|The industries that weakened first in the economic crisis were the one that would recover the quickest. They included the footwear, garment, and electronics industries amongst others.— Photo vietstock
HCM CITY (VNS)— Businesses should take advantage of the current good acquisition opportunities as they won't be available in 50 years' time, according to Le Xuan Nghia, head of the Business Development Institute.
Nghia told participants at Friday's seminar on Viet Nam's economy in 2014, organised by the Vietnam Economic Times in HCM City, that the industries that weakened first in the economic crisis were the one that would recover the quickest. They included the footwear, garment, and electronics industries amongst others.
"Building materials will also be among the industries quick to recover, though it has to cope with strong competition from outside," he said, citing Chinese building materials which have established themselves as being of good quality unlike other Chinese consumer goods.
He noted the state was focusing on the equitisation of the telecommunications sector and that sector was proving attractive in the international mergers and acquisitions market.
The service sector that was not seriously weakened in the crisis is also likely to recover relatively rapidly, according to the economist.
With regards to economic challenges, Nghia revealed that the Prime Minister required drastic measures to be taken in handling bad debt problems, restructuring commercial banks and in the worst cases, accept bankruptcy.
Equitisation and restructuring of State-owned enterprises [as a set plan] will help secure confidence from foreign investors, according to Nghia. The PM has approved a list of those to under-go the process [equitising and restructuring] in 2014-15.
He however noted, that the process would take time, especially business evaluation, which would require the involvement of major foreign firms if it was for a large corporation.
On the restoration of the real estate market, Nghia said the State could only support in terms of policy and could not help financially.
He mentioned that the State Bank and Ministry of Construction were required to adjust procedures relating to the VND30 trillion (US$1.43 billion) programme to provide loans to property developers and low-income end-buyers, at soft interest rates.
The terms of the loans were expected to lengthen and interest rates to decrease, he said.
A new credit package of VND70 trillion ($3.33 billion) had been proposed to the Government.
"The amount will support important infrastructure development," said Nghia. He added that even street houses that are too small and in need of upgrading would likely to be included in the new programme.
Meanwhile, Marc Townsend, managing director for the real estate services firm CBRE Vietnam, anticipated that the middle level apartment transactions would increase perhaps at higher rate this year, than those for the affordable units, thanks to the rising middle class.
The recent entries of Starbucks and McDonald's in Viet Nam as well as the official allowance of 100 per cent foreign owned companies in the restaurant and cafe business in 2015, as set out when joining WTO, would encourage more foreign firms to explore this retail market.
Speakers at the seminar agreed that though challenges remained for the country's economy, there were encouraging factors.
Economist Tran Du Lich cited these as being the determination of the government not to allow inflation to rise again, the end of high lending interest rates of more than 20 per cent, and stability of the foreign exchange rate, increased export and remittance, and the positive foreign direct investment.
On his part, Sandeep Mahajan, Chief Economist for World Bank Vietnam stated that the country had achieved significant progress in the integration into the world's economy but it would need to make more focus on improving its competitiveness. — VNS