Logo of Phnom Penh Post newspaper Phnom Penh Post - VN unready to do battle with inflation



VN unready to do battle with inflation

VN unready to do battle with inflation

KUALA LUMPUR - Heavy inflows of foreign funds into Vietnam and robust economic

growth have raised the specter of runaway inflation which the Vietnamese central

bank is ill-equipped to deal with, bankers said last week.

"Vietnam is

still a cash economy and you can't control a cash economy by using interest

rates. You have to physically drain the currency out of the system," said John

Brinsden, chief executive for Standard Chartered Bank in Vietnam and

Cambodia.

Speaking to delegates at a Pacific Economic Cooperation Council

(PECC) meeting in Kuala Lumpur, Brinsden said Hanoi in 1991 resorted to issuing

some three to seven tones of gold to soak up liquidity and managed to keep

interest rates stable.

Inflation in Vietnam fell to about 5.5 percent in

1993 and 17.2 percent in 1992 from 80 percent in 1990. It was about six percent

this year, Brinsden said.

Michael Ward, Principal Economist of the World

bank's Asia Department said the Bank was concerned that the Vietnamese economy

appeared to have all the right ingredients for an inflationary

spiral.

"There will be a large inflow of funds and expansion of the money

supply over which there will be very little control," Ward said during a

question and answer session.

Speaking to Reuters later, Brinsden said the

State Bank of Vietnam was not yet ready to shoulder the responsibilities of a

central bank.

"It is coming together now but it will take three to five

years before the state bank has the capability of imposing its will on the

banking system," Brinsden said.

He said the Vietnamese banking system

remained fragmented and currently lacked sufficient expertise and manpower to

deal with the problem. -Reuters

MOST VIEWED

  • Phnom Penh placed in two-week lockdown

    The government has decided to place Phnom Penh in lockdown for two weeks, effective April 14 midnight through April 28, as Cambodia continues to grapple with the ongoing community outbreak of Covid-19, which has seen no sign of subsiding. According to a directive signed by Prime Minister

  • Cambodia on the verge of national tragedy, WHO warns

    The World Health Organisation (WHO) in Cambodia warned that the country had reached another critical point amid a sudden, huge surge in community transmission cases and deaths. “We stand on the brink of a national tragedy because of Covid-19. Despite our best efforts, we are

  • Hun Sen: Stay where you are, or else

    Prime Minister Hun Sen warned that the two-week lockdown of Phnom Penh and adjacent Kandal provincial town Takmao could be extended if people are not cooperative by staying home. “Now let me make this clear: stay in your home, village, and district and remain where

  • Businesses in capital told to get travel permit amid lockdown through One Window Service

    The Phnom Penh Municipal Administration has issued guidelines on how to get travel permission for priority groups during the lockdown of Phnom Penh, directing private institutions to apply through the municipality's One Window Service and limit their staff to a mere two per cent. In

  • Vaccination open to foreigners in Cambodia

    The Ministry of Health on April 8 issued an announcement on Covid-19 vaccination for foreigners residing and working in Cambodia, directing the Ministry of Labour and Vocational Training and local authorities to register them. Health minister Mam Bun Heng, who is also head of the inter-ministerial

  • Ministry names types of business permitted amid lockdown

    The Ministry of Labour and Vocational Training singled out 11 types of business that are permitted to operate during the lockdown of Phnom Penh and Takmao town, which run through April 28. Those include (1) food-processing enterprises and slaughterhouses; (2) providers of public services such as firefighting, utility and