Vietnam's central bank asked to further cut interest rates
Deputy Prime Minister Le Minh Khai has requested the central bank to continue cutting interest rates to revive the country's slowing economy.
The central bank, or the State Bank of Vietnam (SBV), announced on Tuesday it will cut its refinance rate by another 50 basis points to 5%, effective from Thursday. The SBV will also cut the overnight electronic interbank rate to 5.5% from 6%, while keeping the key discount rate at 3.5%. This is the third policy rate cut so far this year, following those on March 15 and April 3.
However, Deputy PM Khai on Wednesday asked for further cuts. He requested the central bank to analyze factors related to providing credit to businesses, especially small- and medium-sized enterprises, thoroughly evaluate the capital absorption capacity of enterprises, and make relevant policy proposals for authorities to consider.
SBV Deputy Governor Dao Minh Tu said the central bank will continue to direct commercial banks to reduce operating costs aiming at further rate cuts and to continue debt restructuring for corporate clients.
According to Can Van Luc, chief economist at BIDV bank, Vietnam is likely to further lower interest rates as inflation pressure is falling and forex rates are stable.
As for this year’s second half, he said the central bank still has room to reduce policy interest rates but it needs to weigh inflation, the possibility that creditors will continue to reduce their lending rates, and the economy’s capital absorption capacity.
Like Luc, Tran Ngoc Bau, CEO of WiGroup, a Vietnamese provider of financial data and solutions, said the current policy rates are at 3.5-5.5%, and it is possible for the SBV to lower the range to 0.5-1% to support growth “if the economic conditions are too stressful”.
However, he noted that taking inflation and forex rates into consideration, the room remaining for new cuts is not that large. Money supplies in Vietnam are weak while interest rates across the world are high, Bau elaborated.
According to other analysts, lower policy rates will result in cuts in other rates to make capital cheaper, and therefore help businesses access credit amid the current credit crunch, which is seen as a major obstacle for the economy. This would also help residents increase spending, which in turn would help prop up the economy.
However, there is also a more pessimistic view, saying that both production and consumption are already on the decline. Therefore, residents would not have the need to borrow money from banks for spending while enterprises do not want loans for business production. Therefore, cutting interest rates will not have a clear impact if production and consumption do not recover.
Recently, domestic banks have reduced their deposit interest rates in line with the central bank’s instructions. However, loan interest rates remain high due to high demand for capital, rising interest rates on the global market, and credit institutions facing problems related to debt collection, according to the SBV.
Prolonged global slowdown together with the credit crunch and other problems in the Vietnamese slowing economy may hinder Vietnam’s 2023 GDP growth target of 6.5%.
- Read More
Major Vietnamese developer Novaland appoints new CEO
Duong Van Bac, who joined Novaland as chief financial officer in August 2023, has been appointed general director, starting Friday.
Companies - Sat, November 2, 2024 | 10:24 am GMT+7
Vietnamese conglomerate Bamboo Capital posts 36-fold profit growth in Q3
Ho Chi Minh City-based Bamboo Capital Group recorded an after-tax profit of VND331.2 billion ($13.1 million) in the third quarter of 2024, an astounding 36-fold expansion year-on-year.
Bamboo Capital - Sat, November 2, 2024 | 9:41 am GMT+7
ThaiBev to bag $54 mln from Sabeco’s upcoming dividend payout
Vietnam Beverage, wholly owned by Thai Beverage (ThaiBev) will rake in VND1,374 billion ($54.26 million) worth of dividend from Ho Chi Minh City-based top brewer Sabeco.
Companies - Sat, November 2, 2024 | 9:13 am GMT+7
Steel heavyweight Hoa Phat pours over $2 bln into central Vietnam complex
Leading Vietnamese steelmaker Hoa Phat had invested more than VND52.5 trillion ($2.08 billion) in its Dung Quat Iron and Steel Integrated Complex (Dung Quat 2) in the central province of Quang Ngai as of Q3/2024.
Industries - Sat, November 2, 2024 | 8:00 am GMT+7
Vietnam becomes Australia’s fastest-growing inbound market
The number of Vietnamese tourists to Australia has grown significantly after the Covid-19 pandemic, with nearly 178,000 reported in the 12 months to August 2024, according to a Friday press release by the Australian Minister for Trade and Tourism’s Office.
Southeast Asia - Fri, November 1, 2024 | 10:02 pm GMT+7
Study finds shift in Thai consumers’ spending patterns
Consumers in Thailand are shifting their spending focus to experiences and investments, according to the latest ASEAN Consumer Sentiment Study (ACSS) by United Overseas Bank (UOB).
Southeast Asia - Fri, November 1, 2024 | 10:00 pm GMT+7
Energy security, digitalization key to Indonesia's economic growth
The Indonesian government is prioritizing long-term economic growth through energy security, digitalization, and natural resource industrialization, according to Deputy Minister of Finance Thomas Djiwandono.
Southeast Asia - Fri, November 1, 2024 | 9:58 pm GMT+7
Vietnam PM's Middle East tour creates breakthroughs in economic, trade, investment cooperation: FM
Prime Minister Pham Minh Chinh’s freshly ended six-day trip to the UAE, Saudi Arabia and Qatar has produced important outcomes, demonstrating the growing relations between Vietnam and the three Middle-East countries, Deputy Prime Minister and Foreign Minister Bui Thanh Son told the Vietnam News Agency.
Politics - Fri, November 1, 2024 | 9:25 pm GMT+7
Vietnam, Qatar look to tap potential for energy, oil & gas collaboration
Vietnam and Qatar have recognized the significant potential for further collaboration in multiple sectors such as energy, oil and gas, especially LNG, agriculture, Halal industry, and banking.
Politics - Fri, November 1, 2024 | 9:02 pm GMT+7
Thailand bans export of raw palm oil until December
Thailand's Department of Internal Trade has temporarily banned the export of raw palm oil due to reduced production caused by drought and plant diseases.
Southeast Asia - Fri, November 1, 2024 | 8:31 pm GMT+7
Envision Energy to build $420 mln wind power plant in Vietnam from June 2025
Envision Energy Singapore Pte Ltd, under China-based Envision Energy, aims to kick off construction of the 300-MW Envision Nam Po wind power plant in Vietnam’s northern mountainous province of Dien Bien in June 2025.
Energy - Fri, November 1, 2024 | 8:30 pm GMT+7
Indonesia to ban plastic waste imports from 2025
The Indonesian government will start imposing a ban on the import of plastic waste from the beginning of next year, according to Minister of Environment Hanif Faisol Nurrofiq.
Southeast Asia - Fri, November 1, 2024 | 8:29 pm GMT+7
Islamic economy makes up 48% of Indonesia’s GDP
The contribution of Islamic business activities to Indonesia’s GDP has been estimated at 48%, local authorities reported at the 11th Indonesia Sharia Economic Festival (ISEF).
Southeast Asia - Fri, November 1, 2024 | 8:28 pm GMT+7
Restructured construction giant Tracodi gets set to execute ambitious plans
After changing its name and restructuring as a group, Tracodi Construction Holdings JSC (HoSE: TCD), a member of Bamboo Capital Group (HoSE: BCG), has completed a leadership shake-up and is poised to achieve rapid growth.
Bamboo Capital - Fri, November 1, 2024 | 4:43 pm GMT+7
Philippines requests companies to pay for plastic waste treatment
The Philippines expects its "Extended Producer Responsibility" (EPR) that came into force last year will help it curb plastic waste
Southeast Asia - Fri, November 1, 2024 | 4:30 pm GMT+7
Indonesia warns of rising online terrorism
Indonesia's National Counter-Terrorism Agency (BNPT) has warned of a shift in terrorism tactics, moving from public attacks to online platforms that target vulnerable groups, particularly women and children.
Southeast Asia - Fri, November 1, 2024 | 4:29 pm GMT+7