UNDP

Analysis of the Impacts of the Global Financial Crisis on Social and Economic Indicators in Vietnam

Le Dang Doanh Institute of Development Studies

ACRONYMS AND ABBREVIATIONS

ASEAN Association of Southeast Asian NationsCIEM Central Institute for Economic Management

FDI Foreign Direct Investment

GDC General Department of Customs

GDP Gross Domestic Product

GSO General Statistics Office

IMF International Monetary Fund

MARDMOF

Ministry of Agriculture and Rural DevelopmentMinistry of Finance

MPI

MOLISA

Ministry of Planning and Investment

Ministry of Labor, Invalids and Social Affairs

NPL

SBV

Non-Performing Loan

State Bank of Vietnam

SOCB State-Owned Commercial BankVASS Vietnam Academy of Social Sciences

VCCI Vietnam Chamber of Commerce and Industries

1

Table of Content1. Introduction p.4

2. The Global Financial Crisis and its Impacts to Vietnam p.5

3. The situation in Vietnam before the current economic crisis p.8

3.1 Vietnam: twenty years of transition, growth and socio-economic development p.8

3.2. Running up to the crisis p.13

3.3. Facing the Crisis p.16 4. Impact analysis of the current economic crisis on key socio-economic areas p.19

4.1 The first wave impacts on Vietnam p.22 Impacts on Export- Import p.22Impacts on Tourism p.27Impacts on FDI p.27Impacts on Industries and Construction p.32Impacts on Agriculture p.33Impacts on Services and Domestic Trade p.34Impacts on Economic Growth p.34Impacts on State Budget p.35 Social Impacts of the Crisis p.36 5. Implications for policy and Vietnam’s quest for continued economic development p.406. Concluding Comments p.46 References p.47

Tables

Table 1. Global Economic Growth forecasts p.6Table 2. Quarterly Growth of Selected Economies p.6Table 3. ICOR Ratios of Vietnam in 2001-2007 p.8Table 4. Structure of Budget Revenues and Expenditures in 2005-2008 p.9

2

Table 5. Comparison of Selected macroeconomic indicators p.14Table 6. Vietnam’s interest rates p.16 Table 7. Simulating the Poverty Impacts of the Economic Slowdown p.17Table 8. Traditional Export Markets of Vietnam p.22 Table 9. Export of selected goods in the first five months 2009 p.24Table 10. Export Performance of Selected Regional Economies p.25Table 11. FDI in 2009 p.27Table 12. Main Issues of Business Environment in Vietnam p.30Table 13. Large Current Account Deficit p.31Table 14. Increase of poor households p. 38Table 15 Stimulus Package across the countries p.42 Table 16 Stimulus Package Round 1 p.43 Table 17 Stimulus Package, Round 2 p.45

Figures

Figure 1. Annual Growth Rate in Money Supply and Credit p.13 Figure 2. Inflation Rate p.13Figure 3. Vietnam’s Stock Market Index p.15Figure 4. Number of occurred Strikes in 1995-2008 p.20Figure 5 The gap between world and domestic gold price p. 24Figure 6. Trade deficit p.26Figure 7 Composition of FDI projects by sector p.29Figure 8 JBIC Ranking p.30Figure 9 Recovery of Construction p.33Figure 10 Growing Retail Trade and Consumption p.34Figure 11. Job Offers and Job Seekers in Urban Markets p.37

Box

Box 1. Handicraft Villages p.20 Box 2. Impacts on Export of FDEs p.25

3

Introduction

As an economy in transition from centrally planning into market economy with socialist orientation and to the same time, increasingly integrated into the world economy, Vietnam’ economy has been and continuing to be seriously affected by the global financial crisis in multiple ways, but with certain delay. After the “doi moi” in 1990s, Vietnam’s economy reached high growth rate and impressive poverty reduction. In the last decade Vietnam’s economy has been becoming a very open economy in term of international trade and highly depending from foreign direct investment as well as indirect financial investment. By that way Vietnam’s economy is vulnerable from external impacts. Moreover, before the global crisis reached Vietnam tangibly in late 2008, in 2007 and the first three Quarters of 2008 Vietnam’s economy faced high inflation, huge trade deficit, high current-account and budget deficit as well as exchange rate fluctuation. (Harvard/UNDP 2008, IMF 2008).Economic growth rate has been slowing down to 3.1percenr in the first Quarter of 2009 compared to 7.2% from the same period in 2008 and for the whole year growth rate is expected to be between 4-5 percent only. The fragile macroeconomic balance faced new considerable challenges. For medium term, the fulfillment of the Five-Years Plan 2006-2010 targets is now realistically questionable. The strong commitment of the Vietnamese Government to the ambitious MDGs targets1 of the UN under these deteriorating conditions could be hardly realized timely according to the schedule. According to Campbell, a 3 percent drop in gross domestic product for developing countries leads to between 47 and 120 more infant deaths per 1,000 live births.All these developments negatively affected the social development, income and living conditions of the population as well as the effort of poverty reduction. The Government quickly responded with a huge stimulus package which has been gradually extended to USD billion 8. The efficiency of the implementation of these multiple measures must be proved by facts.

So far, several studies on the impacts of global financial crisis on Vietnam’s economy have been published: Dinh Van An and Thanh Vo Tri (CIEM, 1 Vietnam’s Comprehensive Poverty Reduction and Growth Strategy (CPRGS) http://cprgs.org. http://www.mfdr.org/sourcebook/5-5/Vietnam-Comprehensive Strategy.pdf.

4

2009) addressed channels of impacts on Vietnam’s economy. CIEM’s regular annual Report on Vietnam’s Economy in 2008 provided a comprehensive overview on the socio-economic situation and policy response of the Government. World Bank’s Report “Taking Stock” in June 2009 also provided an overview of the economic situation. (World Bank, Taking Stock, 2009). Vo Hong Phuc, the minister of MPI in December 2008 in an article in Communist Review warned from negative impacts of global financial crisis to Vietnam’s economy through various channels. (Vo Hong Phuc, 2008). Vu Quang Viet analyzed the economic performances and economic policies in 2008 and qualified it as “Vietnam’s Economic Crisis” (Vu Quang Viet, 2009). Le Dang Doanh analyzed the impact of inflation on poverty in Vietnam in 2008. (Le Dang Doanh, 2009). International NGOs and Vietnamese research institutes conducted various valuable field studies: VCCI published in May 2009 a study on the impacts of global crisis to the private enterprises, mostly small and medium size enterprises (SMEs) (VCCI, 2009). IPSARD (Institute of Policies and Strategy for Agriculture and Rural Development) published also in May 2009 a field study of the impacts of the economic recession on living conditions of rural households and the efficiency of Government’s support and reported from severe deterioration of living conditions and return of several households into poverty: 68.4 percent of total rural households have been negatively affected (IPSARD,2009). Alex Warren-Rodriguez, UNDP, Hanoi, studied the impacts of the global crisis on employment in Vietnam in an elasticity approach (Alex Warren-Rodriguez, UNDP, Hanoi, 2009). With the support of World Bank, Oxfam GB (OGB) and ActionAid Vietnam (AAV), Vietnam’s Academy of Social Sciences (VASS) conducted a quick study on enterprises, craft villages and employment in selected provinces (VASS, April 2009). UNICEF, MOCST, Vietnam Institute of Sociology conducted a field study on impact of economic downturn on international labor migrants and their families.

This study aims to provide an overall comprehensive analysis of the various impacts of global financial on social and economic development in Vietnam. It tries to identify the various channels of impacts on the Vietnamese economy, the socio-economic affected fields and discuss Government’s policy responses.

2. The Global Financial Crisis and its impacts in Vietnam

5

The global financial crisis has started in February 2007 in the US with the sub-prime credit for housing and real estate market, rapidly widening the whole financial sector in the US, Europe and Asia. The bankruptcy of Lehman Brothers in September 2008 triggered a new round of collapses of related banks, financial institutions and securities markets in the world. In October 2008 the US Senate approved the bailout package of 700 billion USD. Despite these efforts, the global financial system was “on the brink of a systemic meltdown” (IMF 2008, 2009). Advanced economies are in deep recession, emerging economies like BRICS (Brazil, Russia, India and China), are slowing down. Commodities prices e.g. crude oil, food, metals dropped sharply to lowest level during a very short period of time, causing devastating impacts on commodities exporting developing economies, including Vietnam. International trade experienced an unprecedented free fall. Investors and consumers confidence falling, export declined speedily. Credit supply stagnated, indirect financial investment as well as foreign direct investment falling. Value of currencies was fluctuating. The IMF and other international and national institutions successively corrected their forecast for world’s economic growth to lower and negative level for 2009 –last forecast from the World Bank in June 2009 was minus 3.1 percent- by emphasizing that their forecast are less reliable and economic situation is getting instable and volatile. Industrial output in all countries declined in a free fall. Unemployment increased rapidly and reached the highest level since decade in the US (over 9 percent), EU, but was reportedly less dramatic in Japan (~5 percent) and in Asia (IMF, 2009). All Governments of the affected economies announced rescue plan or stimulus package for banking and financial sector and the real economy. Budget deficit in the affected economies reached a highest level and ODA for developing economies was getting scarce. The G 20 meeting on April the 2 2009 in London could reach an agreement on various important political aspects but their implementation remains a difficult question. For example, while all twenty countries of the G 20 Summit in London have committed to reject protectionism and supported free trade, 17 from these very same 20 countries have implemented 47 measures restricting free trade. (World Bank, 2009). So far neither IMF nor World Bank has officially announced the end of the crisis but some economists predict a slow and difficult recovery by the end of 2009.

Table 1: Global Economic Growth Forecasts

6

2008/e 2009/f 2010/f 2011/f GDP growth World 1.9 -3.1 2.0 3.3

High-income countries 0.7 -4.5 1.3 2.4

Euro Area 0.6 -4.5 0.5 1.9 Japan -0.7 -8.5 1.0 2.0

United States 1.1 -3.0 1.8 2.5 Developing countries 5.8 1.2 4.3 6.0 China 9.0 6.5 7.5 9.5 India 5.5 4.0 7.0 8.0 Russia 5.6 -7.0 3.0 3.5 Exports World trade volume 3.6 -9.6 3.8 6.9

Source: World Bank, May 2009

Table 2 provides an overview on GDP-Growth of selected economies in Asia.

Table 2: Quarterly GDP Growth of Selected Economies

Q1-08 Q2-08 Q3-08 Q4-08 Q1-09/e

Hong Kong 7.3 4.3 1.7 -2.5 -7.8

Japan 3.4 -3.5 -2.5 -14.4 -15.2 Singapore 6.7 2.5 0.0 -4.2 -10.1 Malaysia 7.4 6.7 4.7 0.1 -6.2 Thailand 6.0 5.3 3.9 -4.3 -7.1 China 10.6 10.1 9.0 6.8 6.1 India 8.4 8.8 7.9 7.6 5.3 Indonesia 6.2 6.4 6.4 5.2 4.4 Vietnam 7.5 5.7 6.3 5.7 3.1

Source: World Bank. Growth rates are over the same quarter in the previous year

The World Bank, ADB and UNDP (World Bank 2009, ADB 2009, and UNDP 2009) have alerted on the severe impacts on developing economies,

7

especially the lowest income groups. The developing economies faced a number of serious challenges on food security, energy supply, environmental protection; employment and social safety, now have to cope with severe drop on export revenue, declining foreign direct investment and indirect financial investment, declining revenue from tourism and remittance. With limited foreign reserve and weak institutions, the developing economies have to deal with high risk on macroeconomic balances and social issues e.g. unemployment and underemployment. The Governments of these countries have limited means to rescue the troubled banks and enterprises. They also need the necessary ability to elaborate and implement stimulus packages.

3. The Situation in Vietnam before the current economic crisis

3.1. Vietnam: twenty years of transition, growth and socio-economic development.

After more than twenty years of “doi moi” as well as various reforms in public administration and legal framework, moving from a centrally planning economy into market economy with socialist orientation, gradually integrated into regional and world economy, Vietnam could overcome a serious social-economic crisis in the 1980s and succeed to reach high economic growth rate as well as impressive poverty reduction. In 2008, GDP has been estimated to reach USD billion 90, GDP/capita according to current prices, should reach USD 1040, overcoming the status of a low income economy2. Vietnam is slowly moving to a more industrialized economy with industries and construction share 41 percent of GDP, Services 39 percent and agriculture, forestry and fishery ~20 percent of GDP. Nevertheless, agriculture remains important for Vietnam since it provides food security and substantial export and 65 percent of the population still live and work in rural regions. Agriculture and rural region are expected to serve as a flexible sack to absorb redundant labor forces. The informal economy in Vietnam is still substantial, provides 56 percent of total employment and could help to certain extent the unemployed peoples to earn some income in order to survive in this difficult time. (Pierre Cling, 2008) Vietnam’s population in 2009 reaches 86.5 million peoples, it grows on average by 1.1 million per annum and 60 percent of the population is in the working age. The domestic retail market realized high growth rate in the last decade and the A.T.Kearney

2 Low income economies have less than 935 USD/capita (2007), (World Bank 2008). IMF 2009

8

qualified Vietnam’s retail market according to the GRDI (Global Retail Development Index) at third position among the most attractive market in the world in 2008 and at sixth position in 2009 after India, Russia, Saudi Arabia and China3 . In 2007 peoples in Vietnam spent USD billion 47 on consumption. In the last ten years, as Vietnam increasingly integrated into regional and world economy, export increased by 440%, from USD billion 14.5 in 2000 to 64 in 2009. In terms of trade, Vietnam is an open economy, exporting 70 percent of GDP, importing nearly 90 percent of GDP but value-added share in export good of Vietnam is limited. Trade deficit is rapidly growing in the last years, especially in bilateral trade with China. Vietnam could balance the current-account of international payment thank to capital inflow from FDI, ODA, remittance and tourism. Foreign reserve is modest but increased swiftly in 2007 due to massive capital inflow after joining the WTO. According to SBV, foreign reserve in 2008 is ca. USD billion 21, equivalent to 20 weeks of import. (IMF 2009)

Vietnam invested ca. 40 percent of its GDP, domestic saving shares 25 percent of GDP, the ICOR (Incremental Capital Output Ratio) is high and increasing, indicating inefficient investment.

Table 3. ICOR Ratios of Vietnam, 2001–07

2001 2002 2003 2004 2005 2006 2007

ICOR ratios 5.14 5.28 5.31 5.22 4.85 5.04 5.38

Source: Data for calculation are from GSO of Vietnam.

Foreign direct investment shares 13 percent of GDP, 20 percent of total investment, contributes 40 percent of total export, contributes 4.1 percent of total employment. Domestic, private economy was non-existent prior the reform process now shares 46 percent of GDP, creating 90 percent of the new employment. The dynamic private sector is an important factor to keep the economy growing under the difficult conditions of global financial crisis. Before the “doi moi”-reform process, nearly 90 percent of Vietnamese households were equally poor, in 1993 the poverty rate was 58.1 percent, in 1998 374 percent in 2006, 20 percent in 2007 and 13.5 percent in 2008 according to Vietnamese former standards.

3 http://atkearney.com

9

According to the revised standard in 2008, the poverty rate in 2008 must be 16.5 to 17.5 percent. (CIEM, 2009, Le Dang Doanh 2009) In the meantime, there are several domestic press reports on inaccurate reporting of local authorities on poverty reduction, but there is so far no independent study or survey checking or challenging on these data of poverty reduction in Vietnam. Inequality in Vietnam increased rapidly; the richest 20 percent of the population has 36.2 times higher income than the poorest quintile. This gap is high compared to the income level but continues to widening4

For a low-income economy, Vietnam‘s state budget revenue shares a comparatively high percentage of the GDP as following table illustrates:

Table 4. Structure of Budget Revenue and Expenditure 2005-2008 (% of GDP)

Budget Revenue and Expenditure

2005 2006 2007 2008

Total Budget Revenue 25.1 28.7 27.6 27.0Domestic Revenue (without

crude oil)13.7 14.9 15.2 13.9

Revenue from crude oil 6.6 8.6 6.7 6.6Revenue from ex-import 4.5 4.4 5.3 6.1Revenue from grant and national reserve

0.3 0.8 0.4 0.3

Total Budget Expenditure 30.8 39.6 34.9 32.1Among them Investment 8.8 9.1 9.8 8.0Budget Deficit 4.9 5.0 4.9 4.95Source: MOF,CIEM

Budget revenue depends highly on oil sale, varying from 20 to 25 percent of total budget revenue, and depends therewith sensibly from fluctuating oil world price. Since years Vietnam faces a budget deficit at 5 percent of GDP. But as GDP is growing every year, budget deficit also grows in absolute term by keeping a stable share of 5 percent of GDP.

Social safety system is still in development and reform, in 2008 only 20 percent of the total labor forces have social insurance, mostly in state

4 Tran Hai Hac TBKTSG September 7 2008.

10

sector. Employees in private households and farmers should join the voluntary insurance, but in 2008 there are merely 100.000 participants on this program. Health care insurance covers 40.3 million peoples, 46 percent of the total population. Unemployment insurance, including assistance for a limited part of unemployed workers in state sector is expected to be in force on January 1 2010 only. The employees in the informal sector are less protected from these social insurance systems. Health care system is under developed, considering the demographic growth rate of 1.1 percent per annum and permanently highly overcharged (by 600 percent). Health care services in public hospitals are partially covered by health care insurance, but requesting additional out- of - pocket payments from the patients and their families. The maternal mortality rate was 75 deaths for every 100,000 live births in 2008, compared with 233 deaths per 100,000 live births in 1990. The under-five child mortality rate plunged to 25.9 deaths per 1,000 live births from 58 deaths per 1,000 live births in 1990.5 According to the World Bank out of pocket spending of the peoples cover 70 percent, the state budget covers 30 percent of the total health care costs (World Bank, Social Protection, 2007). By that way, illness is an important cause to push back affected families into poverty, especially in the poorest families. Education system has developed quantitatively at high speed but the quality of education and training is poor and could not meet the expectation of the domestic and international business community. (World Bank, Vietnam Development Report 2008, Social Protection, Hanoi, December 2007) Regardless undisputed, internationally acknowledged successes and

achievements, Vietnam’s growth and progress were below the potential of the Vietnamese economy and Vietnamese people. Vietnam’s economic growth rely mainly on capital investment, the capital factor contributes to 69.3 percent of total economic growth during the period between 1993-1997 and remains high at 52.7 percent during the period 2003-2008 while TFP (Total Factor Productivity) contributes 14.8 percent and 28.2 percent in the two periods accordingly. Pollution in Vietnam has aggravated, including pollution in urban and rural regions, air, river, ground water pollution is equally serious. ORC Worldwide classified Ho Chi Minh-City and Hanoi at 9 and 11th position among 55 cities with weakest working environment6. Deforestation continues to damage the environment,

5 http://www.lookatvietnam.com/2009/07/helping-families-through-crisis.html.6 http://orcwordlwide.com

11

causing landslide, spring flooding. According to Institute of Strategy and Policies of Industries in 2008, 94 percent of industrial waste water surpass the environmental protection criteria, 80 percent of waste water from hospitals has been not treated for cleaning.7

After more than twenty years of “doi moi”, the reform process in Vietnam is far to be accomplished. In the framework of the “market economy with socialist orientation” market economic institutions as commercial banks, securities market etc. have been formally established but their function, their legal framework need further improvement. Vietnam is actively engaging other economies to recognize Vietnam as a market economy before the WTO deadline at 2018 (e.g. Australia, New Zealand). Vietnam’s business environment has a low ranking (92/118 economies according to Doing Business Survey of the World Bank 2008). Likewise, Vietnam’s position in the World Competitiveness Ranking published by World Economic Forum is modest and has been not improved in the last years (70/138 in 2008). Biggest obstacles are insufficient infrastructure, shortage of highly qualified labor forces, corruption, rapidly and unpredictable changes of policies. According to UNDP Human Development Report 2007-2008, Vietnam ranks at 105/177 economies in term of Human Development Index (HDI).

Transparency International’s Ranking on Corruption Perception Index (CPI) of Vietnam is equally low and the gap to the regional economies is rather widening than narrowing (80 in 2000 and 123/180 in 2008), compared with 81 of Thailand in 2008. Public administration reform has been conducted since decade, producing limited progress and failed to reach a real breakthrough. Business community continues to complaint about bureaucratic time taking procedures and corruption8, The Law on Competition has been promulgated but poorly implemented; monopolies operate unchanged without sufficient supervision on control. Reform of state-owned enterprises has slowing down in the recent years and is far to be accomplished, the number of equitized SOEs declined from 724 (2005) to 640 (2006), 150 (2007) and 73 (2008). The total asset of equitized SOEs shares 15 percent from the whole asset of SOEs. The remaining 85 percent belonging to the bigger state-owned “Economic Groups” or “Conglomerates” which enjoy special support of the Government on access to land and natural resources, credit and state’s investment projects. There are no

7 Lao Dong December 29 2008.8 http://www.vbf.org.vn

12

reliable data on the performance of the state-owned sector but there are serious signs for its inefficiency. (Vu Quang Viet,2009)

3.2 Running up to the crisis

In 2008 the Vietnamese Government aimed to reach overly high and ambitious targets, an economic growth rate between 8.5-9 percent, over-fulfill the Five Years Plan 2006-20010 two years early in 2008 and overcome the low-income economy level in the same year. In order to reach this ambitious target, massive credit injection increased credit supply by 53 percent compared to 2007 as well as strong inflow of foreign capital into the Vietnamese economy caused high inflation.

Figure 1. Annual Growth Rate in Money Supply (M2) and Domestic Credit from 1993 to 2007

Inflation soared to dangerously high level.

Figure 2: Inflation Rate

13

Source: General Statistics Office (GSO)

Macroeconomic indicators remain fragile and turned to more instable in 2008. GDP growth rate reached 6.2 percent, much lower than the initial target and the lowest one since 2000. The economy was overheated, inflation was 21 percent, budget deficit over 5 percent of GDP, trade deficit reached 13.4 percent of GDP and current-account deficit reached 13.4 percent of GDP, real estate bubble faced a free fall and Vn-Index of security market dropped from nearly 1200 in 2007 to 300 in 2008. The Vietnamese currency VND is not yet fully convertible; its exchange rate to USD fluctuated strongly in 2008. The dollarisation in Vietnam’s economy is high; its share is 22-28 percent of saving deposit is in US-Dollar, depending on year9.

9 SBV,CIEM

14

Table 5. Comparison of selected macroeconomic indicators of regional economies

Sources: World Bank and GSO

These macroeconomic indicators show the precarious situation of Vietnam’s economy as it faced the impacts of global crisis.

Figure 3. Vietnam’s Stock Market Index

15

Source: Vietstock.

Nevertheless, the resilient private sector in Vietnam continued to increase investment by 19.3 percent, while investment from state-owned enterprises strongly declined (CIEM, 2009). Newly established domestic private enterprises increased by 8 percent, a visible decline from 24 percent increase in previous year 200710.

3.2. Facing the Crisis

Realizing this dangerous situation, from March 2008, The State Bank of Vietnam (SBV) introduced to the same time exceptionally draconic measures to tighten monetary and credit policy: raising basic interest rate to 14 percent, requested a compulsory reserve deposit from 3 to 11 percent of all types of saving at SBV by low interest rate. Commercial banks are requested to purchase compulsory SBV-bonds of 20,300 billion VND.

Table 6. Vietnam: Interest Rates, 2006–09 (In percent per annum, average)

10 http://www.mpi.gov.vn

16

Base 1/ Ref

Repo 1/ finance 1/

I7-day O

Interbank overnight

Interbank I1-month

Interbank 3-month

Lending 1-year

Deposit Bond Y3-month

Yield 1-year

Jan-06 8.3 6.5 … 6.4 7.5 7.9 11.8 7.8 …Feb-06 8.3 6.5 … 5.9 7.4 7.9 11.8 7.9 …Mar-06 8.3 6.5 6.1 5.9 7.3 8.0 11.8 7.9 …Apr-06 8.3 6.5 … 6.0 7.2 8.0 11.8 7.9 …May-06 8.3 6.5 … 6.0 7.2 7.9 11.8 7.8 …Jun-06 8.3 6.5 … 6.0 7.2 7.9 11.8 7.9 …Jul-06 8.3 6.5 … 6.1 7.2 7.9 11.8 7.9 6.0 Aug-06 8.3 6.5 … 5.8 7.1 7.8 11.8 7.9 6.1 Sep-06 8.3 6.5 … 6.0 7.1 7.7 11.8 7.9 6.3 Oct-06 8.3 6.5 … 6.1 7.1 7.9 11.8 7.9 7.7 Nov-06 8.3 6.5 … 6.6 7.5 8.2 11.8 7.9 7.8 Dec-06 8.3 6.5 8.5 7.1 8.1 8.5 11.8 7.9 7.8 Jan-07 8.3 6.5 … 7.2 8.3 8.7 11.8 8.0 7.8 Feb-07 8.3 6.5 … 5.7 7.7 8.1 11.8 8.0 7.4 Mar-07 8.3 6.5 … 4.4 6.1 7.3 11.8 7.9 6.8 Apr-07 8.3 6.5 … 4.2 5.9 7.1 11.8 7.9 6.6 May-07 8.3 6.5 … 4.0 5.8 7.1 11.8 7.9 6.8 Jun-07 8.3 6.5 … 5.8 7.1 7.9 11.8 7.7 6.7 Jul-07 8.3 6.5 … 4.0 5.9 7.0 11.8 7.7 7.0 Aug-07 8.3 6.5 … 3.6 5.5 6.7 11.8 7.7 7.1 Sep-07 8.3 6.5 … 5.6 7.0 7.8 11.8 7.7 7.4 Oct-07 8.3 6.5 … 5.7 6.9 7.9 11.8 7.7 7.4 Nov-07 8.3 6.5 7.5 6.9 7.9 8.5 11.8 7.7 7.5 Dec-07 8.3 6.5 8.0 6.5 8.3 8.9 11.8 7.4 7.8 Jan-08 8.8 7.5 9.5 7.9 9.0 9.1 11.8 7.4 7.6 Feb-08 8.8 7.5 8.0 9.1 10.2 9.9 11.8 9.3 7.5 Mar-08 8.8 7.5 9.0 6.1 9.2 9.9 15.6 11.9 7.4 Apr-08 8.8 7.5 10.5 9.1 11.0 11.1 15.2 12.1 8.1 May-08 12.0 13.0 12.0 11.2 13.7 14.1 18.0 14.0 11.3 Jun-08 14.0 15.0 15.0 14.6 17.2 17.6 21.2 18.0 19.9 Jul-08 14.0 15.0 15.0 16.2 18.9 19.3 22.2 17.2 20.0 Aug-08 14.0 15.0 15.0 15.7 18.5 19.2 22.2 18.6 17.6 Sep-08 14.0 15.0 15.0 14.3 17.3 18.2 21.8 18.3 16.8 Oct-08 13.0 14.0 13.5 12.1 15.4 16.9 19.6 16.4 16.7 Nov-08 12.0 13.0 11.0 8.7 11.9 14.1 14.1 10.5 13.3 Dec-08 8.5 9.5 9.0 7.3 9.9 11.6 11.5 8.1 10.5 Jan-09 8.5 9.5 8.0 5.2 7.3 8.5 10.6 7.2 8.9 Feb-09 7.0 8.0 7.5 6.1 7.5 8.1 … … 8.3

Sources: IMF, State Bank of Vietnam; and Reuters. 1/ End of period

Credit turned to be highly expensive, lending interest rate reached 21 percent/annum, several commercial banks faced liquidity crunch, and small-and medium-size enterprises could not afford this exorbitant interest rat and have to reduce their operation.

This development increased unemployment, reduced net income of the peoples and negatively affected the process of poverty reduction. It has even pushed some households back to poverty.

17

The World Bank in Taking Stock (December 5-6 2008) predicts a slow

down of poverty reduction as an impact of the domestic inflation and the

impact of the global crisis. Table 7 provides a summary of the simulation in

three scenarios:

Table 7 Simulating the Poverty Impact of the Economic Slowdown

Year

Percent of Population below the Poverty Line: Counterfactual 8.2 percent in 2008 and 2009

Optimistic: 6.75 percent in

2008, 6.5 in 2009

Pessimistic: 6.75 percent in 2008, 5 in 2009

2006 (actual) 16.0 16.0 16.0 2007 (estimate) 14.5 14.5 14.5 2008 (forecast) 12.8 13.1 13.1 2009 (forecast) 11.5 12.1 12.4

Source World Bank Taking Stock, December 2008.

High inflation in 2008 and the draconic anti-inflation measures affected severely the poor households in multiple ways like diminishing real income and unemployment or underemployment. At July 2008, 558.000 laborers from the formal sector have been reported as unemployed, million others faced delay of payment, reduced payment due to reduced working hours were not accounted for. In the last three months of 2008, according to quick report of the Trade Union of Vietnam, at least additional 50.000 employees have loss their job.11 According to MOLISA, some 8000 to 10.000 Vietnamese guest-workers from total 500.000 were unemployed and returned home.12 An unknown number of employees in SMEs, which preferred to be “clinically dead” than to go bankrupt on the legal way, have been not included as unemployed and did not get access to the regular social assistance system. In a field study at Tan Thuan-Export Processing Zone, located at District Seventh, HoChiMinh-City on January 14 2009, the author could personally confirm by the first Secretary of the CPV Seventh. District Committee, that the service sector of the District (like housing and

11 http://vietnamnet.vn on January 30 2009.12 Viet Nam News, June 18 2009, p.6

18

dormitory rent, food caterers, barber shop etc.) has fallen into a desolate situation as the migrant workers of the Tan Thuan-Export Processing Zone have been fired and returned home. All these peoples were underemployed and suffered losses on income but they have never been accounted for. The district-authorities don’t have any fund to assist them. High food prices leaded to reduced purchasing power, the poverty rate in 2008 should be likely 15-16 percent and not the anticipated 11-12 percent. Malnutrition of children aggravated. Increasing number of school children of vulnerable families abandoned school. In urban regions, households of migrating peoples were worst affected. In mountainous regions ethnic minorities were more seriously affected.Two independent field studies (ActionAidVietnam 2008 and Vu Quoc Huy, IDS, 2008) could not confirm the prediction made by other authors (Ivanic, Martin 2008 and Linh Vu, Glewwe 2008) that some net food sellers should benefit from higher food prices. The rice cultivating farmers, the fishers, the pig and milk-cow growing farmers, they all did not really benefit from higher food price because the even higher increase of input materials over-compensated the price increase of their product output.The Vietnam’s Government provided various emergency measures to assist the poor households and unemployed peoples.13

Business faced serious constraints, the Chairman of SME-association in Vietnam estimated 60 percent reduced their operations and 20 percent of small and medium size enterprises preferred the “clinical dead” (tacitly ended their operation, closed their business temporarily) without to proceed the formal bankruptcy procedures14. There are 2 790 craft villages in Vietnam, they provide job and income for 11 million peoples, including handicapped and invalids, in 2008 the craft villages exported products of USD billion 1. According to the Association of Craft Villages, 50 percent of craft villages are running bankrupt due to the collapse of their export markets, causing job losses for ca. 5 million craft workers.15

Box 1. Handicraft Villages

13 Le Dang Doanh Inflation and Poverty in Vietnam 2008, Paper presented at the Conference at Institute of South East Asian studies (ISEAS, Singapore, March 25-26 200914 Cao Sy Kiem www.massogroup.com on August 22 2008; www.any.vn March 2 200915 Viet Nam News June 18 2009, p.4

19

Strikes occurred more frequently and turned to be a concern of the foreign investors.16

Figure 4. Number of occurred strikes from 1995 to 2008

Source: http://www.bbc.co.uk/vietnamese/vietnam/story/2009/01/090109_strikes_statistics.shtml17

16 Nguyen Thanh Tuyen, Strikes, Causes and Solutions, Communist Review, October 11 200817 Tran Tu Van Anh, Strikes in Vietnam, Paper presented at the Workshop in Haiphong, February 12-15.2009.

According to MARD, so far nine craft villages, 2166 households trading craft products and two related companies have gone bankrupt since March 2009. They include the Buoi village that well-known for the special traditional do paper, the painting village Kim Hoang, the pottery village of Trieu Khuc in Hanoi, the shoe-making village of Chi Long and porcelain and pottery village of Huong Canh in Vinh Phuc Province. Other 35 percent of rural handicraft makers had to cut back their production due to shortage of credit and contract.

20

Under these difficult overall conditions, the global financial crisis and economic recession hit a weakening Vietnam’s economy hardly and the space for Government’ maneuvering through the crisis is limited by the described macroeconomic constraints.

4. Impact analysis of the current economic crisis on key socio-economic areas

The global financial crisis hit Vietnam as a total surprise, no state agency neither research institute in Vietnam has predicted it and analyzed its possible impacts on Vietnamese economy. As the news from massive bankruptcy cases of banks from US and all over the world reached Vietnam, politicians were in hurry to declare to the press that Vietnam did not have any asset in these bankrupt banks and did not suffer any loss. The Governor of the SBV stated explicitly that “these developments don’t have any influence to the financial and monetary market in Vietnam”18. The press reported that the Minister of Planning and Investment emphasized on the Session of the Standing Committee of the National Assembly of Vietnam on October 10 2008 “that the global financial crisis could not harm the GDP of Vietnam’s economy”19. But as soon as the impacts were so evident, the very same minister two months later, in December 2008 in an article on the Communist Review, quickly move to make the statement that the impacts on export and foreign direct investment in Vietnam were already tangible from the beginning of the year 2008 (Vo Hong Phuc, 2008). Moreover, the global financial crisis and economic recession cause some ideological discussion. The global recession, triggered from the US, has been qualified as a “sickness of incurable capitalism”. As the Government of the US decided to buy shares of some bankrupt private commercial banks and enterprises as a rescue operation, by that way, turned them temporarily into US-government-owned banks and enterprises, some Vietnamese politicians interpreted these steps as the return to the state-owned sector in the US-economy and as evidence for the need to sustain state-owned enterprises in Vietnam as fundament of

18 General Governor of the SBV Nguyen Van Giau on the Government Press Briefing on September 30 2008. http://vietnamnet.vn/chinhtri/2008/09/806334.19 Vo Hong Phuc, Statement at the Standing Committee of the National Assembly on October 10 2008 http://vtc.vn on October 11 2008.

21

the economy20. The equitization of Vietnamese SOEs has been coming under criticism again in this context and slowing down visibly in 2009.

4.1. The first wave of impacts

With some delay, from third Quarter of 2008 until now, the global financial crisis and economic recession affected Vietnam directly, caused an abrupt decline on international credit supply, foreign direct investment commitment and disbursement, indirect financial portfolio investment, export. By that way, unemployment and under employment increase, social impacts aggravated the already worsening situation in 2008.

Impact on Export and Import

The impacts of the global financial crisis and economic downturn on Vietnamese economy were most painful and devastating through export. And via export it harmed the budget revenue, economic growth, employment and international balance. It comes through different channels including price drop on commodities, price reduction on contract to manufacturing goods, declining contracts leading to reduced export volume and increasing protectionist measures from importing economies.The early signs of a slowdown of Vietnamese export to the US, EU and Japanese markets emerged in second and third Quarters of 2008, export to the US dropped from a growth rate of 26.7 percent in 2007 to 16.7 percent in the first nine months of 2008, the share of the US-market from total Vietnam’s export fall from 20.7 percent in 2007 to 17.7 percent in 2008. Nevertheless, MPI planned an export growth rate at 18 percent for 2009 in October 2008. (Vo Hong Phuc, 2008). This target has been further reduced and the National Assembly has been asked to adopt a growth rate of 13 percent in December 2008. This target has been revised again to 3 percent only in June 2009, but even this repeatedly revised target could be hardly realized.Rapid drop of commodities prices as crude oil from USD 147/barrel to 43/barrel, rice from USD 1100/ton in April 2008 to 550 in 2009, etc. caused severe losses to Vietnamese export. The price drop strongly affected the export value and was the main cause for significant drop of export earning. In the first five months of 2009, export price of crude oil declined by - 54.3 percent, of coffee by - 27.7 percent, rubber by - 43

20 Nguyen Sinh Hung http://www.na.gov.vn/htx/vietnamese/default.asp?Newid=29955

22

percent, rice by - 16.1 percent, black peppers by - 34.5 percent, cashew-nut by - 14.3 percent, anthracite coal by – 2.3 percent and tea by – 3.5 percent. For these eight major export goods the price drop produced a loss of – 47.3 percent of the export revenue compared to the same period in 2008 or USD billion 4 in value. On average, the export price of all export goods in the first five months of 2009 declined by – 27.2 percent, equivalent to USD billion 8.5. The declining export volume caused a further drop in export. The export volume to four major export market of Vietnam US, EU, Japan and ASEAN declined by - 13.4 percent.

Table 8: Traditional Export Markets of Vietnam

2006 2007 2008 Q1-2009 China 8.3 7.7 7.5 6.3 Japan 14.3 12.6 12.2 9.6 ASEAN 11.6 12.5 14.0 10.7 EU 21.1 21.4 19.4 16.6 US 21.3 23.2 20.8 17.5 Rest of the World 23.3 22.5 26.1 39.1

Source: World Bank, 2009, GSO. Share of Vietnam non-oil exports by main market.

The decline in Japanese and EU-markets are relevant while the decline in US-market is not too painful.

The export revenue in the first five months reached USD billion 22.9, declining by – 6.8 percent from the same period in 2008. Only rice, tea and gold reached a growth rate. The abnormal high export item in the first five months was gold and jewelry of USD billion 2.6. Vietnam is not a real gold producer and not a traditional gold exporter, but due to the huge price gap between the world price and the domestic price, Vietnam’s gold and jewelry (re-)export increased by 3.149 percent compared to the same period of 2008. As the price gap is narrowing and disappearing, this speculative, unsustainable export operation should end.

Figure 5. The gap between world gold price – domestic price –

23

Table 9. Export of selected goods in first five months of 2009

Export items Value (million USD) Comparison in % to the same period in 2008

Seafood 1.376 90.9Fruit and Vegetables 163 90.9Coffee 251 83.9Rice 1.498 120.2Tea 50 113.4Black Pepper 122 93.8Coal 479 79.3Crude Oil 2570 56.0Rubber 245 51.0Furniture 939 80.2Garment 3.244 98.2Footwear 1640 89.9Gold & Jewelry 2.605 3.419

24

Porcelain & Ceramics 116 76.0

Electronics 909 92.0Cables 240 58.3

Sources: MOIT and GDC

Credit crunch for importer is another reason for declining of Vietnamese export as Vietnamese commercial banks could not provide credit to support export. Fierce competition (e.g. with Chinese garment in US-market) and technical barriers (for example the case against the Mekong basa-fish export) are additional causes for this decline.Export from foreign direct invested enterprise realized a decline of - 10.4 percent (without crude oil), export from domestic enterprise increased by + 12 percent.

Box 2. Impacts on export of FDEs

In regional context the export performance of Vietnam is not too bad.

Table 10. Export Performance of Selected Regional Economies

2007 2008 Q1-2009Japan 10.0 9.5 -60.0

Philippines 7.1 -2.9 -36.8Indonesia 13.2 20.0 -32.0Malaysia 9.7 13.3 -28.9

Korea 14.1 13.8 -24.9Thailand 16.5 15.7 -23.2

Singapore 10.1 12.9 -20.6China 25.7 17.3 -19.7

Vietnam 21.9 29.1 7.4

Source: World Bank, General Department of Customs (GDC), and GSO

Import declined even deeper than export in the first five months of 2009, total import reached USD billion 24, dropped – 37 percent. Major import

25

A field study of VASS, Action AidVietnam, Oxfam GB (VASS 2009) and Center for poor workers by the Trade Union of Haiphong shows that several foreign direct-invested enterprises face declining of contract, reduced price and drying out of credit. From November 2008 manufacturing contracts have started to decline rapidly and reached a reduction at – 40 percent compared to the same period of last year in the first Quarter of 2009. It was the case of seven footwear, two garment, one consumer electronic producer and one bureau equipment producer. Footwear and garment producer have to accept price drop to – 40 percent to receive a processing contract.The Japanese 100 percent foreign-invested electronic producer Pioneer has seen a drop of contract offer by – 50 percent.The badly affected enterprises face a drastic decline from the US and EU market.

items like steel declined by – 60.8 percent, machinery by - 23.9 percent, car by – 44.5 percent etc.Trade deficit reached USD billion 1.128, a clear reduction compared to 2008.

Figure 6: Trade Deficit

Source: World Bank 2009, GSO

In February 2009, gold (re)export helped to reach some limited temporary trade surplus and the domestic press proudly celebrated it, but as the gold (re)export ended, trade deficit reemerged.There are a wide rang of forecasted growth rates for Vietnamese export in 2009, from – 20 percent (EIU) to -15.5 percent (IMF) to planned + 3 percent as the Government of Vietnam revised the target. Depending from the recovery of Vietnam’s major export market, if Vietnam could reach a zero growth rate for 2009, it should be already a success.

Impact on Tourism

Tourists arrival in Vietnam in the first five months declined by - 22 percent, their daily spending has been also reduced, causing all together a drop of -30 percent on tourism revenue. Tourists from China declined by – 38.3 percent, from US – 1.2 percent only, from Korea – 22 percent, from Japan – 8.2 percent while tourists from Canada increased slightly by 4.2 percent and from Malaysia by + 0.9 percent. (GSO, Report 2009).

26

Occupation rate in luxury hotels dropped from over 90 percent to 70 percent while three star hotels did not report relevant reduction. The Tourism Association in the Province Baria-Vungtau informed the author by a field visit on May 2009 that their business declined by at least -30 percentVietnam’s tourism started in May 2009 an advertising campaign in international television channels like BBC but so far there no immediate sign of recovery of Vietnamese tourism yet before the recovery of the world economy.

Impact on FDI

In 2008 Vietnam attracted a record high FDI commitment from USD billion 64 and disbursement at USD billion 11.5, but the impacts of global crisis were tangible in October 2008 as both commitments and disbursements have been slowing down considerably. (Vo Hong Phuc 2008). This tendency continued and aggravated in the first five months of 2009 in an astonishing way:

Table 11: FDI in 2009

Amount Change (percent, (US$ billion) Yoy)

Approved capital 6.7 -76.3 Newly registered projects 2.7 -89.2 Number of projects 256 -60.5 Capital increased from existing projects 4.0 27.5 Implemented capital 2.8 -29.1

Source: World Bank 2009, (MPI). Data accumulated figures, January 1 to May 20, 2009.

On June 22 2009, MPI-official informed the press that there are still 187 projects with USD billion 85.4 capital in the pipeline, they should be approved in the time to come.21

The official statistic of MPI doesn’t provide systemic information on projects which have been cancelled, suspended or delayed their

21 http://www.vietnamnet.vn/kinhte/2009/06/854415

27

implementation. Anecdotic press reports show that several big projects have been cancelled like the USD billion 11 worthy Naphtha Cracking Refinery of SP Chemicals Ltd (Singapore) in Phu Yen Province, the USD million 527 Steel Factory from Indian Essar,22 the USD billion 3.3 Foxcom Electronic Complex from Taiwan (China) in Province Bac Giang have been indefinitely delayed. If all suspended projects have been subtracted from the reported total new commitments as well as the increased capital of USD billion 6.7, FDI-inflow into Vietnam in the first five months of 2009 was de-facto deeply negative. This development should be not ignored but analyzed systemically to have a realistic picture of the real available FDI in the time to come. The author made field visit to provinces Long An, Bac Giang, Baria-Vungtau, District Dong Anh, Hanoi and the Seventh District of Ho Chi Minh-City. The provincial and local authorities were very worrisome about the delay of FDI-projects, they faced a high pressure from party veteran, landless farmers seeing large plot of land has been cleared but the foreign investors did not use the land.Foreign Direct Invested companies in Thang Long IP reduced their business, reduced employment and the supporting services in the District were badly affected.The lion share of total FDI-commitment come from increasing investment from existing FDI-projects. Tourism, resorts, hotels share 66.9 percent of the newly committed FDI-capital, equivalent to USD billion 4.5. But 96 percent from this capital are increased additional investment from existing projects and not from new one. US, Korea, Singapore, Taiwan (China) are the leading investors into Vietnam in this period.Source: MPI

The shift in the composition of FDI-projects in the last years is a subject of concern and disputes in Vietnam.

Figure 7. Composition of FDI projects by sector

22 Saigon Economic Times, June 4 2009, p.10-12 (Vietnamese)

28

Source: MPI

The clear-cut delegation and decentralization of FDI-decision to provincial authorities one side, called a real competition between provinces to attract FDI. To another side, delegation without detailed criteria on land use, accountability jeopardized the concept of regional planning, specialization, clusters and value-chain. The share of golf courses, resorts, occupying large areas of land, including precious arable, rice cultivating land, increased tremendously in 2007 and 2008. Landless rice-farmers were not satisfied with compensation, could not find new employment raised their complaints. Large projects of metallurgy, cement, bauxite exploitation caused widespread critical reaction from the public on environmental consequences.Nevertheless, Vietnam is still an attractive place for foreign investor. JBIC (Japan Bank for International Cooperation) published a survey, placing Vietnam as the third place on ranking of promising economies in Asia, only after China and India23.

Figure 8. JBIC ranking on FDI in Asia

23 JBIC http://www.jbic.com.jp

29

The top five issues on investing in Vietnam are the following:

Table 12. Main Issues of Business Environment in Vietnam

30

Indirect foreign investment jumped up to USD billion 6.2 in 2007 but it was abruptly reversed in 2008. In 2008, an unknown amount of capital has been withdrawn and USD million 120 has been registered as inflow. (CIEM, 2009)

Remittance from oversea-workers and Vietnamese Diaspora which reportedly shared USD billion 2.73 in the first half of 2009, has been slightly reduced, but is expected to reach USD billion 5.6 for the whole 2009, according t0 the General Governor of the State Bank of Vietnam24. All these developments lead to a fragile balance of international payment with a considerable deficit. As the World Bank “Taking Stock” June 2009 indicated it is difficult to predict the balance of international payment because of the volatile situation.

ODA-disbursement in the first five months reached USD million 720, equivalent to 38 percent of the annual target only.

Surprisingly, the private sector in Vietnam continues to grow, but at lower rate. In the first six months of 2009, 40.000 new private enterprises have been registered, an increase of 14 percent but registered capital down by -40 percent compared to the same period of 2008.25

Table 13: A Large Current Account Deficit

US$ million 2009/e Current account balance -4,622 Trade balance -5,552 Non-factor services -595 Investment income -3,275 Transfers 4,800 Financial account balance 1,950 FDI investment 4,500

Medium and long-term loans 1,450 Other capital -4,000 Overall balance -2,672 Change in reserves (-increases) 2,672 Current account as percent of -5.0

24 Saigon Economic Times June 25 2009, p.1725 Dien Dan Doanh nghiep, June 26. 2009, p.2

31

GDP

Source: World Bank estimates

Compared to the deficit of international balance from 2008 at 11.9 percent of GDP, it is a modest improvement.

Impacts on Industries and Construction

Industrial production output in the first five months of 2009 reached a growth rate of 4 percent, a severe drop from the average growth rate of 16-18 percent in the last years. It is a progressive increase compared to the first three months with a growth rate of 2 percent only. The state-owned sector realized a negative growth rate by -0.1 percent, the domestic private sector a positive + 7.3 percent, the FDI-sector a positive +3.7 percent. Garment production declined by – 19.9 percent, ceramics and bricks by – 23.6 percent.

Construction which shares 10 percent of GDP, experienced a negative growth rate at – 0.4 percent in 2008 due to high prices of commodities (cement, steel), tightening credit and high interest rate and a paralyzed real estate market. In the first months of 2009, as credit supply has been eased, especially credit at subsidized interest rates, prices of cement and steel falling deeply, construction service seemingly led the economic recovery by growing at 6.9 percent in the first three months and 6.6 percent in the first five months and is expected to continue to grow in the next months. Retail sale of steel and cement growing considerably. Real estate market has been warming up.

32

Figure 9. Recovery of Construction

Source: GSO, World Bank

Impact on Agriculture, Fishery, Forestry

Agriculture in Vietnam continued to grow at 2.5 percent in the first half of 2009, not only ensuring the national food security but also sustaining an increasing rice export at five million metric ton. Fishery and aqua products grew at lower rate 4.4 percent in the first five months as basa-fish export faced increasing technical barriers and cultivation had to deal with higher feed price as well as could hardly get access to credit. Agriculture was and is a stabilizing pillar of the Vietnamese economy. The author has visited the main rice producing and exporting provinces An Giang, Kien Giang and Dong Thap. The provincial authorities confirmed that the situation is normal, the impacts through export as price drop are tangible but the farmers earned a bumping harvest, their local budget revenue did not decline severely.The social impacts on farmers and rural development should be addressed later.

33

Impacts on Services and Domestic Trade

Turnover of domestic retail trade and consumption services in the first five months increased by 21 percent, if deflated by consumer price index, it is still growing by 8.4 percent.

Figure 10. Growing Retail Trade and Consumption

Source GSO, World Bank

CPI (Consumer Price Index) grew by 5.58 percent compared to the same period 2008 or by 2.12 percent compared to December 2008. Gold price increased at over average rate by 13.04 percent compared to the same period of 2008 and by 17.88 percent to December 2008. US Dollar increased by 10.22 percent compared to the same period of 2008.As credit supply increased by 15 percent in June many economists warned on a coming revitalizing inflation in the third Quarter of 2009, especially when this eased domestic monetary and credit policy meet in an ungraceful coincidence with increasing world oil price.26

Impacts on Economic Growth

The global financial crisis and economic recession led to a considerable slowdown of economic growth of Vietnamese economy, GDP-growth rate in the first three months of 2009 was 3.1 percent compared to 7.49 percent of

26 Le Dang Doanh Saigon Economic Times May 28 2009, p. 10-12.

34

the same period in 2008. The Vietnamese Government successively reduced the growth target from 7.5 percent in October to 6.5 percent in December 2008 and to 5 percent in June 2009. The Government repeatedly affirmed that from the second Quarter 2009, Vietnam’s economy should recover and the GDP- growth rate of 5 percent is realistic.27 On June 23 2009, GSO reported the GDP-growth rate for the first six months of 2009 is 3.9 percent.28 The economy needs to grow at 6 and 7 percent in the following quarter to reach the overall target of 5 percent GDP growth rate for the whole year 2009. IMF reduced its forecast from 4.8 percent in February 2009 to 3.75 percent in June 200929. Other institution like EIU (Economic Intelligence Unit) forecasted a growth rate at 0.3 percent30. Depending on the world economic recovery, Vietnam’s economy could likely to grow at 4-4.5 percent. By a population growth rate at 1.1 percent, this GDP growth rate should allow to sustain the established living conditions and not a relevant improvement.The impacts of the crisis on medium-and long-term economic growth are undeniable but so far not sufficiently studied. Vietnam certainly will face a difficult year 2010 and needs some more years to recover fully. The set targets of the Five-Year Plan 2006-2010 could be not fulfilled. The economic growth in the future depends on how well Vietnam could reform and restructure its economy and administration.

Impacts on State Budget

In 2008, due to record high oil price, Vietnam’s budget revenue realized an unexpected over-fulfillment of the budget plan by 23.5 percent, equivalent to an increase of 26.3 percent to 2007. Revenue from oil sale increased to 25 percent of total revenue in 2008. But to the end of 2008 and until April 2008, strong fall of commodities prices led to a severe loss on budget revenue: In the first Quarter of 2009, budget revenue declined by – 20 percent compared to the same period of 2008. As revenue from export and import falling and the Government provides a wide range of tax holidays, tax exemption, state budget faces a deficit by at least 8.5 percent of GDP. The IMF and some other economists fear it could reach 12.5 percent of GDP or equivalent to 50 percent of total budget revenue if all other budget expenditures should be included.31

27 Report of the Government to the National Assembly Meeting May 20 2009 http://www.chinhphu.gov.vn28 http://www.chinhphu.gov.vn, June 25 2009.29 IMF Statement at the Midterm CG-Meeting June 2009.30 EIU. http://www.EIU.com31 http://vneconomy.vn/20090414093528240P0C6/noi-lo-boi-chi-ngan-sach.html.

35

Social Impacts of the crisis

The Report of GSO on socio-economic situation in the first five months of 2009 did not include any information on employment and unemployment.32

By an elasticity coefficient of 1 percent GDP growth rate produces 0.34 percent of employment, the severe drop of economic growth rate in 2009 should produce less 1-1.5 percent of employment. Mme. Minister of MOLISA could collect report from 43 provinces only from total 63 and informed the National Assembly on June the 11 that in the first five months that there are additionally 68.000 unemployed peoples. She could also not provide any information on the unemployment situation in the large informal sector33 but other sources from MOLISA estimated unemployment in 2009 could reach 300.000 to 400.000. The number of Vietnamese unemployed, exported guest workers coming back should reach 10.000 in 2009.34There are only anecdotic reports or fields studies providing sporadic information. If unemployment in the informal sector is included (e.g. 5 million unemployed peoples from the craft-villages as announced by the Association of Craft Villages)35 the real unemployment is even more serious. Such information could be not confirmed independently. As most of the private enterprises prefer the “clinical dead”, underemployment and reduced earning are more common, but there is no information. Strikes are no more frequently reported in the domestic as in 2008 perhaps because unemployment causes more pressure than salary increase. Interestingly there are both increasing job offers and job seekers in Hanoi and HoChiMinh-City, but the supply and the demand could not meet each other.

Figure 11: Job Offers and Job Seekers in Urban Markets

32 GSO, Report on socio-economic performance in the first five months of 2009, http://vneconomy.vn33 http://www.molisa.gov.vn/Details.asp/ambien2=2028mbien4=140798mbien3=. For informal sector, see also Pierre Cling, Dao Trong Khanh, Mireille Razafindrakolo, Francois Roubaud, The informal Economy in Vietnam, Publishing House of GSO, Hanoi 2008.34 Workshop on impacts of economic slowdown to employment, Hanoi, June 9 2009, see also http://www.molisa.gov.vn/details.asp?mbien2=202&mbien4=14057&mbien3={5B306390.35 Viet Nam News June 18 2009

36

Source World Bank Taking Stock 2009.

Other social impacts like criminality, prostitution are not available. The press frequently reported from increasing crimes (fraud, burglary, human trafficking) and violence, but there is no systemic information and analysis on these issues

As agriculture is doing relatively well and keep growing, the regular Government reports on socio-economic situation never mention the social situation in rural arrears and the situation of rural population. There is a general assumption or a traditional, unfounded believe that the situation in rural region is less affected by the global crisis. But the field study of IPSARD (IPSARD 2009), conducted on behalf of the Economic Commission of the National Assembly in four provinces Lang Son, Nam Dinh, Binh Thuan and An Giang, revealed a totally different picture: 68.4 percent of the households have to reduce their spending for food, stopping the purchase of durable consumer good and housing construction. Spending for food has been cut by ca. 20 percent on average, spending on durable consumer good has been reduced by 37 percent and spending on housing construction has been reduce by 52.3 percent. The number of poor households increased tangibly.

37

Table 14. Increase of poor households

Province Increase of Communes with hunger-households

(%)

Increase of communes with poor households

An Giang 0 27.2Binh Thuan 2.8 13.2Lang Son 8.9 18.3Nam Dinh 1.6 9.2

Source IPSARD 2009

In 42.3 communes farmers reportedly reduced their investment by – 21 percent. Price drops of agrarian products caused losses for the farmers, 71.6 communes reported a revenue reduction by -14 percent. Unemployed migrant workers returning from abroad or from urban regions increased the social burden for rural regions. The poorest communes with high share of migrant workers were hit hardest. On average, 21.7 percent of migrant workers returned home unemployed, in Province Nam Dinh it was 22.5 percent, in Lang Son 21.1 percent, in the poorest communes the share was 25 percent. Only 11.4 percent of the returning workers found a job, among them 5.3 percent in agriculture and 6.1 percent in industries and services. The survey shows that the farmer households and rural regions suffer very much from the impacts of financial crisis, indicating growing malnutrition, diminishing school enrollment. The crisis is said to be pushing more families into extreme poverty and increasing child mortality rate. Several families need to sale their belonging and asset to cover their daily subsistence.36 The absorption capacity as a “flexible sack” for returned migrant workers is limited, much smaller than usually expected. The migrant workers used to send money to their families at home now coming back empty handed are a burden for the family, The income reduction is tangible but increasing spending is needed.Anecdotic reports informing on various impacts on health care and education but there are so far no field study and survey on these issues. The websites of the two related ministries did not provide any information on the impacts of global crisis on their domains.

VASS, Oxfam and ActionAidVietnam conducted a quick survey on impacts of the financial crisis on migrant workers in industrial parks in Hanoi, Dong

36 http://cpv.org.vn/cpv/Modules/News/NewsDetails.aspx?co_id=30671&cn_id=344655, July 11 2009.

38

Nai, Binh Duong provinces, on “day laborers” in so-called “laborer market”, workers in craft villages, migrant workers in Industrial Parks (IP) etc. (VASS, Oxfam, ActionAidVietnam, 2009) They interviewed 105 workers, conducted dialogues at craft villages, at Thang Long Industrial Park, Hanoi. Their most important finding is very strong impact on migrant workers, independently whether they are “free day laborers”, waiting at the “laborers market” for pick-up or workers in IP.

The “day laborers” reported a drop of working days by -50 percent and income by 30-50 percent compared to 2008. The declining income coincided with increasing food price pushed them on the brink of the subsistence, some of the children must stop to go to secondary school and join them at work. Nevertheless, they still find some job and are not yet totally unemployed.

At the two well-known craft-villages Ha Thai (for lacquer ware production) and Bat Trang (for pottery), the study find a decline of - 35-40 percent for Ha Thai and -30 percent for Bat Trang. Both two craft villages did not see any sign of recovery. Craft village Bat Trang used to employ 10.000 workers, reported a drop of employment at -60 percent. The number of operating household- enterprises in Bat Trang dropped from 1200 in 2004 to 970 in 2007 and 800 to the end of 2008. Craft village Ha Thai ended the employment of 400 migrant workers from neighbor villages without any assistance. The workers in Ha Thai now come back to agricultural activities to find some income.

A survey of UNICEF,MOCST and Vietnam Institute of Sociology in June 2009 (UNICEF.MOCST and VIS,2009) confirmed the severe impacts on children, education like delay of payment of school fees, the parents of the affected families have to take their children out of school, or to compromise on visits on health care facilities.

Foreign direct invested enterprises in IP Thang Long (Hanoi) faced a severe drop of demand. All of the 67 FDEs in the IP Thang Long have reduced their operation, some of them by -40 percent like Nissin, or -50 percent like Inoac. The FDEs preferred not to fire the employees but encourage them to voluntarily to end working indefinitely. By that way they avoid to pay assistance and insurance, So far, non of 3000 unemployed workers in IP Thang Long have been “fired” as 500 by Panasonic, 1500 by Nissei, 1200 by Canon, 1500 by Sumitomo. Seventy percent of them are migrant workers

39

and 65 percent are women. The unemployed workers try to stay at the IP in waiting for a comeback, so far, they reported from increasing burglary, thieves but no serious social unrest.

These findings confirm the results of other reports and surveys and provided a very complicated situation. The social impacts are much more severe and wide spreading than the Government has recognized. The economic crisis is challenging Vietnam to maintain progress in maternal and child health care, especially in mountainous, remote and disadvantaged areas. The affected peoples reported that they could hardly get access to the assistance provided by the Government due to various conditions, papers and procedures.

VCCI conducted a field study on competitiveness of Vietnamese companies under the conditions of global crisis (VCCI, May, 2009). The study based on answer of 630 registered companies having on average 300 employees in Ho Chi Minh-City and in Hanoi. It reported from severe drop on turnover, employment and profit. The turnover growth rate of companies in Hanoi dropped from 61.2 percent in 2007 to 17.2 percent in 2008, in HoChiMinh-City from 16.1 to -3.3. Export declined from a growth rate at 20.4 percent in 2007 to 2.7 percent in 2008, labor forces have been reduced by – 4.7 percent while turnover in domestic market fall from + 43.9 percent in 2007 to 10.2 percent in 2008. Seemingly, the domestic market helped these companies to survive. Interestingly, 67.8 percent of the companies have succeeded to bring new product into market while only 57.3 percent have renewed their services. Nearly sixty percent (59.7%) 0f these companies have changed their technology or design, 45.1 percent reformed its logistic and distribution operations, 44.3 percent modernized their maintenance, purchasing activities.All companies identified “the instability and unpredictability” of the market as a big challenge, 53 percent among them considered it as the “highest challenge” for their future planning. Other difficulties are “high cost of credit” and “liquidity of their account”

5. Implications for policy and Vietnam’s quest for continued economic development

The global financial crisis and the economic recession have certainly various consequences for economic development after the recovery. As agreed by the G20 Summit in London April 2 2009, a whole agenda of reform and restructuring has been confirmed and is under implementation. But many

40

more issues emerged and should be not neglected.The super power position of the US-economy has been clearly shacked; the position of the US as first economic power and the role of the US-Dollar as world currency have been de-facto challenged by the Euro and by China but it may still take sometimes to see a real change of this position. A geopolitical shift is under way and the position of the US-economy depends very much on the capability of the US in technology innovation as it has done in the twenty century. In economic terms, the peoples in the US have to increase their saving and no more consuming so much import goods by continuing a record high trade deficit. The emerging economies which have been growing at high rate relying on export oriented production and on foreign direct investment in a globalizing world, now, undoubtedly, need to revise their concept and their economic structure. They may need to balance its economic relations by boosting its own consumption and developing its own domestic market. Any restructuring the economies needs to take in account that the world indeed faces not this one global financial crisis, but three more crisis as: food crisis, energy crisis and global warming, environmental crisis. Any recovery must be a “green” recovery, ensuring food and energy safety.

In 2007 Asian economies (including Japan) share 66.8 percent of the world reserves, 55 percent of the world population 24.5 percent of the world GDP but only 16 percent of the IMF quotas. Asian economies are the most dynamic region in the twenty-first century. Unlike the US and EU, Asian economies have been slowing down its growth rate to 6 percent while China continues to sustain growth rate at ca. 7 percent. Some other economies, highly depending from world market, shall contract like Singapore at -7.2 percent, South Korea by -5.9 percent and Hong Kong by – 4.5 percent. Some Asian countries with large domestic market, high foreign reserve and robust economy shall recover earlier than the rest of the world like China and India, but the recovery shall be sluggish and painful. (IMF, 2009). They may have a V-or U-shape curve or a W-shape curve as discussed by Nuriel Roubini37. Other one, depending highly on world markets, like Singapore, Taiwan (China) may have a longer recovery according a L-shape curve.

The Vietnamese Government reacted promptly and strongly with various stimulus measures. Initially to the end of 2008, the Government has decided to use 17 trillion VND, equivalent to USD billion 1 to subsidize interest rate for credit and by that way mobilize a total credit of 60 trillion VND in one 37 RGE Monitor info@rgemonitor.com

41

year period. Later, on June 2009, MPI reported to the National Assembly a stimulus package from 143 trillion VND, equivalent to USD billion 8, or 8.7 percent of the expected GDP of 2009. By that way, Vietnam has the biggest stimulus package as share of the GDP among the regional economies. The budget deficit increased accordingly to – 8.3 percent of GDP.

Table 15: Stimulus Packages across Countries Percent of GDP

Country China 12.0 Malaysia 9.3 Singapore 8.0 Philippines 1.8 Korea 6.8 Thailand 1.1 Vietnam 8.3

Source: National authorities, Bloomberg, Factiva and World Bank

The efficiency of the subsidized credit scheme is highly disputed, weather it should help to refinance the debt of some enterprises and some commercial banks and not help to create job and boosting export.

Table 16: Costing the First Round of Measures Stimulus package components approved or committed so far

Revenue item Trillion VND •Reduction of CIT for small and medium enterprises, from Q4-2008 to Q42009, both inclusive •Deferred CIT payment for six sub-sectors during nine months of 2009. Revenue is not foregone •Deferred PIT payment during five months of 2009. Revenue is not foregone •50 percent reduction in VAT payments for selected goods and sectors, including imports

3.0 (7.3) (6.1) 7.2

Total revenue foregone 10.2

Expenditure item Trillion VND

42

•Subsidized interest rate scheme, two phases combined. SBV to bear the cost for now, although it may eventually impact on the budget •Additional off-budget spending •Tet bonus (200,000 VND per poor person, up to 1,000,000 VND per poor household). Based on actual spending •Support to 61 poorest districts (each of the provinces to receive an advance of 25 billion VND) •Housing support for the poor (around 0.5 million rural households to receive 7.2 million VND each) •Support for low income civil servants (about 0.9 million civil servants to receive 360,000 VND each)

(17.0) 8.0 1.7 1.5 3.6 0.4

Total additional expenditure 15.2

Source: Based on data from the International Monetary Fund (IMF), the Ministry of Finance (MOF), and SBV. Figures are in parentheses indicate deferred (as opposed to foregone) revenue or expenditures not falling on the budget.

But the second round of measures as described in the following table, creates more confusion and disputes.

Table 17: What is Additional in the “143 Trillion VND” Plan? Stimulus package components in the “US$8 billion” MPI plan (figures in trillion VND)

Revenue item MPI World Bank

•Combination of measures related to rebates and payment delays on CIT, PIT and VAT. Already included in the first phase of the stimulus package

28.0 (10.2)

Total revenue foregone 28.0 0.0

Expenditure item MPI World Bank

43

•Advancing the implementation of critically important projects from 2010. In practice, resources will be reallocated from projects with poor implementation •Subsidized interest rate schemes, two phases combined. Already included in the first phase of the stimulus package •Other spending, mainly on social safety net, including the Tet bonus. Already included in the first phase of the stimulus package •Investments to be financed on revenue brought forward from the 2008 budget. However, 14.1 trillion VND in carry-overs were already included in the November 2008 budget plan •Issuance of additional off-budget domestic bonds. However, only 20 trillion VND are to finance additional expenditure. The other 7.7 trillion represent additional finance

37.2 17.0 7.2 22.5 27.7

14.9 (17.0) (7.2) 8.4 20.0

Total additional expenditures 83.9 43.3

Financing item MPI World Bank •Suspending the recovery of advances made in 2008 for investments not implemented. This amounts to an authorization to draw upon deposits •Issuance of additional off-budget domestic bonds for investment

3.4 27.7 3.4 27.7

Total additional financing 31.1 31.1

Source: Based on data from IMF, MOF, and SBV. Figures in parentheses were not part of the first round of measures or did not fall on the budget

The World Bank expressed concern about the high deficit, the “off-budget” spending and rising public debt to 50.7 percent in 2012.

On the medium-and long term, the Vietnamese economy has to cope with many implications of the global financial crisis and the economic recession.The geopolitical shift of power between US, Japan, China, the strongly emerging China with ambitious territorial claims, hunger for oil, gas and all kind of minerals etc. request from Vietnam an acrobatic balance to sustain a favorable and peaceful environment for the socio- economic development. Moreover, the economic structure between Vietnam and China is similar, garment, footwear, consumer electronic but also seafood, fruits, vegetables compete each other at the Vietnamese domestic market and at third export market. China’s plan to build eight dams on the Mekong-River could change drastically the conditions in the Mekong River delta of the South of Vietnam. All these factors should be not ignored.

44

Vietnam aims to reach the level of a “basically industrialized and modernized economy in 2020”38, a state ruled by laws of the peoples, for the peoples and by the peoples, an equal, democratic and civilized society. These aims still must be quantified in terms of GDP/capita, economic structure, employment and labor, education and training etc. The development gap is tremendous and the remaining time no more too much. But the potential for high growth is still there, it must be unfold and liberated and further developed. If Vietnam could not mobilize the dynamism, energy and creativeness of all Vietnamese, reach unprecedented high growth rate for the next decade by implementing efficient reforms, these noble targets could be hardly reached on time. The prospect of a “middle-income trap” could not be totally excluded. The recent mid-term Plenum of the Central Committee of the Communist Party of Vietnam strongly confirmed this unchanged targets.39 Now the preparation for the Eleventh National Congress of the Communist Party of Vietnam for January 2011 is gearing up, drafts of the Strategy for socio-economic development for the period 2011-2020 are under discussion, amendment to the Party Program could be made. How strong the reform could be?The much smaller Asian financial crisis in 1997 had minor impacts on Vietnam’s economy but it took Vietnam four years to recover. How long it takes Vietnam this time to recover from the severe impacts of this crisis? It should be wishful if it doesn’t take too long, maybe not longer than the last one. Could Vietnam recover swiftly according to a V-shape curve or sluggish according to a W-shape curve?40 What is the most effective way for Vietnam to reach this noble target? Certainly it is not a mechanic extrapolation of the past under the changing situation of a post-crisis world; reforms, new approaches; renewed development paradigm must be explored and introduced.Vietnam de-facto joined the middle-income group in 2008 but all other development indicators of Vietnam are still low and belonging to the 1/3 low end of the world economies (Growth and Business Competitiveness Index from World Economic Forum, Human Development Index from UNDP, Corruption Perception Index (CPI) from Transparency International etc. Reform and development in Vietnam must continue in a more systemic way to improve these indicators substantially in the future.

38 The tenth National Congress of the Communist Party of Vietnam. Documents. National Publishing House for Political Literature, Hanoi 2006.39 http://www.cpv.org.vn40 Le Dang Doanh, Saigon Economic Times, May 5 2009, p.10-12.

45

Technical infrastructure (high way, road, bridges, seaports and airports) but also electricity is serious bottlenecks, they must develop more rapidly than in the past by de-monopolizing and opening up to an equal and fair participation of the private sector. In this context the reform of the SOEs, particularly the reform of the state-owned economic groups or conglomerates must come on the agenda. Vested interests, interest groups now sharing the benefit of land, mineral resources and SOEs must be controlled under a transparent and open system. Regardless strong rhetoric, the fight again corruption produced until now minor and less convincing results. The related problems are not technical issues, they are problems related to the whole political and economic system. Without relevant reforms Vietnam could hardly reach significant and substantial progress. These issues are extremely difficult and they haven’t been touched in the past. How could Vietnam surmount it and where are the driving forces and the motivation for these unprecedented reforms in Vietnam in the future?The crisis once again makes it more obvious that the expansive growth model of Vietnam, relying on capital, resources, labor inputs, is approaching its natural limits. Instead high quantitative growth targets, requiring more capital, more land, and more water etc, Vietnam must move to an intensive growth model, emphasizing growth quality, efficiency, competitiveness, using more efficiently any resource.The crisis made it more pressing that, Vietnam has to develop its financial markets and to be less depending from foreign capital as foreign direct investment, indirect financial investment, ODA. By joining the low end of the middle-income group, Vietnam must be prepared for declining ODA and moving to cooperation for mutual benefit, as e.g. Sweden already announced. This financial system must be reformed strongly and efficiently according to the renewed scheme as decided by the G 20 Summit in London April 2 2009.The environmental pollution, the ongoing deforestation, the food security are approaching the critical level. The Government alone could not solve all these problems without the inclusive participation of the civil society, of every citizen themselves. A new development paradigm must be adopted, accepting more accountability, responsibility of the Government, an adequate supervision and monitoring function of the National Assembly as well as elected local parliament, and last not least a well operating, responsible civil society. But the reality is until now the term of “civil society” has been rejected from all official documents and a draft of law on mass organization could not be allowed to be presented. I may illustrate the thorny way ahead.

46

The crisis also revealed the weaknesses of the social safety net and regulation. The system must be further developed and reformed. The informal sector, which contributes so much for economic growth and employment, is not included in the stimulus measures; they even are not recognized and accounted for. Migrant workers are the most vulnerable groups need to get access to the assistance scheme provided by the Government. Education and training are keys for poverty reduction and social development. Reforms and development of the education and training must provide all Vietnamese the access to knowledge and skills.Vietnam must build-up appropriate, professional capacity to meet with disasters and crisis. Capacity for preparation and implementation of policy responses must be improved by including a larger pool of available experts and not restricted under civil servants.

6. Concluding Comments

The global financial crisis and economic recession hit a weakening Vietnam’s economy hard and unprepared. Declining export and FDI caused wide spread unemployment and underemployment. The supporting services suffered a painful downturn. Thank to a flourishing agriculture, a large retail domestic market and a dynamic, resilient private domestic sector, the downturn is less painful and Vietnam’s economy continues to grow at 4- 5 percent in 2009. The global crisis was and is a tough test for the social safety net, for policy responses. The poor farmers, the migrant workers and employees in the informal sector suffered most but could hardly get access to the stimulus measures of the Government. The global financial crisis has substantial impacts on the economic structure, policies and the concept of socio-economic development.The global financial crisis should provide Vietnam an opportunity and an imperative for reforms and change. Hopefully, Vietnam could catch this chance and realize it.

47

48

References

Dinh Van An and Vo Tri Thanh, Global Financial Crisis on Vietnam and Policy Choices, Vietnam Economic Management Review, 2008, p. 3-10.

CIEM, Report on Vietnam’s Economy 2008, Finance Publishing House, Hanoi, May 2009.

GSO, Report on socio-economic performances in the first five months of 2009. http://vneconomy.vn

Harvard University/ UNDP Choosing Success, the Lessons of East and Southeast Asia and Vietnam’s Future, A Policy Framework for Socio-Economic Development, 2011-2020. Hanoi 2008.

Pierre Cling, Dao Trong Khanh, Mireille Razafindrakolo and Francois Roubaud, the Informal Economy in Vietnam, Current Situation and Solutions, GSO Publishing House, Hanoi, 2008.

IPSARD, Studies on Impacts of Economic Slowdown to Rural Sector, Hanoi, May 2009. (Vietnamese).

VCCI, Studies on Competitiveness of Vietnamese Enterprises in the context of Global Economic Crisis, Hanoi May 2009. (Vietnamese).

IMF, Global Economic Outlook November 2008, January 2009, April 2009.World Bank Impacts of Global Financial Crisis on the poorest countries, 2008.

World Bank, Vietnam Development Report 2008, Social Protection, Hanoi December 2007.

Robert Zoellick, Impacts of Global Financial Crisis on Developing Countries. www. world bank.org.

World Bank. Taking Stock, Report to the Midterm CG -Meeting on June 8-9 2009.

Mauro F.Guillen, The Global Economic & Financial Crisis: A Timeline. Wharton University of Pennsylvania, 2009.

49

Alex-Warren Rodriguez “The impacts of the global crisis downturn on employment levels in Vietnam: an elasticity approach.” UNDP, Hanoi, 1/2009

VASS, WB, OGB, AAV “Quick Survey of Global Financial-Economic Crisis on Enterprises and Employees in Thanh Hoa, Nghe An, Hai Phong, Ho Chi Minh, Binh Duong, Dong Nai, Vietnam.” Hanoi, April 2009.

Vo Hong Phuc, The impacts of global financial crisis on FDI and economic growth of Vietnam in the coming years, Communist ReviewDec.20.2008. (Vietnamese)Vu Quang Viet, Vietnam’s Economic Crisis: Policy Follies and the Role of state-owned conglomerates, Southeast Asian Affairs, 4/2009 p.389-417

Ivanic M. and W. Martin.(2008), Implications of Higher Global Food Prices for Poverty in Low-Income Countries, World Bank Policy Research Paper, No. WPC 4594.

Linh Vu and Paul Glewwe. (2008), Impacts of rising food prices on poverty and welfare in Vietnam. Department of Applied Economics, University of Minnesota. May 2008.

Tran Hai Huu. (2008), Paper presented at the Forum on October 2 2008 in Hanoi.

DFID (2008) Vietnam: MDGs head into murky water Vietnam Investment review October 13 2008.

UNDP (2008). Current Economic Crisis and the poor in Vietnam, Viet Nam News http://www.undp.org

World Bank. (2008) Taking Stock, An Update on Vietnam’s recent Economic Developments, Report presented at the CG-Meeting December 4-5 2008, Hanoi, Vietnam. Vu Quoc Huy (IDS), (2008). Giup do nguoi ngheo vuot qua bao gia (Assisting the poor overcoming the price storm). Report prepared for SDC, Hanoi 2008.

50

Oxfam and Actionaid, Vietnam (2008). Tac dong cua bien dong gia ca den doi song va sinh ke cua nguoi ngheo tai Viet Nam (Impacts of Prices Fluctuation on living conditions of the poor in Vietnam), Hanoi, November 2008.

UNICEF, MOCST and Vietnam Institute of Sociology, Report on the impact of economic downturn on international labor migrants and their families, Key findings of a quick assessment. Advanced copy June 2009.

51