Gov't acknowledges "shortcomings' in managing top shipbuilder

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Prime Minister Nguyen Tan Dung and other leaders acknowledge "shortcomings" in managing the nation's top shipbuilding company, Deputy Prime Minister Nguyen Sinh Hung said.

They had shortcomings and weaknesses but have conducted serious self-criticisms and drew lessons from those experiences, Hung said in a speech to the National Assembly, Vietnam's legislature, on Monday (March 21).

The (Party's elite) Politburo felt the mistakes weren't serious enough to warrant any disciplinary action, he told lawmakers in the assembly.

The government said in August Vietnam Shipbuilding Industry Group, or Vinashin, was facing the risk of going into bankruptcy, after it began an investigation into the company's financial difficulties the previous month.

The country's largest shipbuilder missed a December payment on a US$600 million loan from foreign investors and asked lenders for a one-year extension, chairman Nguyen Ngoc Su said last month. The company's debt totals $4.1 billion.

Vietnam is aiming to cap the growth in money supply in 2011 at 15 percent to 16 percent, Hung said in his speech at the National Assembly on Monday.

The nation faces economic risks from rising global inflation and higher food and commodity costs, he said. Consumer prices rose 2.17 percent in March from February, the General Statistics Office said.

Prime Minister Nguyen Tan Dung last month unveiled plans to tame the fastest inflation in two years by ordering a tight monetary and fiscal policy.

"Together with inflation, high interest rates, unstable exchange rates and continuing volatile gold prices have greatly impacted economic growth and production, causing instability in the macro-economy and people's lives," Hung said.

Economic growth

Vietnam's growth may slow to about 5.5 percent in the three months through March from a year earlier, Hung said. The economy grew 5.84 percent in the same period in 2010, according to data from the General Statistics Office.

Authorities have directed commercial banks to keep growth in credit to below 20 percent this year, with the proportion lent to the non-production sectors particularly restrained.

State spending is to be cut by 10 percent, and the budget deficit reduced to below 5 percent. And in a bid to reduce traditional reliance on gold, the government is planning to ban unofficial trade in gold bars and has proposed hefty new fines for black market foreign exchange trading.

"I think the government's now sending a much more clear message about giving stability a higher priority compared to growth," said Vu Thanh Tu Anh, research director of the Fulbright Economics Teaching Program in Ho Chi Minh City.

Benedict Bingham, country representative for the International Monetary Fund, welcomed the measures, which he said are seen as "a fairly decisive shift," with growth now seemingly "subordinated to a focus on macro-stability."

He said the key would now be convincing foreign exchange markets which include Vietnamese residents who hold dollars that the policy would be implemented in a decisive and sustained way.

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