "Vietnam's economy is slowing down, with the threat of recession looming large," Dung said in a statement published Friday on the government's Web site. "All the state organizations should combine their efforts to prevent recession, support production and maintain reasonable economic growth," Dung noted. He said the package includes measures to boost production and exports, stimulate domestic consumption, increase loans, support the poor and a review of taxation. No further details were available although state media reported that ministers proposed a further cut in benchmark interest rates to 10% from the current 11% and delaying the implementation of a planned capital gains tax to July from January. Ministers also proposed increasing the disbursement of state funds for welfare, healthcare, education and infrastructure projects, plus reducing taxes for businesses. Neither did the government say how much it plans to spend, although analysts have speculated that it could be for around US$1 billion. Vietnam, once expected to be the next Asian boom economy, has suffered a marked slowdown in economic growth. In late September, the government estimated that gross domestic product expanded 6.5% in January through September from a year earlier compared with 8.2% growth in same period of 2007. That slowdown was in part due to government spending cuts and price controls on some goods to stem inflation that still stood at an elevated 24.2% on year in November. Slowing offshore demand for Vietnamese goods and falling inward investment have added to the woes lately. Vietnam's key stock-market index, which has declined 67% so far this year, ended up 3.7% Friday after state media announced that the government will take urgent measures to support the economy. -By Nguyen Pham Muoi, Dow Jones Newswires, 84-913-220-614; phammuoi.nguyen@dowjones.com
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