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Cablegate: Vietnam Economic Highlights: Import Licensing, Rice Export

VZCZCXRO3098
PP RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #0847 2041015
ZNR UUUUU ZZH
P 221015Z JUL 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 8163
INFO RUEHHM/AMCONSUL HO CHI MINH 4932
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

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

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