2013 was an impressive year for the Vietnamese economy. Inflation was controlled and there were signs of recovery despite low economic growth. The General Statistics Office reported that, although GDP increased only 5.42%, the consumer price index was just 6.04%, the lowest rate in the past decade. This success was mainly due to the government’s macro-economic policies, especially its monetary policy. Doctor Tran Du Lich, a member of the National Financial and Monetary Policy Advisory Council, says:

“The biggest contribution of the monetary policy was to control inflation. While the CPI was more than 18% in 2011, it dropped to 6.81% in 2012. That level was maintained last year. But the most important thing was that inflation is no longer a stampeding horse. The second success was stabilizing the exchange rate between the Vietnamese dong and foreign currencies while increasing the foreign currency reserves. The third was to cut the interest rate, which has been a difficult task for Vietnam for a long time.”

A key achievement of Vietnam’s banking sector for the year was to drop the lending interest rate – a move that strongly influenced the domestic business community and contributed to the national economic recovery. Statistics by the banking sector show that the average annual lending rate is now 10%, less than half of the 22% seen two years ago. The current rate matches 2005, when Vietnam was experiencing stable economic development. Economist Vu Dinh Anh comments:

“In the past year, we successfully reduced both lending and deposit interest rates to match Vietnam’s macro-economic conditions and the capacity of enterprises to adapt to these conditions. The question now is how to use the capital efficiently in the current contest of low investment and consumer demands.”

The decline in interest rates have helped businesses recover their production and trading. Nguyen Duc Tuyen, President of the Hanoi-based Cau Giay Trading Company, says:

“For retailers like us, purchasing power remains low. However, short-term loan packages have helped us maintain our production, trading, and inventories.”

In 2013, the State Bank of Vietnam stabilized the domestic gold market by asking credit institutions to gradually reduce capital lending in gold to wipe out gold-related risks and end the goldalization.

2013 also saw preliminary success in the restructuring of the banking sector, particularly commercial banks. Vietnam consolidated credit institutions via mergers or dissolutions. It also completed the equitization of 4 state-owned commercial banks. By the end of last year, the Vietnam Asset Management Company had purchased more than 1.6 billion USD worth of bad debts.