Ho Chi Minh City International University Critical Thinking

VIETNAM ECONOMY IN US FINANCIAL CRISIS

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Vietnam economy in US financial crisis

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Contents Part A: INTRODUCTION TO US FINANCIAL CRISIS

1. Background 2. Causes 3. Evolution 4. Consequences 5. Solutions

Part B: VIETNAM ECONOMY IN US FINANCIAL CRISIS 1. The influence of US financial crisis on economy of Vietnam 2. Solutions of Vietnam Government 3. Preventing the influence of US financial crisis from happening again in the future

Vietnam economy in US financial crisis

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PART A: INTRODUCTION TO US FINANCIAL CRISIS

1. BACKGROUND:

The financial crisis of 2007 to the present is a crisis triggered by a liquidity shortfall in the United States banking system caused by the overvaluation of assets. It has resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of USD, substantial financial commitments incurred by governments, and a significant decline in economic activity. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 20102011 periods.

2. CAUSES:

a) Securitization (sub-cause):

The product securitized first appeared in the 1970s and thrive in an environment of monetary policy was loosened in 2001. Securitization and the released product of this process as securities guaranteed by collateral (MBS), paper debt secured by assets (CDO) and the like is a great invention of the financial instruments. However, due to at least four types of economic entities related to securitized (instead of the two types of the world economy as mortgages - borrowers and credit institutions to borrow - as mortgagee transactions Traditional credit), because the

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appearance of insurance for securitized products such as swap contracts credit losses (CDS). Since the birth of institutions such as special-purpose institutions (SPV) and the structure of investment instruments (SIV) to purchase MBS, and CDO, so existing systems risks, including risks ethics and Adverse selection. While which model of financial supervision of the United States before the crisis is not enough capacity to monitor the risks. The systemic risk existed and when the incident to bubble market assets occurs, these risks will make tremendous distrust of the parties involved. In addition, the practice of inter-bank lending will cause credit losses spread throughout the banking system; a bankrupt bank would entail many other banks out of business. Moreover, losing trust in the depositors cause withdrawal of deposits mutations also make the situation more serious and more rapid. Indeed, the housing market began to adjust in 2005 led to housing prices and lower asset quality guarantee for the MBS and CDO down. Systemic risks have made the housing credit crisis erupted in the secondary in May 2006 when many issuers MBS and CDO as well as some financial institutions that the asset portfolio of their many MBS and CDO collapse. Next, the financial crisis erupted in August 2007 when both the SPV and SIV turn also collapses, and then developed into a global financial crisis since May 9, 2008 when the entire giant financial institutions giant like Lehman Brothers collapse.

b) Housing bubble (main cause):

After the Dot-com bubble broke in 2001 and the

economic slowdown evident after September 11 events, the Federal Reserve United States has made monetary measures country's to rescue the from 4

economy

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recession, that lower interest rate for overnight interbank loans. Only a short time from May 2001 to December 2002, the interbank interest rates drive down 11 from 6.5% to 1.75%. Secondary credit interest rate reduction as well. This stimulates the development of the real estate sector and construction industry as a driving force for economic growth. In the easy credit environment, the financial institutions tend to lend risky, even for illegal immigrants borrowing. Consequently, lending and borrowing massively in order to lead to formation of speculative housing bubble. In 2005, up to 28% of the purchase is for speculative purposes and not just to buy 12%. In this, this housing bubble to develop the maximum level and broken. From fourth quarter 2005 to first quarter of 2006, the median value of home prices decreased 3.3%. At that time, the total value of credits accumulated in the secondary up to 600 billion dollars.

After the housing bubble burst, these individuals have difficulty in repayment. Many organizations credit home loan

difficult because creditors cannot recover. Housing prices plummeted causing all kinds of paper debt secured by assets such as: CDO or MBS by the financial issue was a serious discount. As a result the balance of the assets of these institutions to deteriorate and their credit ratings are the rating agencies reviews lag. The credit crisis erupted in the secondary.

3. EVOLUTION:

August 2007, a number of credit institutions of America as New Century Financial Corporation must apply for bankruptcy. Others have fallen into the state shares its strong devaluation as Countrywide Financial Corporation. Many people send money in the credit institution has to fear and withdraw money, causing the phenomenon of sudden withdrawal of deposits made to these organizations more difficult. The risk ratio may increase establishment. 5

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Financial crisis broke out officially true. From the US, this disorder spreads to other countries all the around the world. In the UK, bank Northern Rock shaken because depositors queued to withdraw their deposits. Under these circumstances, the United States Federal Reserve has been taking measures to increase the level of liquidity of credit markets such as the implementation of open-market purchase on the type of US government bonds, agency bonds US government and government agency bonds guaranteed by the US housing credit. September 2007, the Federal Reserve cut interest rates also conducted for overnight interbank loans (Fed fund rates) from 5.25% to 4.75%. Meanwhile, the European Central Bank has pumped 205 billion USD in the credit markets to raise liquidity. December 2007, the crisis aggravated stepped forward to when the reports last year showed that the economic adjustment of the real estate market place longer than expected and also the scale of the broader crisis plan. Bad Credit hunger became apparent. Federal Reserve System tried to decrease the interbank interest rates in December 2007 and February 2008, but not as effective as expected. March 2008, Federal Reserve

Bank of New York tried to rescue Bear Sterns, but not well. The company agreed to JP Morgan Chase bought for 10USD a share that is much lower with a share price of 130.2USD at the most expensive erupted. before The the crisis Reserve

Federal

Bank of New York famous rescue Bear Sterns and not forced to sell this company was made with cheap price for the concern about the capacity of government intervention aid financial institutions meet difficult. The collapse of Bear Stern has pushed up ladder crisis more severe. 6

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August 2008, in turn Lehman Brothers, a financial institution into the largest and oldest in the US, went bankrupt. Lehman Following are some other companies.

September 2008, the United States Senate passed Economic Stabilization Act of 2008 Emergency Minister of Finance for expenditure to 700 billion USD financial rescue of the country by buying back the bad loans of banks goods, especially securities secured by real estate.

4. CONSEQUENCES:

a) For the US:

This crisis is the main cause for the US economy fell into recession from December 2007. The National Bureau of Economic Research (NBER) predicts this will be the most severe recessions in the United States since the World War II. Average per month from January to September 2008, has 84 thousands of laborers lost their jobs the US.

Numerous financial institutions, including the giant financial institution are bankrupt and have long pushed the US economy into the state of a credit starvation. In turn, re-credit hunger affect regional production making enterprises must reduce production, firing workers, cutting contracts entered input. Unemployment increases affect consumption pole to income and hence to consumption of households do for businesses selling hard goods. Many businesses were bankrupt or in danger of bankruptcy, in which all three automobile manufacturers in the US such as: General Motor, Ford Motor and Chrysler LLC. Leaders of three carmakers have instigation of Congress relief, but without success. On December 12, 2008, General Motor 7

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had announced the temporary closure of its 20 plants in North America. Reduce consumption leads to the general price level of the economy decreased continuously; pushing the US economy may be subject to the risk of deflation. The crisis also made the USD to appreciate. Due to USD liquidity is most popular in the world today, should global investors bought dollars to improve its liquidity, the USD pushing up prices. This makes US exports of damage.

b) For the world:

The United States is an important import market of many countries, so that when the economic downturn, exports of many countries affected, especially those countries towards exports in East Asia. Some in this economy as Japan, Taiwan, Singapore and Hong Kong into recession. The other economies are slowing growth.

Europe which has close economic ties with the United States seriously affected both the financial and economic. Many financial institutions went bankrupt here to become the financial crises in some countries like Iceland, Russia. The largest economic sector is Germany and Italy fell into recession, and Britain, France, Spain with decreased growth. The official euro area fell into the first recession since its founding.

The economy in Latin America has close ties with the US economy, should also be

affected negatively when the short-term capital flows to

withdraw from the region and as oil prices slump.

Ecuadorian forwards to the brink of a debt crisis. The regional economic slowdown in the world demand for oil led to reduced production and consumption as well 8

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as lower oil prices. This in turn makes the oil exporting countries affected. Also, because of fears of instability occurs has food for speculation broke out, contribute to rising food prices during late 2007 to early 2008, creating a crisis of global food prices. Many stock markets round the world faced a serious devaluation of securities. Investors moved their portfolios into the stronger currency as the USD, Japanese yen; Swiss franc has made money for this going up against many other currencies, causing difficulties for US exports, Japan, Switzerland and the disruption of currency in some countries to force them to apply for assistance by the International Monetary Fund (IMF). South Korea fell into a currency crisis when the won depreciated continuously beginning in 2008. 5. Solutions: Economic stimulus The U.S. Federal Reserve has done steps to expand money supplies to avoid the risk of a deflation. The U.S executed two stimulus packages, totaling nearly $1 trillion during 2008 and 2009. On 13 February 2008, President Bush signed into law a $168 billion economic stimulus package, mainly taking the form of income tax rebate directly to taxpayers. On 17 February 2009, U.S. President Barack Obama signed the American Recovery and Reinvestment Act of 2009, a $787 billion stimulus package with an encouragement of spending and tax cuts. Over $75 billion of which was specifically allocated to programs which help struggling homeowners. Beside U.S, China was one of the first countries to act, with a stimulus package of nearly $586 billion. Euro zone package of 750 billion. On November 1415, 2008, in Washington, D.C., United States. It achieved general agreement amongst the G-20 on how to cooperate in key areas so as to strengthen economic growth, deal with the financial crisis, and lays the foundation for reform to avoid similar crises in the future. The five key objectives the leaders agreed were: 9 also decided on a mutual financial aid

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Reached a common understanding of the root causes of the global crisis Reviewed actions countries had taken and would take in the future to address the immediate crisis and strengthen growth Agreed on common principles for reforming their financial markets Launched an action plan to implement those principles and asked ministers to develop further specific recommendations that would be reviewed by leaders at a subsequent summit Reaffirmed their commitment to free market principles. Leaders of the G-20 gather on April 2 in London for their second summit. As the world combats a great recession, the leaders addressed how to help stabilize financial markets and re-start economic growth, reform the global financial system, and aid developing and emerging economies

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Part B: VIETNAM ECONOMY IN US FINANCIAL CRISIS

1. The influence of US financial crisis on economy of Vietnam: How does the financial crisis in the U.S. influence to Vietnam? It depends on the economic relationship between the two countries. Remains the most investment, today, US is one of the largest investors in Vietnam. Other projects from the U.S. into Vietnam in large part the early stages and focus on long-term infrastructure. In contrast, short-term relationship, we export to the U.S. more. On trade, the U.S. is currently the largest export market of Vietnam; its about 23-25%. However, in relationship between the two financial and banking systems, its almost negligible. But, in a globalized world today, this crisis has created significant impact on the macro economy of Vietnam in many different aspects, leaving many problems for us to solve.

a) Export: First, the financial crisis makes export market shrinking due to strong import demand and liquidity in key markets is declining. This effect directly on production and export of Vietnam, especially for certain Main export partners Export goods Exports $63.73 billion (2008 est.) Crude oil, marine products, rice, coffee, rubber, tea, garments, shoes, pepper. US, EU, Japan, Australia, China, Singapore ...

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sectors such as export value of textile and garment, footwear, plastic, etc...

Second, commodity price reduction on a global scale makes the advantage of Vietnam's export price in 2008 is no longer as in 2009. Exports of

agricultural, forestry, aquaculture and mineral are difficult due to falling prices.

Third, the number of anti-dumping and anti-subsidy increase when import countries interest more in regaining the market for domestic enterprises during financial crisis. On the other hand, the import demand on world markets lower the competitive pressure from other Asian countries continue to rise, especially for agricultural products, aquatic products, textile footwear, electrical goods, ... makes exporters more difficult to find customers, contracts.

In terms of export structure: Group of agricultural products, aquatic products is not affected by the market because these are the essential goods daily so reducing demand is not significant. However, the difficulty of this category is the export price lower than in 2008. Export turnover in the first 7 months in 2009 is estimated at $7.13 billion, down 8.2% over the same period in 2008.

Categories of processing, industry and handicrafts are predicted to be affected much from the crisis as the demand of these commodities will decrease. Indeed, in the early months of the year, exports of textiles and garments, footwear, furniture is difficult due to market shrunk. However, in May and June of 2009, there were some signs of recovery. Export turnover in first-7 years in 2009 reached $20.2 billion, down 4.7% over the same period in 2008.

Commodity group of fuel, mineral is not affected by the market share but affected by the market prices. Export turnover of this group reached nearly $ 5 billion, down 40.1% equivalent to $3.35 billion, which decreased $4.83 billion by 12

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reducing

price

and

increased

$1.48

billion

by

increasing

amount.

b) The stock market and capital flows: Vietnam's stock market has not entered into the system world stock markets so there is just relatively small impact. Fearing that most foreign investors will withdraw capital when their capital shrinking. Meanwhile, a non-small amount of dollars will go out of Vietnam. Although the capital of foreign investors on Vietnam's stock market is not much, only about 20% of the capital, but if they withdraw they will massively affect the stock market immediately to Vietnam. This will affect foreign exchange reserves and prices on the stock market. Many studies have shown that, in the process of financial market fluctuations in one or many developed countries, the global stock markets have linked levels much larger than the period of stability and Vietnam is no exception to that rule. The concern for Vietnam's stock market is the move of selling is more than buying of foreign investors. This total amount withdrawn from the market by selling stocks and bonds from early October 2008 is 932 billion VND and about 11,000 billion VND for bonds since early August, contribute significantly to the a decline in the market. Besides, foreign direct investment (FDI) in Vietnam is also affected because FDI in Vietnam mostly are loans, not equity, so if the investor does not settle the loan disbursement, the loan disbursement will be difficult to implement. With financial crisis spreading worldwide today, we can say most US and European companies will reduce direct investment abroad, so the attraction of FDI in these two markets in Vietnam are significantly affected. Moreover, the cost of mobilizing global capital can be increased because the increasing Credit 13

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margin leads to the limitation of investment, and reducing consumption can lead to reducing FDI disbursement. Most countries are now facing with economic growth slow or negative. Vietnam also cannot escape these problems and inflation is still a potential problem affecting the economic development of Vietnam in 2009. In addition, deposits of foreign banks and domestic banks will be reduced due to monetary easing in many countries to avoid falling into deep recession, foreign exchange flows will be reduced and many economic activities will be in difficulty.

c) Economic growth and the unemployment:

According to the report of the organization the International Monetary Fund (IMF) in 2009, world GDP growth is 0.5%, while the developing countries are about 3.3%. The situation continues much more bleak, unemployment rising, the budget deficit in 2009 of the Government is very large, leading to government debt and the risk of high inflation, the face of the world changed dramatically and profound. These problems have seriously affected the economy of Vietnam. According to statistics, in 2009, the economic situation markedly reduced growth: GDP growth in 2009 is 5.2%, above the average of area, but is the lowest since a decade (GDP growth is 6.1% in 2008 and 8.5% in 2007) Industry and construction increased 1.5%, exports increased 2.4% (but mostly rice and gold, if gold exports except the turnover exports declined by 15%) The number of jobs reduce, unemployment rate increases, approximately 5 million workers in the village business out of work.

According to calculations, in 2009, about 400-500 thousand employees in business sector lost the job, the unemployment rate of Vietnam is increasing, from 4.64% (in 2007) to 5% (in 2008) and 6.5% in 2009. Status of enterprises: about 20% delayed production, 60% has difficulty and just 20% is doing well.

The UN has reported that the economic sector of Vietnam's most heavily affected is construction, followed by banks and other financial institutions. Many 14

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companies have to cut production level, labor force and these problems threaten to ensuring jobs for employees.

2. Solutions of Vietnam Government: The 2008-2009 financial crisis caused a global economic recession. In response Vietnam, along with many countries in the Asia-Pacific region, implemented an economic stimulus package.

The Vietnamese government provided an economic stimulus package in December 2008, and announced a second stimulus package for 2010 on 31 October 2009. The first economic stimulus package was introduced on 11 December 2008 on urgent measures to deal with the economic recession, maintain economic growth and ensure social security.

The economic stimulus package involved both fiscal and monetary interventions with a planned cost of US$ 6 billion focusing on boosting production and businesses; strengthening exports; stimulating investment and consumption; guaranteeing social security; and endeavoring to achieve an economic growth of 6.5% in 2009.

The four main components of the first economic stimulus package were:

Subsidized loan interest rates of 4% points to increase credit for investment for enterprises. It is a kind of short-term loan with maximum duration of 8 months that enterprises will get interest rate assistance of 4% per Annum. This component focuses on investment stimulus, create new jobs and increase domestic consumption

Public investment package for aiding infrastructure and social services.

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This promotes investment in traffic infrastructure projects, accommodation for workers or low-income people and health and education facilities such as highways, airports, seaports, school and hospital.

Tax reduction for firms and tax exemption for individuals. Several of tax reductions for enterprises such as Corporate Income Tax (CIT), Value Added Tax (VAT). For individuals, personal income tax (PIT) is deferred for 2009.

Social security package to support poor households. Vietnamese workers who signed contracts of at least one year with foreign companies, government companies or individual companies will be eligible for unemployment insurance, up to 60% of the average salary of the employee. Moreover, the Vietnamese government provided interest-free loan to enterprises for paying salaries, social insurances their workers. Additionally, workers can ask the local governments to pay their remaining salaries in case their companies go bankrupt.

We want to give an argument to support the solution above: All Vietnamese workers who signed contracts of at least one year with foreign companies, government companies or individual companies are able to receive unemployment insurance, up to 60% of the average salary of the employee. All workers who are able to receive unemployment insurance of Vietnamese government are protected from financial crisis which can make them become the most vulnerable. So, all workers who signed contracts of at least one year with foreign companies, government companies or individual companies are protected from financial crisis.

Now, we assign that: 16

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Vietnamese workers who signed contracts of at least one year with companies as A Workers who are able to receive unemployment insurance of Vietnamese government as B Workers who are protected from financial crisis as C And we have the Venn Diagram:

Look at the diagram, we can conclude that our argument above is valid

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Here are some major responses to the financial crisis in Vietnam:

April 2008 Resolution Between March and August of 2008, with inflation running at some 28% p.a., fuelled by significant capital inflows the year before, the Government had to implement strong stabilization policies in order to cool the overheated economy. Measures to restrain inflation, stabilize the macro economy and ensure social security and sustainable growth Tight fiscal policy to reduce the budget deficit Reduced public investment, especially in state owned enterprises Prioritized investment in the economic sectors

November 2008 Resolution By November 2008, these policies had to be reversed in order to support economic growth in the face of deteriorating global conditions. Fiscal expenditure (VND 100 trillion, US$ 6 billion, 6.8 % of GDP) aimed at boosting production and supporting businesses, strengthening exports: 4% interest subsidy on loans to small and medium enterprises (17 trillion VND) Reduction in corporate income tax for small and medium enterprises (28 trillion VND) Temporary refund of VAT for exported goods Extension of time for payment of taxes Deferment in recollecting advanced infrastructure construction capital (3.4 trillion VND) Provided advances for urgent projects (37.2 trillion VND) Transfer of planned investment capital in 2008- 2009 (30.2 trillion VND) Issue of government bonds (20 trillion VND) Increased credit guarantee for enterprises (17 trillion VND) Stimulus package of US$ 1 billion to subsidize interest-rates for short-term loan contracts Unemployment insurance for 60% of salaries

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March 2009 Resolution The fiscal stimulus targets to alleviate poverty and enhance efficient infrastructure projects, rather than piecemeal tax and interest-rate relief for small-medium enterprises. Pushing on with state-owned enterprise reform (particularly state-owned commercial banks reform) would also add to fiscal sustainability. Fiscal expenditure (VND 300 trillion, US$ 17.6billion, 21% of GDP) Stimulating investment and consumption Exemption on personal income tax from Jan to May 2009 Investment in infrastructure for housing, schools, hospitals Tet bonus (200,000 VND or US$ 12 per poor person, up to 1,000,000 VND or US$ 56 per poor household) Support to 61 poorest districts Housing support for the poor (around 0.5 million rural households to receive 7.2 million VND or US$ 400 each) Support for low income civil servants Measures to support manufacturing and export sectors

Guaranteeing social security Launched an unemployment insurance scheme with effect from 1 January 2009 (limited eligibility) Interest free loans to enterprises to pay salaries, social insurance or unemployment subsidies for their workers If companies cannot pay workers entitlements, workers can ask local governments to pay Projects designed to support social security and welfare A comprehensive revision of the Labor Code that should result in market-based rules for employment contracts; employment of women, young workers and persons with disabilities; working time; protection of wages; and labor inspection.

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These measures proved the governments efforts to deal with increasing unemployment, decreasing of economic growth in Vietnam due to the global crisis. The authorities showed a degree of flexibility in policy-making that needs to be maintained, and enhanced, for Vietnam to face the near-term challenges posed by the global recession. Moreover, Vietnams GDP growth rate in 2009 stands at 5.2%, the highest among Southeast Asian countries. Hence, there has been a clear-cut recovery from the financial crisis, which is greater than any developed and many developing countries. We want to support our argument by using diagramming: (1)These measures proved the governments efforts to deal with increasing unemployment, decreasing of economic growth in Vietnam due to the global crisis. (2)The authorities showed a degree of flexibility in policy-making that needs to be maintained, and enhanced, for Vietnam to face the near-term challenges posed by the global recession. (3)Moreover, Vietnams GDP growth rate in 2009 stands at 5.2%, the highest among Southeast Asian countries. (4)Hence, there has been a clear-cut recovery from the financial crisis, which is greater than any developed and many developing countries. We create a flowchart that indicates relationships of our argumentative support:

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3. Preventing the influence of US financial crisis from happening again in the future:

To prevent crisis from happening again, there are more works need to be improved: One of the biggest issues of Vietnams human resources is lacking of both quality and quantity. When economic recession occurs, there is the fact that current salaries of untrained workers could not cover the extremely high cost living in the country's major cities, making many workers return home to look for job, even at lower salaries. Besides that, Vietnam workforce also faces with increasing of unemployment rate. To deal with these issues, Vietnam government should improve human resources policy, provide more opportunities for workers to develop their skill as well as give them chances to approach career in formations. It is not only the way to help Vietnam overcome challenges and difficulties arising from the current economic and financial crisis but also the answers to improve living standard of Vietnamese people. We rewrite argument above in simpler form: If the unemployment rate increases in financial crisis, government must improves human resources policy. If government improves human resources policy to deal with financial crisis, then Vietnam can prevent successfully financial crisis from happening again and improve Vietnams living standard. So, if the unemployment rate does not increases, Vietnam can prevent successfully financial crisis from happening again and improve Vietnams living standard We assign that: 21

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The unemployment rate increases in financial crisis as a Government improves human resources policy as b Vietnam can prevent successfully financial crisis from happening again and improve Vietnams living standard as c Then, we symbolize our argument ab bc -------~a c a 1 2 3 4 5 6 7 8 T T T F F F T F b T T F T F T F F c T F T T T F F F ~a F F F T T T F T a->b* T T F T T T F T b->c* T F T T T F T T ~a->c C T T T T T F T F

The second issue is sustainable development. When we think of the world as a

system over time, we start to realize that the decisions of our grandparents made on the farms continue to affect agriculture today; and the economic policies we endorse today will have an impact on urban poverty in the future. The field of sustainable development can be divided into three parts: a) Environmental sustainability b) Economical sustainability 22

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c) Sociopolitical sustainability a) Environmental sustainability: Environmental issues are always a major global issue. Vietnams development depends on a sustainable and healthy environment, and yet we have damaged the environment in numerous ways. Therefore, we have to change. And the best protection of natural assets will require coordinated efforts across all sections of government, businesses, and every Vietnamese people. The productivity of ecosystems depends on policy choices on investment, trade, subsidy, taxation, and regulation, among others. Therefore, if we want to develop, we have to think of the environment. We support above argument by using truth table: Sustainable development is the way to prevent crisis from happening again. Sustainable development does not allow environmental destruction and we have to change the ways we treat to environment to be a sustainable development country. So, sustainable development is the way to prevent crisis from happening again and we have to change the ways we treat to environment to be a sustainable development country. We assume that: Sustainable development is the way to prevent crisis from happening again is x Sustainable development allows environmental destruction is y We have to change the ways we treat to environment to be a sustainable development country is z Symbolization: x ~y & z ------x&z

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x 1 2 3 4 5 6 7 8 T T T F T F F F

y T T F T F T F F

z T F T T F F T F

~y F F T F T F T T

x* T T T F T F F F

~y & z* F F T F F F T F

x&zC T F T F F F F F

b) Economical sustainability: One of the most important parts of social in sustainable development is economy. Still, there are some effects on the environment because of some economical activities. Thus, an examination of the relevant issues must take into consideration not only the economic policy framework but also environmental policy. The Vietnamese Government has to realize that the major tasks for economical sustainable development: The inflation which is also the most important mission has to be reduced. The macro-economy must be stabilized Ensuring social security and sustainable growth

c) Sociopolitical sustainability: Socioeconomic development which is a process of improving living conditions for human by goods production, social relationship innovation, and cultural quality improvement also needs to be concerned by Vietnam.

While the global economic downturn is having an effect on trade and investment, it also highlights the importance of triangle of sustainability: society, environment and economy. Global economic crisis provides opportunities for sustainable development, and sustainable development provides the way to prevent 24

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crisis from happening again. Last but not least, sustainable development and improving human resources are extremely long-term tasks that require the efforts of every Vietnamese people.

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