October 19, 2015.
Vietnamese leaders are expecting strong economic growth even though the government won’t be able to finish restructuring the nearly 300 state-owned companies that it had plan to finish by the end of 2015. The government forecasts that Vietnam’s GDP will increase by 6.7% next year, coming from a 6.5% increase this past year in 2015. Inflation this year is expected to be two percent, the lowest in 15 years, Prime Minister Nguyen Tan Dung said. This will add to the country’s expansion next year, which will be the fastest rate of growth in the past 9 years. With a hopeful outlook still, the government won’t let its issues of public debt and the failure to privatize its goal of 289 state companies this year get in the way. It plans to lower its budget deficit from its current 5% of GDP this year to 4.95% next year. Although the restructuring of state companies is slow, the budget deficit remains high, and public debt is rising, the government remains committed to privatizing state-owned companies. “After being privatized, companies have stronger financial capabilities, better corporate governance and are more efficient,” Dung said. “Financial reports of 2,400 companies one year after being privatized show their revenues increased by 34 percent and after-tax profit rose 99.9 percent.”
Louie Nguyen, CFA is the CIO of San Diego-based Soledad Investment Management. Soledad invests qualified clients’ assets in markets around the world, including Vietnam.