Vietnamese Economy `Not in a Crisis,' ANZ Bank Executive Says

Thursday, June 19, 2008
Australia & New Zealand Banking Group Ltd. said Vietnam's economy isn't facing a crisis, with cash still flowing easily through the country's banking system and inflation likely to slow.

Morgan Stanley last month said the Vietnamese dong was heading for a ``currency crisis,'' citing a widening current- account deficit, and warned of the risk of a ``systemic banking crisis.''

Calyon, Credit Agricole SA's investment banking unit, said this month that the exchange rate for dong non-deliverable forwards points to a possible balance of payments crisis in Viet Nam. Citigroup Inc. said in a report this month that the risk of a banking crisis is the primary problem facing Viet Nam.

``It's very interesting to see international commentators, when there is a problem, using the word `crisis','' Alex Thursby, Asian-Pacific managing director for ANZ, told reporters yesterday in Ho Chi Minh City, without citing anyone by name.

``I don't think there's a crisis,'' Melbourne-based Thursby said. ``There's a requirement to bring inflation down and a focus on that, but the Vietnamese economy has many strengths, between domestic demand and continuing investment by organizations that want to export.''

Vietnam's inflation rate accelerated to 25.2% in May, the fastest since at least 1992. Exports rose 27% through May, according to preliminary figures from the General Statistics Office in Hanoi.

`Reasonable Shape'

Vietnam's economy ``is in reasonably good shape,'' buoyed by ``correct'' recent interest-rate increases by the country's central bank as a measure to control inflation and by ``strong'' foreign-exchange reserves, Thursby said. Dong and dollar liquidity in the banking system has been ``strong,'' he said.

``There may be pockets which are not quite as strong as other pockets, but generally the system is still relatively liquid and that all bodes very well for the future,'' he said. ``I don't get a feeling this is as bad as some people would like to suggest.''

While a ``herd mentality'' has led to a loss of confidence in the dong among some Vietnamese, the country's banking system is stable, said Dam Bich Thuy, ANZ's chief executive for Viet Nam.

``We see some people trying to get dollars, but then they still put their dollars back into the banks,'' Hanoi-based Thuy said. ``They don't take money out and put it under the mattress.''

ANZ has a 10% stake in Saigon Thuong Tin Commercial Joint-Stock Bank and a 12 percent stake in Saigon Securities Inc., and wants to further expand its branch network in Vietnam, Thursby said. The Australian lender has branches in Hanoi and Ho Chi Minh City and a representative office in the southern Mekong Delta city of Can Tho. (Bloomberg)