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Tishwash: Việt Nam will continue making new miracles: new State President

HÀ NỘI — Việt Nam will continue to make new miracles on the foundation of the nation’s glorious tradition, turning the country into a prosperous and strong one, stated newly-elected State President Nguyễn Xuân Phúc while taking the oath of office on April 5.

Nguyễn Xuân Phúc, Politburo member in the 13th tenure and a deputy of the 14th legislature, was elected by the 14th National Assembly as State President for the 2016-2021 term on April 5 morning.

Declaring his absolute loyalty to the Fatherland, the people and the Constitution, the new President pledged that he will do his best to fulfill his duties while coordinating closely with relevant agencies, and listening to people’s aspirations.

He asserted that in the time to come, Việt Nam will face opportunities and challenges at the same time, but he believes that under the leadership of the Party and with the mettle and brainpower of Vietnamese people as well as the strength of the national great unity bloc and support from international friends, Việt Nam will overcome all difficulties and successfully fulfil targets set by the 13th National Party Congress.

The President expressed warm sentiments and respect to soldiers and public security officers who are safeguarding peace for the people, and the border and islands of the country.

He also thanked Governments, people and friends around the globe, underlining that “we are always a good friend and trustworthy partner of all of you.”    link

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Tishwash:  Benefits of a strong đồng

Việt Nam achieved a trade surplus of US$19.1 billion last year, the highest in five years, after exports rose by 6.5 per cent to $281.5 billion

The State Bank of Việt Nam’s reference exchange rate for the US dollar fell by 0.1 per cent at the end of 2020.

Analysts expect the greenback to weaken further this year.

The US’s Federal Reserve plans to keep its rates near zero per cent until at least 2023 and allow a period of higher inflation, which is going to keep the dollar weak in 2021, according to VNDirect.

Meanwhile, the Chinese yuan is projected to stay strong since the world’s second-largest economy will continue to perform better than most others in 2021.

Similarly, the strong recovery by the Vietnamese economy amid the Covid-19 pandemic will be an important factor in boosting the đồng.

Việt Nam achieved a trade surplus of US$19.1 billion last year, the highest in five years, after exports rose by 6.5 per cent to $281.5 billion.

Its inward remittances topped $15.7 billion, the ninth highest in the world.

As a result, the country’s foreign exchange reserves zoomed close to $100 billion by the end of 2020.

The stronger đồng is also due to the recent accusation of Việt Nam as a currency manipulator by the US Department of the Treasury, which has made the central bank more wary of using monetary policy tools to regulate the exchange rate such as purchase of the greenback.

Benefits

What is the impact of the strengthening đồng on the economy?

One evident outcome is the country’s exports will become less competitive, especially agricultural products, raw materials and unprocessed goods.

Obviously, imports will become cheaper. Another benefit is that servicing foreign debts will become easier both for the Government and enterprises.

The Power Generation Corporation No 3 (PGV) is a typical example. In 2020 it benefited to the tune of over VNĐ1.2 trillion ($52.2 million) from the strengthening đồng alone.

In past years it often suffered big losses when the currency weakened. In 2018, for instance, it lost VNĐ2.6 trillion.

Many experts also believe that a stronger đồng is likely to benefit the stock market.

They point to the fact that banks’ interest rate on dollar deposits has been zero since 2015. Yet, until last year, many people continued with the traditional Vietnamese habit of keeping their savings in dollars as a hedge against inflation, which once used to be rampant.

Once the love affair with the greenback ended, people began to switch to other asset classes like stocks and real estate.

The stock market is expected to attract more of this money thanks to its sharp gains in recent times and analysts’ predictions it will remain positive in the long term.

They pointed out that due to the fallout of the COVID-19 pandemic, most economies shrank in 2020 and, though it was one of the few countries to achieve positive growth, Việt Nam’s GDP only grew by 2.91 per cent, the lowest rate in over three decades.

The Government thus has to keep easing policies to pump prime the economy, which would positively affect investors’sentiments and the stock market, they said.

The Government’s persistent efforts to develop the capital market to lessen the dependence on bank credit have also come as a boost to the stock market.

The đồng’s strength is helping attract foreign investment in the stock market since much of the exchange rate risk is mitigated.

The outcome of all this is being reflected in the numbers: In January alone, 86,269 new stock trading accounts were opened, up 36.4 per cent from the previous month.

This has been the theme of recent times. So many new investors have flocked to the market and trading has increased so much that the 20-year-old system used by the Hồ Chí Minh Stock Exchange (HoSE) has been unable to cope with the load.

There has been several system failures, especially on days when the turnover crossed VNĐ14 trillion.

To resolve the problem, HOSE and the State Securities Commission have proposed increasing the size of the standard lot from 100 to 1,000 shares and are encouraging small investors to switch to exchanged traded funds (ETFs).

ETFs track indexes, sectors, commodities, or other assets, but can be bought and sold on a stock exchange like a regular stock.

But industry insiders warned this could cause small investors to be eliminated from the stock market without fully addressing the overload problem.

Minister of Finance Đinh Tiến Dũng rejected HoSE’s suggestion to increase the lot size, but approved FPT chairman Trương Gia Bình’s proposal to allow private companies to participating into pilot settlment of  clogged trading activities in four months.  

The Vietnam Association of Financial Investors has called on the finance ministry to sack the HoSE bosses and replace them with experienced foreigners to resolve the overload problem.

It also suggested equitising the Vietnam Securities Depository and bringing in foreign stock exchanges as strategic shareholders of HoSE in charge of technology transfer and personnel training.   link

Tishwash:  Fiscal sustainability is the cornerstone of economic reform

The observer and observer of the role of economic institutions during the lean years that Iraq has gone through and is still going through since 2003 with regard to managing the Iraqi economy notes that there are failures, challenges and repercussions related to the loss of methodology, lack of clarity of policies and programs and inconsistency of strategies prepared in partnership with international organizations, experts and advisors Iraqis

With the reality of the Iraqi single-resource economy, which depends mainly on oil rent, and what this has led to a structural and structural defect in the economy, the lack of stability in the financial system and the monetary system due to the deficit in revenues, the gases of oil, the deficit in the balance of payments, the deficit in public budgets and the lack of coordination between the two financial policies Added to this was the mismanagement of public money.

In addition, the private sector was not given an effective role in making economic decisions … All the above failures, in addition to political and security instability and the war on terror, led to economic instability and deficiencies in visions to build a solid national economy capable of drawing the preludes to the transition to a market economyThe above failures and challenges have created a fog and a pessimistic outlook for our economic future among our people and many of our economic elites.

 However, many economists, financial experts, local and far-sighted people believe that there are promising points and experiences that some economic institutions have carried out during the past 18 years, clearly and effectively, which are the years of the stifling economic and financial crisis, and one of the most prominent bright spots in this process is the experience of the Central Bank in supporting the national economy with its governorate.

On his functions, goals and independence specified in his lawThe most important achievement of the Central Bank is its contribution to achieving economic resilience and enhancing financial sustainability in crisesThrough implementation and development measures and building balanced relationships with Arab, regional and foreign banks, and its strategy for the past five years, in addition to the results achieved on the scope of monetary policy applications internally, and convincing international financial organizations, the most important of which is the official reports issued by them, confirm the success of the central bank’s policy in achieving an important transition for the Iraqi economy from the gray stage. To follow up periodically

As far as we know we who are interested in economic, financial and banking affairs in the implementation procedures of the means of monetary policy applications.

The bank has played a major role in supporting the national economy and strengthening the state treasury, in addition to its numerous contributions and initiatives to revitalize the economic cycle, enhance liquidity in banks, continue paying the salaries of employees and retirees, and contractor and farmers ’dues, and reach a re-extension of coordination bridges between the fiscal and monetary policies and propose economic and structural policies to prepare public budgets for years The upcoming and attempts to restore confidence in the banking system.

The Central Bank has proven its obvious ability to interact, analyze obstacles to work, and create conditions to overcome challengesHowever, there is still a long way to go before the Central Bank and the relevant government agenciesIn order to achieve a sound national economy building, therefore, I invite economic elites to interact with bright points and experiences and sing them with their ideas, visions and proposals to build a solid national economy, overcome challenges, correct wrong paths, and in transparent and calm dialogues.

Because preserving the spirit of economic steadfastness and financial victory and moving forward to ensure financial sustainability for the coming years comes for well-known reasons, the most prominent of which is that the Iraqi economy is rentier and depends mainly on oil and because of its global price fluctuations, down and up by (20% – 70%), confusion and imbalances in the management of the economy. The lack of clarity of the vision and the economic approach and the insufficient legal environment regulating the management of the economy and money.

And the lack of a sovereign fund in the years of financial abundanceAll this coincided with conditions of fragility and instability, which led to the country’s burden of additional economic problems and large financial costs, which were reflected in the increase in the unemployment rate and the proportion of the population below the poverty lineThis required the government, its agencies, institutions, advisors, and economic elites to reconsider plans and programs to overcome the weakness and fragility that were diagnosed by national and international reports, with trends that require national sensitivity and real and sincere intentions for change and reform.

And that a new economic methodology is adopted by diversifying the sources of budgetary resources, moving the economy from rentier to

productive, establishing a market council, engaging the private sector in making economic decisions during the next five years and leading the market in accordance with Iraq’s 2030 vision.

* An economic and banking advisor   link

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