Friday, August 24, 2012

In Vietnam, Growing Fears of an Economic Meltdown

Construction crews got as far as the first floor of what was to be Saigon Residence, a high-end apartment building in the center of Ho Chi Minh City. All that remains today of the abandoned project are piles of moldy bricks, rusting steel rods and a small team of security guards who have transformed the cement foundation into a parking lot for motorcycles.
In Vietnam’s major cities, a once-booming property market has come crashing down. Hundreds of abandoned construction sites are the most obvious signs of a sickly economy.
A senior Vietnamese Communist Party official, speaking in the ornate drawing room of a French colonial building, compared the country’s economic problems to the market crash 15 years ago that flattened many economies in Asia.
“I can say this is the same as the crisis in Thailand in 1997,” said Hua Ngoc Thuan, the vice chairman of the People’s Committee of Ho Chi Minh City, the city’s top executive body. “Property investors pushed the prices so high. They bought for speculation — not for use.”
Vietnam’s economic problems appear less severe than those of the 1997 financial crisis — the economy is still growing, albeit relatively anemically, at a rate of about 4 percent — but the country’s list of problems continues to grow.
The arrest this week of Nguyen Duc Kien, one of Vietnam’s wealthiest businessmen, set off a 4.8 percent plunge in the country’s stock market index Tuesday, the biggest drop in four years. The charges against Mr. Kien are vague. The state news media said he was accused of illegal business activity. 

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