VN news (July 26)

[Dam Son <son@fermi.phys.washington.edu>]

Vietnamese party elder calls for equality with U.S. 
Bulgaria and Vietnam discuss military cooperation 
Vietnam new anti-drug chief outlines new strategy 
ASEAN ministers agree to launch regional award in Vietnam next
Vietnam-Religion: New Converts Turn to "Opiate of the Masses"
Solace campaign continues for Vietnam's heroic war martyr mothers
Worst unrest in years spreads to other northern Vietnam provinces
Independent Candidates Win Seats In Vietnam Election 
Vietnam VP Bank Says Two Shareholders Arrested 
Vietnam Trade Gap To July Stands At $1.77 Billion 
Vietnam Jan-Jul Industrial Production Up 13.8% Vs Yr Ago 
Vietnam annual inflation at 3.1 percent in July 
Vietnam plans massive telecoms upgrade 
Asian-Pacific Brief: State Bank of Vietnam 
Senior Vietnam Banker Says Overdue Debt Increasing 

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Vietnamese party elder calls for equality with U.S. 

07/26/97
Japan Economic Newswire

Hanoi, July 26 --

A former top leader of the Vietnamese Communist Party, Nguyen Van Linh,
has called for equality in relations between Vietnam and the United States,
a local newspaper reported Saturday.

"International relations among countries, major and small alike, in the
world must be equal," Linh said in an article in the Saigon Giai Phong,
a party paper published in Ho Chi Minh City.

Linh, who as party general secretary initiated in 1986 a policy of broadening
relations between Vietnam and capitalist countries, cited the accounting
for American soldiers listed as missing in action (MIA) during the Vietnam
War as a prominent case of inequality. He stepped down as the country's
top leader in 1991 and has since been working as an adviser to the party.

"The Vietnamese government...lets the U.S. comb any place where its troops
were stationed while Vietnamese war veterans have to join their efforts
in the search for the remains of their comrades in arm," Linh said.

The Vietnam War, which lasted form 1961 to 1975, took the lives of about
58,000 Americans and more than three million Vietnamese. The U.S. still
has more than 1,500 MIAs in Vietnam.

Linh also said the U.S. had not given any clear reply to Hanoi's request
for help for Vietnamese people who suffered from toxic chemicals sprayed
by U.S. forces.

"They promised to pay more than 3 billion dollars, and have for more
than 20 years now not paid a single cent but demand that we pay the debts
they provided to the Saigon government to fight against our people,"
Linh said.

The party official also said the U.S. brings more consumer goods than
technology and investment to Vietnam.

"The question is not to beg to the foreign capitalists, but to manage
and work out policies which are more beneficial to the domestic economy,"
Linh said.

"I hope that in the time to come, Vietnam will look for every measure
to make our international relations equal," the party adviser said.

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Bulgaria and Vietnam discuss military cooperation 

Sofia (dpa) - Bulgarian Defence Minister Georgi Ananiev and his Vietnamese
counterpart Doan Khue, emerging from talks in Sofia, Saturday said the
two sides seek closer military cooperation.

There are no plans to sign any agreements on bilateral defence cooperation
during this visit, however, Ananiev said.

Doan Khue started an official visit to Bulgaria on Saturday, accompanied
by a military delegation. He was scheduled to tour an arms technology
repair plant as well as the military university in the former capital,
Veliko Tarnovo, on Saturday.

Doan Khue, an army general, is to meet Prime Minister Ivan Kostov and
representatives of Bulgaria's defence industry on Monday.

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Vietnam new anti-drug chief outlines new strategy 

Hanoi (dpa) - Vietnam's new anti-drug chief says he plans to issue "incentives"
to encourage ordinary citizens to identify drug traffickers, according
to an official report.

Vu Hung Vuong, director of the interior ministry's newly established
Narcotics Department, also said his operation would be financed in part
through fines imposed on prosecuted drug dealers.

His remarks, the first made public since Vuong was appointed chief of
the department established in March, appeared in the latest edition of
Dai Doan Ket (solidarity), a newspaper of the Vietnam Fatherland Front,
a Communist Party mass organisation.

The new department was created to improve the government's anti-drug
activities which were previously spread across at least three other departments.

The reorganization was prompted by the exposure of the country's largest
ever drug ring, which was dominated by senior interior, police and customs
officials.

The Hanoi People's Court handed down eight death sentences and eight
life terms, among other long prison terms, during the trial of that case
in May, and subsequent appeals were rejected.

Earlier reports suggested that the new narcotics department was having
difficulty recruiting staff, who are expected to be subject to strong
internal scrutiny.

Vuong said his department is looking to recruit "experienced and qualified
soldiers who are well-qualified morally for the battle", according to
a translation appearing in Vietnam News Saturday.

He did not say how large the department would be or its expected budget
although a number of foreign governments - including Germany, Belgium
and the United States - are already providing relevant assistance.

Vuong said a lack of equipment - including a shortage of sniffer dogs
- was a "matter of great concern".

"The narcotics department has successfully detected some large scale
drug trafficking rings ... but this success has made the drug trade more
sophisticated," he added.

In recent years Vietnam has emerged as an important transit country for
opium and heroin moving from the nearby Golden Triangle area to Western
markets while domestic drug abuse has soared as well.

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ASEAN ministers agree to launch regional award in Vietnam next
year 

KUALA LUMPUR, July 25 (AFP) - Foreign ministers from the Association
of Southeast Asian Nations (ASEAN) agreed Friday to launch a new "ASEAN
Award" for individuals and organisations at next year's summit in Vietnam.

The new award will recognise "outstanding work and contribution towards
the promotion and development of regional cooperation aimed at sharing
prosperity through human development, technological competitiveness and
social cohesiveness," a joint statement said.

Bestowed every three years when ASEAN summits are usually held, the award
will carry a 20,000 dollar prize for individuals and a 200,000 dollar
research study or project grant for organisations, the statement said.

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Vietnam-Religion: New Converts Turn to "Opiate of the Masses"

HANOI, (Jul. 24) IPS - During the war years, it was unthinkable for a
Communist Party member to be seen inside a pagoda or a temple. Now, even
high-ranking cadres are willing to burn joss-sticks in pagodas.

In Communist Vietnam today, religion is no longer the "opiate of the
masses." Pagodas, temples, churches are once again filled with worshippers,
as religion makes a big comeback in this mainly Buddhist country.

The revival of religious life in Vietnam reflects overall normalization
of life in the post-war years, says Dang Nghiem Van, a professor who
is director of the Hanoi-based Institute of Religious Studies.

As standards of living have improved with economic reforms in the last
decade, the religious aspects of people's lives have also gotten a boost,
he observes.

The state began easing curbs on religious worship in the early 1990s,
when congregations were allowed to resume publishing religious books
and their top officials were allowed to travel overseas. In Ho Chi Minh
city, Catholic nuns now run free-tuition schools for the children of
poor families.

In 1993, the secretary-general of Vietnam's Communist Party, Do Muoi
made the unprecedented, conciliatory gesture of visiting the temples
of the country's major creeds. He visited the Tran Quoc pagoda in Hanoi,
the Phat Diem Cathedral that is Vietnam's oldest Catholic church, and
the Caodist Holy See in Tay Ninh, run by one of the country's many sects.

Despite official pronouncements to the contrary, religion had been discouraged
by Communist authorities until recently.

As a result Vietnam, a country with 77 million people, only has some
20,000 Buddhist monks -- or the same number as Laos which has 4.5 million
people. Vietnamese Buddhists estimate their following at 30 to 35 million,
although official estimates put it much lower at 10 million.

Though a large number of Vietnamese are Buddhist, there are also Catholics,
adherents to other traditional religions, and those belonging to the
Caodai and Hoa-Hao sects.

At present there are some 14,000 Mahayana Buddhist pagodas scattered
across Vietnam, most of them in the countryside. There is one pagoda
for an average 570 people in Hue province. In Ho Chi Minh, the ratio
is one for 1,379 people and in the capital city of Hanoi, one pagoda
for 6,500 people.

Vietnam has 20,000 Buddhist temples, 6,000 Roman Catholic churches and
700 Protestant churches.

But despite the relatively free exercise of religious rights by the Vietnamese,
the government continues to keep an eye on activities of major religions.

In April, authorities held a conference on religious issues for high-ranking
"cadres" in Lam Dong province, where participants were told about the
"peaceful evolution and attempts of hostile forces to misuse religion"
in Vietnam.

The officials said some members of major religions had been prosecuted
in Vietnam because of alleged illegal activities. "We do not insist that
religion as such is reactionary, but we are against the misuse of religion
by bad elements," an official said.

Of all religions in Vietnam, the state's distrust is probably most pronounced
in the case of Catholicism. Hanoi has kept the Catholic Church under
very tight regulations, limiting the number of seminarians and only gradually
returning to the church property that had been nationalized previously.

Likewise, negotiations between Hanoi and the Vatican over the appointment
of some archbishops have come to a standstill.

Only a few dozen priests have been ordained since the early 1990s. Hanoi's
insistence that it approve senior Church appointments has been a major
area of contention with the Vatican.

In southern Ho Chi Minh city, the country's biggest diocese, there has
been no functioning bishop for several years because of such a disagreement.

The country has 40 bishops for some 32 dioceses but most are in their
70s or even older because of the limit on the number of new priests,
a restriction gradually relaxed in recent years.

Meantime, the Catholic Church's flock is growing. Led by French Jesuits,
the Catholic Church has won more converts in Vietnam than anywhere else
in Asia except in the Philippines, which is more than 80 percent Catholic.

Today there are some seven million Catholics in Vietnam, about two-thirds
living in the southern region.

But authorities not only tolerate, but in some cases even encourage,
the observance of traditional festivals especially in northern Vietnam.

Hundreds of thousands of people take part in the festival of Perfume
Pagoda or Chua Huong, some 60 kms southwest of Hanoi. Surrounded by a
haze of incense, the faithful line up before the images, their hands
pressed together in devotion.

The most meaningful of these festivals is the annual celebration in the
memorial temple of Hung kings, the mythical progenitors of the Vietnamese
people. "The commemoration of the ancestors -- Hung kings -- is the holiday
of the people, of the nation," the Communist Party mouthpiece Nhan Dan
daily in April.

In recent years, a memorial temple on Nghia Linh mountain in Phu Tho
province, some 70 kms northwest of Hanoi, has been the focal point of
semi-official pilgrimage.

Dang Nghiem Van sees no conflict between this tradition and the country's
ideology, saying ancestor worship is "crucial to national identity."
In fact, Viet Khieu or overseas Vietnamese took soil from the Hung temple
and brought it to California in the United States to establish smaller
Hung temples there.

But there is another side to Vietnam's religious revival, one tinged
with concern about the material life.

In the temple of the Chua Kho cult, people pray for material wealth,
and offerings come in 100 U.S. dollar bills -- sometimes counterfeit.
The faithful spend more than three million dollars a year to perform
rituals in the Chua Kho pagoda.

But as Van says, these practices by the Chau Kho cult do not constitute
religious worship but mere superstition.

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Solace campaign continues for Vietnam's heroic war martyr mothers

Hanoi (dpa) - A voluntary donation campaign in Vietnam has helped build
more than 100,000 homes for bereaved mothers of "war martyrs" over
the last five years, said an official report Friday.

The donation drive has also raised roughly 36 million dollars in cash
contributions, that have been deposited in banks or other funds to help
tens of thousands of indigent women whose families made significant sacrifices
during the country's "national resistance wars" against the French
and the Americans.

The funds, which are handled by Vietnam's ubiquitous Commuist Party organizations,
are now benefiting more than six million people, accounting for about
nine per cent of the country's population, reported the official Vietnam
News.

The figures were released at a two-day conference hosted by the Party's
Fatherland Front, an umbrella organisation of various mass organisations
active in the campaign.

It was the first meeting if its kind since the campaign was launched
in 1992, the paper reported.

The front's president, Le Quang Dao, called for citizens to continue
contributing to help improve the lives of needy elederly who suffered
greatly as a result of the wars.

He said the campaign, which also aids wounded soldiers and recovers the
remains of fallen cadre, was part of " Vietnam's finest tradition of
remembering one's source and repaying one's debt," according to the
report.

Economic reforms, adopted ten years ago, have bring a new level of prosperity
to down-trodden Vietnam.

The country's ageing Comunist Party leaders have sought to use to the
new wealth to begin to repay the contry's debt to the millions of ordinary
citizens who sacrificed for the "revolution" but who have not yet benefited
much from the country's turn to the market.

Vietnam has recognized 39,780 "hero mothers" - defined as those who
lost two or more children killed in action, and now live without major
family breadwinners - but only 10,760 are still living, the report said.

Fully half of these heroic mothers live in a single province -central
Quang Nam province, scene of some of the 'American War's' most bloody
battles and fierce bombing.

Out of a population of 1.3 million, 53,800 families have had a at least
one family member killed in action; 20,000 others were wounded.

The houses built by the donations was valued at roughly 45 million dollars
- about 450 dollars per dwelling.

As in other countries' wars, Vietnam's peasants did most of the actual
fighting and suffered disproportionately casualities compared to the
more elite city dwellers.

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Worst unrest in years spreads to other northern Vietnam provinces

Hanoi (dpa) - Vietnamese security forces have detained hundreds of protesters
in northern Thai Binh province in an effort to quell the worst public
unrest in years, which is now spreading to other nearby provinces, reported
an overseas organisation with close links to the homeland on Friday.

Government administration has been paralyzed in at least two districts
in the province which lies roughly 80 kilometres south of Hanoi, the
Paris-based Free Vietnam Alliance reported.

The protests, which started in May and appeared to have continued at
least intermittmently until the present, were sparked by excessive taxation,
corruption and autocratic behavior of officials, say residents.

Residents were also protesting the state's compulsory labour contribution
scheme, according to the Alliance statement, which said the protests
had spread to nearby provinces, especially Thanh Hoa province.

In a number of areas the protest were still going on July 20, the date
of National Assembly elections and according to the alliance 52 communities
are now without the normal local government structures known here as
People's Comittes.

Thousands of residents have joined in the initially peaceful and orderly
demonstrations which later turned violent in clashes with police, residents
have reported.

"The Communist government publicly responded with a number of promises
to look into the grievances while quietly unleashing a brutal hunt for
leaders of the protest," said the statement from the Paris-based anti-communist
group.

The account provided by the alliance, which has good contacts through
the country, largely fits the sketchy accounts filtering out of the area
that still remains cut off for foreign journalists.

Among the party-controlled Vietnamese press there is a news black-out
on the events there.

After infiltrating the protesters police were able to arrest a number
of their leaders but when thousands of residents surrounded the Thai
Binh provincial People Committee's building in protest, the detained
were released, according to one account from a resident.

Pham The Duyet, a Politburo member and former party chief of Hanoi, was
recently dispatched to the area, where he is originally from, to investigate
the disturbances, said the alliance.

In its first formal statement of the unrest, Hanoi's foreign ministry
said Thursday that a number of low-level local officials had been discplined
and implicitly acknowledged that official corruption ignited the problems.

In the last few days some of those arrested have appeared on local TV
to read "confessions", reported the alliance, of the long-standing
communist practice, that was earlier reported here.

The statement provided numerous new details on the troubles but had nothing
to say about other local reports that some officials have been beaten
and their homes burned.

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Independent Candidates Win Seats In Vietnam Election 

By Faith Keenan
07/25/97

Hanoi (Dow Jones)--At least two independent candidates have won seats
in Vietnam's legislature, according to early results reported by a National
Assembly source.

The victories of businessman Phuong Huu Viet in Hanoi and surgeon Tran
Than Trai in Ho Chi Minh City mark the first time that candidates not
selected by the Communist Party or its affiliated organizations have
been elected to the country's most representative body.

"That's a complete breakthrough," says Carl Thayer, a Vietnam specialist
at the Australian Defense Force Academy in Canberra. "The election of
self-nominated candidates is unprecedented." It's a cautious breakthrough,
however. Just 11 so-called self-nominated candidates were among the pool
of 663 aspirants vying for 450 seats in the July 20 poll. The winners
take up their posts when the body meets on Sept. 20.

Although votes from some remote provinces are still being tallied, the
assembly source says that at least 55 of 112 non-party members who stood
for election have triumphed. That number, however, "could go higher."
That means that 12% of the new legislature will be non-communists.

In addition, women are expected to take more than 25% of the 450 seats.
They made up 30% of the 663 candidates who contested the July 20 poll.
Among them is Ngo Ba Thanh, a well-known lawyer who accused the party
of fixing the election when she lost her seat in the 1992 run-off. Then
she ran in Ho Chi Minh City against Prime Minister Vo Van Kiet and two
other candidates. This year she claimed victory in Hanoi.

Otherwise, results were predictable: All high-ranking government officials
won, and "only five or six" of the 141 candidates selected from the central
government lost, says the source. The National Assembly plans to release
official results Monday.

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Vietnam VP Bank Says Two Shareholders Arrested 

Hanoi, July 25 (AP, Dow Jones) -- Two shareholders of Vietnam's commercial
joint-stock bank of non-state enterprises (VP Bank) were arrested earlier
this month, a VP bank executive said Friday.

Nguyen Tien Long and Biu Kim Troung were charged with defaulting on loans
made by the bank, the executive said.

He said however that the operation of the bank is being strengthened
and that the state will closely oversee the bank's activities.

Earlier this month, the Vietnamese press reported that government inspectors
found 14 people who weren't shareholders in the bank had received dividend
payments from the bank.

The daily Vietnamese News reported Friday that in an interview VP Bank
General Director Huynh Buu Son said the bank's activities were unaffected
by the scandal and that deposits had risen by 297 billion dong so far
this year.

'With our own capital valued at 306 million Dong, I can say the ratio
of mobilized capital to owned capital here is quite satisfactory,' Son
said, adding that of the 550 million dong owed to the bank some 17% is
in overdue debts.

VP Bank has government permission allowing foreign capital to be invested
to up to 30% of equity. Two foreign funds have invested, one of which
is the Ho Chi Minh City-based Dragon Capital Ltd.

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Vietnam Trade Gap To July Stands At $1.77 Billion 

Hanoi (AP-Dow Jones)-- Vietnam's 1997 trade deficit widened by $350 million
in July to $1.77 billion, the government's General Statistics Office
said Friday.

Vietnam's full-year trade deficit in 1996 was $4.0 billion, or about
17% of gross domestic product, and the government has said it expects
a full-year 1997 deficit of $3.3 billion.

Exports so far this year stand at $4.86 billion, while imports are at
$6.63 billion.

The trade deficit has emerged as a major problem for Vietnam, with multilateral
agencies raising questions about its sustainability in the medium term
if left unaddressed.

The government has repeatedly said a sizeable trade deficit is typical
for a nation at Vietnam's stage of economic development.

As the figures were released before the end of the month, the GSO said
the figures are estimates only.

Among some selected items, cumulative 1997 results through the end of
July were:

(All figures are in metric tons, unless otherwise specified, and are
rounded.)

EXPORTS:

Crude Oil 5.56 Mln 
Coal1.90 Mln 
Rice2.29 Mln 
Coffee  245,000 
Garments  $650 Mln 
Marine Products $426 Mln 
Shoes  $552 Mln 

 IMPORTS:

Petroleum Products 3.7  Mln 
Steel560,000 
Fertilizer 750,800 
Black Cement  800,000 
Motorcycles194,300 (Units) 
Automobiles 11,335 (fully assembled and 
full kits)  

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Vietnam Jan-Jul Industrial Production Up 13.8% Vs Yr Ago 

Hanoi (AP-Dow Jones)-- Vietnam's industrial production increased 13.8%
in the first seven months of 1997 compared with the year-earlier period,
according to preliminary data from the General Statistics Office released
Friday.

The total value of industrial production in July was estimated to be
10.87 trillion dong, in 1994 fixed prices. Production in July alone is
estimated to have increased 14.1% from the year-earlier month.

The value of industrial production in the first seven months is estimated
at 73.31 trillion dong.

In the January-July period 1997, industrial production in the state sector
is estimated to total 36.02 trillion dong, up 10.8% from the year-earlier
period.

Production in the non-state sector is estimated to total 17.33 trillion
dong, up 10.4% from Jan-July 1996.

Production from the foreign-investment sector, which is regarded as a
separate category from the state and non-state sectors, is expected to
total 19.95 trillion dong, up 23.2% from the year seven-month period.

 (On Friday, July 25, the State Bank of Vietnam set the dollar/dong rate
at 11,129 dong to the U.S. dollar.)

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Vietnam annual inflation at 3.1 percent in July 

Hanoi, July 25 (AFP) - Vietnam recorded year-on-year inflation of just
3.1 percent in the month to July 25, due to lower food and construction
prices, according to official figures released Friday.

Prices for the month ending July 25 rose just 0.2 percent amid signs
that the economy is cooling down, reflection a slump in industrial and
consumer demand.

Food prices, the largest component in a basket of consumer and industrial
goods used to compute price changes, fell 0.1 percent during the month,
and have dropped 1.7 percent since the beginning of the year thanks to
softer rice prices.

Rice prices have fallen 3.6 percent during the past 12 months, according
to the General Department of Statistics.

But the price for unprocessed rice paid to farmers has fallen further.
Some 80 percent of Vietnam's population depends on rice for a livelihood.

Vietnam has managed to maintain single digit inflation for more than
one year while managing growth rates officially reported in excess of
nine percent.

However, there are widespread signs that the economy is cooling down,
as evidenced by widespread stockpiling of cement, steel, paper and bicycles.

"There is a general feeling among people that growth in the first six
months was not nine percent," said one international economist referring
to official figures for growth of gross domestic product.

Inflation is at its lowest level in Vietnam since the country launched
its economic reforms in the mid-1980s.

Construction materials prices have increased just 0.2 percent during
the past 12 months.

In contrast, fuels have been the only major commodity to see double digit
inflation over the past 12 months, up 20.3 percent due to large fuel
price and tax increases last November. All processed oil products are
imported.

Ho Chi Minh City, the economic powerhouse of Vietnam, has seen prices
rise 3.4 percent from year earlier levels, just slightly higher than
the national average.

Prices in Hanoi fell slightly over the previous month, dropping 0.4 percent
from May, and rising just 2.3 percent over a year ago.

Inflation in Vietnam has fallen from 67 percent in 1991 to 17.5 percent
in 1992, 5.2 percent in 1993, 14.4 percent in 1994, 12.7 percent in 1995
and just 4.5 percent last year.

The dong has slipped 5.0 percent against the dollar in the past 12 months
according to the official exchange rate, but is unchanged since June.

Vietnam releases its inflation figures around the 25th of the month rather
than waiting until the end of the month.

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Vietnam plans massive telecoms upgrade 

Exchange Telecommunications Newsletter

The Vietnam Post and Telecommunications Department (VNPT) has released
plans to invest VND7.7 trillion ($A1 billion) during 1998, an increase
of nine percent over 1997, to upgrade facilities and expand services,
increasing earnings to VND12 trillion ($A1.3b).

1998 targets include the installation of 750,000 telephones, which would
raise Vietnam's teledensity to 3.4 telephones per 100 people. The number
of communes with access to telephone lines will be increased to 6,877
from 6,551 in 1997, and post offices to 3,100 from 2,900.

Priorities will be given to business cooperation contracts signed with
Australian, Japanese, French and British companies that will develop
local telecommunication networks, build a local satellite information
network, upgrade existing earth satellite stations, and participate in
the installation of an international optical fibre cable system linking
Vietnam with China, Thailand, Laos, Malaysia and Singapore. VNPT recorded
revenue of VND4,000 billion ($US500M) in the first six months of 1997,
an increase of 28 percent over 1996. During the same period, 240,000
telephones were installed, bringing the country's total number to 1.5
million. Another 500,000 telephones will be added in the second half
of the year, raising teledensity to 2.4 telephones per 100 people.

Vietnam currently has around 85,000 mobile telephone subscribers on its
two national networks, VMS and Vinaphone. VMS, a joint venture between
Sweden's Convik International and the VNPT, has around 70,000 subscribers,
with coverage in 32 provinces and cities.

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Asian-Pacific Brief: State Bank of Vietnam 

The Asian Wall Street Journal

The State Bank of Vietnam has offered to compensate for the interest-rate
differential when commercial banks convert some of their short-term loans
into medium- and long-term loans, the Saigon Times Daily reported Thursday.

The move appears to be a follow-up bid to meet central-bank lending targets
introduced several months ago.

At that time, the State Bank told Vietnam's commercial banks to step
up the pace of lending longer-term loans this year. The central bank
set a goal of 30% medium- and long-term loans in banks' total lending
portfolios. Banks currently make about 17% of their lending as longer-term
loans.

Market observers say that the central bank is attempting to reduce the
risk of defaults within Vietnam's unsteady banking system if banks' loan
portfolios show lending spread out over a number of maturities. But banks
have relatively few long-term deposits with which to finance longer term
loans. (AP-Dow Jones)

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Senior Vietnam Banker Says Overdue Debt Increasing 

HANOI, July 25 (Reuter) - A senior central bank official warned in an
interview published on Friday of growing monetary problems linked to
a slowdown in Vietnam's economy, and said levels of overdue debt were
increasing.

Deputy State Bank Governor Le Thi Ngot told the Saigon Giai Phong newspaper
that the capital mobilisation rate, or the rate at which money enters
the banking system, had fallen sharply in the first half of this year
to nine percent from nearly 16 percent a year ago.

She said growth in lending had also slowed to seven percent against projections
of 20 percent for the whole of 1997, and added that while some improvement
had been seen in the quality of credit, there was also an increasing
trend of debt becoming overdue.

"These results show that the economy is facing real difficulties, and
this has a strong impact on the banking field," she was quoted as saying.

Ngot added that slowing rates of business activity and production, coupled
with falling inflation levels and slow capital circulation, had contributed
to problems for domestic industry in making use of credit.

"In other words, enterprises do not have the ability to borrow or repay,
resulting in growth of outstanding debt," she said. "(The situation)
acts as a brake on the development speed of the economy and will have
a bad impact on the banking field itself."

Ngot's frank assessment follows signs of growing problems in Vietnam's
banking system, which has been rocked in recent months by a series of
debt scandals involving several major firms.

Central bankers were forced to defend the reputation of the industry
recently following news that some banks were delaying repayment on deferred
letters of credit issued on behalf of two companies whose top executives
were arrested in March on fraud charges.

Ngot referred obliquely to the problem by saying that some of Vietnam's
regulations on credit "were not suitable for reality".

She also called for reform of the banking sector, including the establishment
of reserve funds to protect deposits and closer supervision of inflation
and exchange rates with a view to keeping both stable.

Vietnam's booming economy has continued to register impressive fundamentals,
but a series of problems over the past year with budgetary management,
trade and in the banking sector has caused concern about its underlying
health.

Government data released on Thursday showed inflation at a year-on-year
rate of 3.1 percent, a reduced trade deficit of $1.77 billion in the
first seven month resulting from a slowdown in imports, and industrial
production at 14.1 percent.

But a further breakdown of the industrial production figures showed growth
in the non-state and state sectors at less than half the rate of that
in the foreign-invested sector.

Economists say the rate of inflation is also below the healthy norm for
an emerging economy where growth targets for this year and next have
been set at around nine percent.

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