m Governor Nguyen Van Giau on Monday said the prime minister will this week announce a series of measures aimed at curbin

s whether Vietnam will tolerate the short-term pain of its tougher new policies or revert to aggressive, pro-growth policies—as it has in the past. In 2010, for example, policymakers attempted to contain inflation by raising interest rates and limiting credit growth, but when the situation appeared to improve in the middle of the year, they loosened credit growth again—and inflation began creeping up into double digits. Many economists also view Vietnam as an indicator of what other countries might face if they fail to effectively deal with rising prices at a time when the surging oil and food costs are rattling emerging-market investors.



While there appears to be little prospect in heavily policed Vietnam of the sort of regime-shaking protests that have hit Middle East, there is widespread concern on the streets of Hanoi about the latest round of price increases, and whether the government will be able to get a grip on inflation. Cars and the country's ubiquitous motorbikes queued up at gas stations in Hanoi and other cities Thursday, rushing to buy before 10 a.m., when fuel suppliers were allowed to raise gasoline prices 17.5% to 19,300 dong (92 U.S. cents) a liter and diesel prices 24% to 18,300 dong a liter. Those who missed the deadline were left to rue the cost. "I was too lazy to go fill up my tank last night, and now it's going to cost me 200,000 dong more," complained one driver, 39-year-old Hoang Hop. "I can't imagine prices could soar so high," said 54-year-old Duong Minh Hoang. "Now I'm worried my salary won't keep up with rising prices."



Vietnam's government subsidizes fuel and covers some costs for importers. The expense is mounting as global crude-oil prices rise amid the unrest in Libya, and because oil is priced in dollars, last week's currency devaluation compounds the problem. Electricity prices will rise 15% as of March 1, in hopes of making generating electricity profitable, and so attract foreign investment to build badly needed power plants. One key gauge of Vietnam's new policy direction, some analysts say, will be the dong. The currency has lost 20% of its value since mid-2008, and many ordinary Vietnamese speculate in gold or real estate to preserve their wealth while others seek out foreign currencies. "If people are comfortable using dong again and don't expend all their energy by speculating in nonproductive activities such as trading gold, then the government will know they are succeeding," said one Vietnam-based economist who declined to be identified.



Vietnam CPI Rises at Fastest Pace in Two Years

The Wall Street Journal 23 Febreuary 2011



Vietnam's consumer-price index rose at its fastest pace in two years in February, gaining 12% from the same month a year earlier, the government said Wednesday. The CPI data comes after State Bank of Vietnam Governor Nguyen Van Giau on Monday said the prime minister will this week announce a series of measures aimed at curbing inflation. Inflation is raising concerns among emerging economies, and Vietnam is one of the main trouble spots. Years of loo

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