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World top stories

President Pervez Musharraf of PAKISTAN resigned just before impeachment proceedings against him were due to begin. In an hour-long television speech he denied any wrongdoing. Violence continued to wrack the country. Two suicide-bombers blew themselves up outside Pakistan's main defence-industry complex, killing at least 40 people; and a bomb at the emergency gate to a hospital killed 23.

Ten French soldiers in AFGHANISTAN, part of the NATO-led force, were killed in an ambush near Kabul by Taliban insurgents. President Nicolas Sarkozy flew in to visit some of the 2,600 French troops in the country and reaffirmed France's commitment to the mission.

Pushpa Kamal Dahal, known as Prachanda, the leader of NEPAL'S Maoists, was sworn in as the country's prime minister, four months after his party won more seats than any other in elections for a constituent assembly.

The SRI LANKAN ARMY said it had overrun an important training complex of the rebel Tamil Tigers in the north of the country, and was close to the Tigers' headquarters at Kilinochchi. Tens of thousands of people displaced by the recent fighting were reported to be converging on the town.

There were large-scale protests in Indian-controlled KASHMIR, in both the Muslim-majority Kashmir valley and the Hindu-dominated region of Jammu. The protests started over the ownership of land around a Hindu shrine, but have developed into big pro-independence demonstrations.

HUA GUOFENG, who in 1976 succeeded Mao Zedong as leader of China's Communist Party, only to be sidelined as Deng Xiaoping rose to power, died at the age of 87.

Chen Shui-bian, president of TAIWAN until May, resigned from his Democratic Progressive Party, apologising for causing it "irreparable damage". Embroiled in a money-laundering scandal, Mr Chen is barred from leaving Taiwan.

At the Beijing OLYMPICS, Michael Phelps won his eighth gold medal at the games, beating the record of seven set in 1972 by another American swimmer, Mark Spitz; Jamaican runners won the men's and women's 100-metre races; and Britain chalked up its best medal tally since 1908 by dominating the cycling events. Liu Xiang, China's hurdling hero, apologised to the nation for an injury that caused him to withdraw from his race.

More than a week after a ceasefire agreement was signed, RUSSIAN tanks and troops were still deployed across GEORGIA. The Russians seemed in no hurry to pull back, as promised, to South Ossetia and Abkhazia, the two breakaway Georgian enclaves.

An emergency NATO meeting agreed there could be no "business as usual" with Russia so long as its troops remain in Georgia. But alliance members were still divided over how tough to be with the Russians, who dismissed their statement as "empty words".

POLAND and the United States formally signed a deal to put part of America's missile-defence system on Polish territory. The deal has been under negotiation for months, but was speeded up by Russia's invasion of Georgia. The Russians said that by signing the deal Poland had made itself a nuclear target.

More than 150 people were killed when a SPANISH airliner swerved off the runway at Madrid airport during take-off.

VENEZUELA'S government seized control of cement plants owned by Mexico's Cemex, after the two sides failed to agree on compensation for the nationalisation of the cement industry. The government promised to pay a total of around $800m for plants belonging to Switzerland's Holcim and France's Lafarge. Cemex says its plants are worth $1.3 billion, a figure the government says is too high.

In BOLIVIA, opponents of Evo Morales, the country's socialist president, staged a general strike in five eastern provinces to demand that the government return a chunk of oil and gas revenues they say should go to regional governments.

PERU'S government declared a state of emergency in parts of the country's Amazon region where several hundred Indian protesters blockaded two oil and gas installations in protest at a law allowing companies to buy jungle land.

Stephen Harper, CANADA'S prime minister, and Stephane Dion, the Liberal opposition leader, both said they would consider forcing an election this autumn. Mr Harper's Conservatives have governed without a parliamentary majority since January 2006.

Democrats headed for DENVER for the start of their convention, which begins on August 25th. The Republicans hold theirs in St Paul, Minnesota, the following week. There was febrile speculation before the gatherings about whom Barack Obama and John McCain would pick to be their running mates as vice-president.

Earlier, Mr Obama and Mr McCain attended a high-profile question-and-answer session at RICK WARREN'S evangelical church in California, at which Mr McCain was generally considered to have come off the better of the two.

CALIFORNIA'S Supreme Court ruled that medical practitioners must not discriminate against gays on religious grounds. The case centred on a lesbian couple who were denied an insemination procedure by a female doctor because it was against her beliefs.

A suicide-bomb killed at least 43 people outside a training school for gendarmes in the town of Issers, 55km (34 miles) east of Algiers. ALGERIA'S government said it bore the hallmark of al-Qaeda, which has become more active in the country recently. The day after the attack two car bombs killed 11 in the nearby town of Bouira.

In a gesture to bolster the authority of the PALESTINIANS' flagging president, Mahmoud Abbas, Israel's government said it would release some 200 Palestinian prisoners; around 11,000 would remain in jail.

After nearly seven years in office, ZAMBIA'S 59-year-old president, Levy Mwanawasa, who had been one of Africa's sterner critics of Zimbabwe's Robert Mugabe, died in France, two months after suffering a stroke during an African Union summit in Egypt.

Global business news

Doubts continued to swirl around FANNIE MAE and FREDDIE MAC, causing their share prices to plunge by almost half between August 18th and 20th. Freddie Mac auctioned $3 billion of its debt, but only after offering very favourable terms to investors (Fannie Mae recently conducted a similar auction). Last month the Treasury received authority from Congress to provide the government-backed mortgage giants with new financing in the form of loans or equity if needed. Hank Paulson, the treasury secretary, was said to be ready to intervene if market confidence collapsed.

LEHMAN BROTHERS' share price came under pressure amid speculation about its continuing efforts to raise some much-needed cash, including the possibility that it might sell all or part of its prized asset-management division.

KfW, a state lender in Germany, at last found a buyer for IKB, which is Germany's most prominent casualty of the credit crunch and had to be rescued three times by its largest shareholder. The buyer is LONE STAR, a private-equity firm from Dallas, which is taking a 91% stake in IKB.

Less than a week after its initial bid was rejected as too low, Japan's MITSUBISHI UFJ FINANCIAL raised its offer to buy the 35% of UNION BANK OF CALIFORNIA it does not already own, to $3.5 billion. The lender, based in San Francisco, accepted the Japanese offer.

Britain's Competition Commission published its eagerly awaited provisional opinion on airport ownership and recommended that BAA sell two of its three airports that serve London and one in Scotland. BAA, which was bought in 2006 by Ferrovial, a Spanish construction company, has been heavily criticised for poor service and delays, especially at HEATHROW. The company insists it will not sell the world's busiest international airport, which would leave it no choice but to sell Gatwick and Stansted.

The head of the International Air Transport Association said that global aviation was a "fragile industry in a crisis". Many airlines have been hit financially by the soaring price of oil. However, Australia's QANTAS AIRWAYS bucked the trend when it reported a 44% rise in annual profit, partly by hedging its fuel costs.

GENERAL DYNAMICS bolstered its luxury-aviation business by agreeing to buy JET AVIATION for $2.2 billion. General Dynamics, a defence company, makes Gulfstream aircraft. Jet Aviation provides a range of services to 25 airports worldwide, including upmarket terminals for business travellers and the maintenance of private jets.

In Germany's biggest takeover this year, CONTINENTAL, a global tyre and car-parts supplier and a leader in new fuel-efficiency technology, succumbed to a sweetened takeover bid from SCHAEFFLER, a privately held industrial group. Continental's management had resisted a deal, which values it at EURO12.1 billion ($17.9 billion), but Schaeffler agreed to retain a minority stake of slightly less than 50% until 2012. Gerhard Schroder, a former German chancellor, will act as guarantor for Continental's interests.

The price of GOLD inched up after reaching a low for the year. Since March, when it hit a record $1,030.8 a troy ounce, the price of gold has fallen by around 20%. A contributory factor has been the recently strengthening dollar.

HEWLETT-PACKARD'S quarterly net income rose by 14% compared with the same period last year. Strong international sales helped offset tepid growth in America, with revenue from Brazil, Russia, India and China up by 24%. Revenue from sales of laptop computers increased by 26%, compensating for growth of only 3% in HP's printers and imaging division, usually its most successful business.

There were more signs that sluggish American consumer spending was taking its toll on RETAILERS, as Target, Saks and Staples all posted disappointing quarterly results. At Home Depot, net profit fell by 25% compared with a year ago.

An appeals court in Washington, DC, overturned a rule created by the Environmental Protection Agency that prevented states from carrying out monitoring of INDUSTRIAL EMISSIONS at stricter levels than those required under federal law. The rule was supported by many business groups, including the American Petroleum Institute.

ELECTRONIC ARTS, a video-game giant, let a deadline expire for its unsolicited $2 billion offer for TAKE-TWO INTERACTIVE SOFTWARE, which publishes the popular "Grand Theft Auto" series of games. EA unveiled its bid in February. The companies are still talking about the possibility of entering a friendly deal.

U.S. diplomat: U.S.-Vietnam cooperative ties to thrive

The United States and Vietnam are expanding and deepening cooperative relations not only on economic and trade spheres but also on education, environment, human rights, anti-corruption and legislation, U.S. ambassador to Vietnam Michael Michalak said Wednesday. "This year we've seen Vietnam successfully take on its role as a member of the United Nations Security Council and, in July, as president of the council. As Vietnam's role on the world stage expands, our relationship deepens and broadens," Michalak said at a press briefing.

Regarding economic relation, the United States and Vietnam are finalizing the date for the first round of negotiations on a bilateral investment treaty, maybe in September or October, he said, noting that the future agreement will bring legal protection to the best international standard, helping draw stronger investment. Besides, the United States is considering Vietnam's proposal on granting it the Generalized System of Preferences (GSP) and market economy status, the ambassador said. "Our economic relationship continues to mature. Halfway through2008, two-way trade appears likely to once again break new ground and surpass the 12.53-billion U.S. dollar mark from 2007... U.S. investment is also poised to make a strong showing in 2008," he said.

The United States and Vietnam are making progress in cooperation on many other fields, including education, healthcare, climate change, law construction, human rights and anti-corruption. The two sides are selecting members of a bilateral task force on education to expand cooperation between the two governments and help more Vietnamese people study in the United States, he said, noting that Vietnamese Prime Minister Nguyen Tan Dung "signed an historic memorandum of understanding" (on the taskforce's establishment) during his visit to the United States in June. Regarding healthcare cooperation, the United States will expand the implementation of its President's Emergency Plan for AIDS Relief (PEPFAR) to seven or eight Vietnamese provinces from current six ones, and keep on helping Vietnam detoxify its areas affected by Agent Orange and clear unexploded ordnances.

The United States and Vietnam have agreed to establish a working group on climate change, the ambassador said, adding that Vietnam's southern Mekong Delta will be its first area to be affected by climate change. The United States will be ready to offer technical assistance to the National Assembly of Vietnam, the country's top legislature, and have continued open dialogues and consultations with Vietnam about ensuring freedom of expression, religion and press and improving transparency to better combat corruption in the country, he said.

The ambassador said four of his priorities during his term in Vietnam include expanding the bilateral economic and trade relationship, forging educational cooperation, seeking further progress on human rights, and settling a land issue to build a new U.S. embassy in capital Hanoi.

Vietnam braces for rising Mekong floods

Rising Mekong floods upstream may cause landslides and deep inundation in southern Vietnam but the seasonal floodwater would also bring farmers good crops of rice and fish, the government and officials said on Tuesday. The government said rescue forces must be ready to move people from dangerous areas in southern Vietnam, where the Mekong river reaches the South China Sea after traveling more than 4,000 km (2,500 miles) from Tibet through Laos and Cambodia. Four people have been killed in flooding and landslides in Laos, where the Mekong river has hit its highest level in at least 100 years after several months of unusually heavy rain.

"Floods in the Cuu Long River Delta happen every year, so people are used to taking preventive measures for crops and life," Le Van Banh, director of the Mekong Delta-based Rice Institute, told Reuters by telephone from Can Tho city. "In the past floods caused problem to transportation and it was hard for children to come to school, but in recent years Vietnam has built protective dykes and residential areas above the flood-peaking level," he said.

About 20 percent of Vietnam's 86.5 million people live in the Cuu Long River Delta, the Vietnamese name for the Mekong river, which produces more than half of the country's paddy output but supplies more than 90 percent of its commercial rice.

Rice growers say they will get extra income from fishing when flooding is high and after they end the summer rice harvest. Flood waters also clean up alum, pests and rats from fields while bringing more fertile soil. "Since the floods are to wash away alum, we expect the yield of the next winter-spring rice crop to be good, at least on par with this year," Banh said. The winter-spring crop, the Delta's top yielding, produced 10 million tonnes of paddy in April with a yield of 6.2 tonnes per hectare, prompting the government to raise Vietnam's annual rice exports by 13 percent from earlier targets.

Seasonal floods appeared slowly in the Delta in July, a month earlier than usual. But this week flood waters are rising faster from heavy rains upstream two weeks ago, including the downpours that caused flash floods in northern Vietnam. "Floods are forecast to rise above the average level in many years," said meteorologist Vo Thanh, head of the weather station in An Giang, one of the Mekong Delta's main rice growing provinces. Waters are expected to rise to 3.5 meters (12 feet) above sea level at Tan Chau gauging station on Friday, or 0.1 meter below the Alarm Level Two, which indicates inundation and danger of river bank and dyke erosion but towns are still protected.

In 2000, the Delta experienced the worst floods in four decades as waters rose to more than 5 meters, killing nearly 500 people, more than 300 of them children. Since then the government has launched a campaign to protect life and property, having built 82,000 new homes, relocated 110,000 families or 80 percent of those living in dangerous areas, and opened swimming class for children and teachers. However, about 30,000 families living near rivers are still facing risk of landslides, according to provincial figures.

The changing face of Viet financial services

UNTIL recently, Vietnam was an old-fashioned cash economy. Whether it was individuals buying big-ticket items such as houses and cars, or companies servicing their payrolls and accounts, almost every transaction was in cold hard cash. Usually this was the Vietnamese dong or US dollar, but stories abound of big purchases using gold. Even today, many companies continue to rely on cash, as fewer than 10 per cent of Vietnam's 85 million people have bank accounts. Economic reform has brought about dramatic change in the financial services sector. In particular, sophisticated financial instruments have been introduced.

Vietnam's accession to the World Trade Organization (WTO) in January 2007 was a catalyst for wide-ranging changes to all aspects of doing business. The legal and tax systems are being reformed, and the role of the private sector is being strengthened. The result has been a rapid flow of foreign investment, and the banking and finance industry has stepped up to meet the challenge. Where once the position of the state-owned banks was unassailable, new private players have significantly increased the range of services available.

Foreign banks now can set up 100 per cent foreign-owned subsidiaries, and some have formed strategic alliances with local banks to rapidly gain greater access to the market. For example, HSBC this year became one of the first foreign banks to receive in-principle approval from the State Bank of Vietnam - the central bank - to set up a locally incorporated subsidiary. HSBC also owns a 15 per cent stake in Techcombank. The economy can be best described as in transition from cash-based to non cash-based. Challenges remain in terms of paying salaries through bank accounts, ATM services and the use of debit cards, as these types of transactions started gaining popularity only a few years ago.

The Vietnamese banking industry remains heavily regulated by the central bank. Also, the government tightly controls foreign exchange transactions by individuals and companies, and the Vietnamese dong is not freely convertible. As a result, cash remains the principal form of payment for wages and purchases, with the US dollar an alternative.

However, opportunities more than make up for the challenges of doing business in Vietnam, which is one of the most under-banked countries in Asia, with a huge market waiting to be served. New services designed to meet the needs of business clients have emerged, and market conditions have prompted international banks to develop innovative solutions for corporate customers. One example is HSBC's establishment of electronic links with the major state-owned local banks, and using their branch networks to collect and distribute cash.

With an increasingly active capital market, it is even possible for companies to consider an initial public offer. Vietnam now has two exchanges. On the Ho Chi Minh Stock Exchange, which has been in operation since 2000, the number of listed companies has quadrupled in the past three years. On the Hanoi Securities Trading Center, smaller companies with capital of 10 billion dong (S $860,000) or more can be listed.

Foreign companies seeking to expand into Vietnam can be confident that the financial tools they rely on elsewhere are now available. It is important to realise that many of these advanced products and services were not in place just five years ago. Everything in Vietnam is changing - and, more significantly, changing fast.

Vietnam hews its own path to growth

ALTHOUGH torrential rains and overflowing rivers have wreaked the worst flooding in decades to Vietnam in recent days, the country is in fact doing rather well economically. Vietnam is on the brink of becoming a middle-income country. It will become one when it attains a per capita income of US $1,000 in 2010. This will be a huge achievement for the formerly war-ravaged country. The per capita income of the Vietnamese population rose from US $250 in 1995 to US $835 last year, according to the World Bank. Vietnam achieved these huge gains for its population after retaining its position among the best-performing economies in the world for the past 10 years. The Vietnamese economy grew at 7.3 per cent annually from 1995-2005, and its per capita income grew 6.2 per cent a year.

Yet, there is a lingering misperception that Vietnam was among on the list of least developed countries (LDCs) in the years following the end of the Vietnam War in 1975. At that time, Vietnam had narrowly avoided appearing on the United Nations' list of LDCs, a roster on which Cambodia, Laos and Myanmar still figure. In an attempt to correct the wrong impression, the United Nations Conference on Trade and Development (UNCTAD) said in June 2003 that Vietnam was never an LDC. There are three core criteria for determining which countries can be considered 'least developed'. These are low income, economic vulnerability, and human capital weakness.

In 2003, Vietnam met the first criterion of being considered an LDC because its per capita income was under US $750. The country did not wholly satisfy the second criterion of economic sustainability. However, Vietnam managed to escape classification as an LDC because it performed well in the third criterion, which measures a score on the 'Human Assets Index', which is an indicator of nutrition, health and education.

Vietnam's large population also helped it escape the LDC label. For countries to be added to the list of LDCs, their population must not exceed 75 million. In 2003, Vietnam's population was 80.2 million, which makes Vietnam a large developing country. UNCTAD argues that large developing countries, although still prone to poverty, are better able to create development strategies than small low-income countries, which are more vulnerable to external shocks and face a greater risk of remaining poor.

For Vietnam, the LDC label would have been a severe drawback in its effort to present itself to foreign investors as a dynamic developing country, and not a basket-case economy. The dubious LDC status does bring some benefits such as substantial duty-free and quota-free access to US markets, and those of other rich countries. But the very perception of an LDC as a basket-case tends to put foreign investors off.

Vietnam is on the threshold of becoming a middle-income country in just two years from now. The reason for this extraordinary success was the realisation by the ruling Communist Party of Vietnam that it must withdraw from business and open the economy to foreign investment. As a result of that policy, the government has reduced its involvement in manufacturing from 52 per cent in 1995 to 35 per cent in 2006. But the withdrawal of the state from business is not a complete explanation of the country's remarkable success. Alongside the adoption of market reforms, the government encouraged participation of the domestic private sector, and began welcoming foreign investments as early as 1986. Vietnam is earning rich dividends from those early reforms. Even before the country joined the World Trade Organisation (WTO), exports were the principal driver of its economic growth. When the country did eventually join the WTO in January 2007, it did so on the basis of solid, all-round economic performance.

So, if the Vietnamese economy is showing some signs of slowing down this year, it does not indicate that the growth saga is ending. Vietnam's gross domestic product growth for the first half of this year was about 6.7 per cent, according to Vietnamese government figures. Should Vietnam maintain the momentum, it can achieve its target of 7 per cent economic growth in 2008. This may be possible because of its efforts to curtail inflation and the trade deficit. Vietnam grew at 8.5 per cent last year, marking the third year of above 8 per cent growth. However, the Economist Intelligence Unit has revised downwards its forecast for real economic growth to 6.2 per cent in 2008 and 6 per cent in 2009, the slowest pace of growth in a decade. This is because growth in consumption is expected to be slow this year as bank credit is tightened and incomes are battered by inflation. However, Vietnamese industrial production has expanded rapidly, rising by 16.5 per cent in the first half of this year.

In any case, major foreign investors seem to agree that in spite of short-term economic worries in Vietnam, the country's longer-term prospects are still attractive. For instance, the Japan External Trade Organisation said recently that Vietnam was likely to be the best production site in Asia over the next five to 10 years. Nine out of 10 Japanese businesses in Vietnam say they would expand their operations in the country in the next one to two years. Little wonder that the country received foreign investments worth US $31.6 billion in the first half of this year, 3.7 times the amount committed during the same period of 2007. However, actual disbursements are often slow, especially for large infrastructure projects.

The World Bank says that to do better, the Vietnamese government must, first, completely reform the banking sector. Secondly, it must establish regulations to govern infrastructure development and fill shortfalls in the supply of power, water and transportation. A third priority would be to create a social security system for healthcare, pensions, and unemployment benefits, and improve the quality of education. Fourthly, Vietnam must provide better protection of the environment. Fifthly, the public administration must become transparent, efficient, and accountable. And finally, Vietnam must enforce the Anti-Corruption Law. The Vietnamese government is not expected to fulfill all these difficult tasks before 2010. But, Vietnam must begin to act on all the tasks in order to show that it is implementing meaningful, and not cosmetic, reforms.

All said, Vietnamese growth has been extraordinary. In the early years of reforms, the country reconstructed entirely on its own effort and without much multilateral development assistance. Even though more bombs were dropped on Vietnam during the 1960s and 1970s than in Europe during World War II, Vietnam was not the beneficiary of any funding package such as the Marshall Plan, under which the US poured billions of dollars to help the Europeans. War-ravaged Vietnam has scripted an entirely Asian way to growth. With Asian social, corporate, and family values intact, it has shown that its most important resource is its people, who are hungry for a better life and are willing to work hard to get it.

Vietnam needs to remember famine of 1945

THE Socialist Republic of Vietnam declared its independence on Sept 2, 1945. The declaration came at the tail end of a famine which began in 1944. The famine still haunts the consciousness of many who were alive then. An estimated two million Vietnamese, or 10 per cent of the population then, died during the famine. By comparison, three million Vietnamese were killed during the Second Indochina War, from 1954 to 1975.

The causes of the famine are hardly in dispute. In 1940, the Japanese army occupied Vietnam but left Vichy France in charge of its administration. By the terms of the May 1941 Franco-Japanese treaty, French Indochina had to supply grains to Japan. From 1941 to 1944, Vietnam supplied 700,000 to 1.3 million tonnes of padi and maize to Japan, roughly equivalent to 50 to 80 per cent of its grain production. And a fairly significant acreage was forced into the production of jute, hemp, cotton and castor-oil plants - also for Japan - thus reducing food production. The wartime destruction of roads and other transport infrastructure made it difficult to transport excess food from southern Vietnam to the north. What ensued was tantamount to genocide.

Many victims walked long distances to provincial capitals, and thousands marched on the capital, Hanoi. Survivors resident there then tell of long lines of ghost-like figures trooping into the city. Hanoi families often found corpses in front of their homes. Huge pits were dug in rural areas near Hanoi for mass burials. The wages paid to burial workers went down by the day, and in Hanoi people were soon burying bodies just for a bowl of gruel. The dead in rural areas were left in the open to rot because people did not have the strength to bury them.

Extreme conditions drove many people to extreme behaviour. The vomit of one became the food of another. People followed horses and oxen to eat the dung or to search for the occasional undigested pieces of food in the dung. Food in the mouth was not necessarily secure, because there were frequent fights to force food out of mouths. People stole, robbed and killed for food. One family that made cakes for sale reports how it made cakes from earth to guard against theft. Customers would pay for the earth cakes and redeem them for real ones later elsewhere. There are stories of how infants were eaten up by hungry dogs. Parents would leave their children at home to go look for food, only to find blood and bones in cribs when they returned.

Vietnam has not set aside a special day in the year to remember the victims of the 1945 famine. The narrative of Vietnam's independence and reunification often mentions only in passing this dastardly crime inflicted on the Vietnamese.

What purpose would a special day serve? Food security has again become a matter of concern. Vietnam is now the second top rice-exporter in the world. The government enforced a suspension of rice exports earlier in the year, but it has been lifted since. Then there are the higher frequency and intensity of natural disasters that strike Vietnam every year, in particular the typhoons that bring flooding, damaging crops and harvests.

Still, in a global economy, Vietnam's obligations to export rice must be observed but remembering the famine will encourage people to plan for a rainy day. Steady growth over the past two decades has brought about levels of consumption that are unreal and even unsustainable. Vietnam now has only US $20.7 billion (S $29.4 billion) in reserves, roughly equivalent to the government's annual budget. One day, the good life will come to an end and the Vietnamese will wonder where all the money has gone.

The Vietnamese government should think about how the entire country, not least the government itself, can put aside more in reserves - not just in money but also in kind - in times of abundance. It should think too of a more comprehensive scheme of security, especially food security.

The writer is a senior fellow and Coordinator of Regional Strategic and Political Studies at the Institute of Southeast Asian Studies.

Fuel, food lift inflation in Vietnam's largest city

Soaring food and fuel prices have driven annual inflation in Ho Chi Minh City, Vietnam's business centre and the country's largest city, to 27.5 percent this month, the city's statistics department said on Friday. Consumer prices this month in the city are expected to rise 2.09 percent from July when prices were only 0.54 percent above June, the Statistical Office of Ho Chi Minh City said in its monthly report. A 36 percent increase in domestic fuel prices on July 21 prompted analysts to predict Vietnam's inflation would hit 30 percent this month, the highest level in Asia.

The report said transport, posts and telecoms fees in August would rise a combined 20.9 percent from the same month last year, compared with the annual rise of 11.8 percent in July. Food prices in the city of 8 million people would soar 84 percent this month from last August, less than 89 percent in July as the summer-autumn rice crop harvesting has nearly finished in the nearby Mekong Delta. Consumer prices in Hanoi this month will rise 1.9 percent from July, faster than the monthly growth of 1.7 percent in July. The consumer prices in Ho Chi Minh City and Hanoi are early indication for Vietnam's inflation. The government's statistics office is expected to release the country's inflation data next week.

Last week Vietnam cut petrol prices by up to 5.3 percent, but its impact will not be seen in August monthly inflation data as statistics agencies stop compiling data on the 15th day of each month to calculate the consumer price index. The Finance Ministry has said it would continue to cut petrol prices if world oil prices further decline. U.S. light crude for October delivery CLc1 dipped 10 cents to $121.08 a barrel by 0222 GMT, after jumping nearly 5 percent on Thursday amid a broad-based rebound in commodities.

Vietnam plans to raise car taxes to save fuel

Vietnam, where car prices are already among the world's highest, is planning to raise taxes by up to 20 percentage points as part of efforts to cut fuel consumption and reduce traffic congestion. Under a draft law, a special consumption tax would be raised to 60 pct for consumers who buy cars with 2.0 to 3.0 litre engines and 70 pct for cars with engines bigger than 3.0 litres, from 50 percent now, the Finance Ministry said in a report on Thursday. "The tax increase is aimed at encouraging consumers to protect the environment and saving fuel," the Finance Ministry's report said. The new tax regime is expected to be approved by the National Assembly, the country's legislative body, in November this year. In addition to the consumption taxes, car buyers are also subject to a registration fee of up to 15 percent and 83 percent import tariffs for imported vehicles, making car prices in the Southeast Asian country one of the world's most expensive.

Despite the steep price tags, which see the popular Honda Civic sedan retailing at nearly $40,000, the country's automobile sales more than doubled so far this year to more than 77,000 vehicles compared to the same period last year as more moneyed consumers traded motorcycles for cars. Vietnam, with a population of more than 86 million, has only about 1.1 million cars and 21 million motorcycles but the roads are too congested to accomodate more cars. At the annual car show, officially named "A Dream Comes True", that kicked off in Hanoi on Thursday, thousands crowded around the latest models from foreign car makers that have opened factories in Vietnam including Ford, Toyota, Honda, Mercedes Benz, Fiat and Isuzu.

In the emerging economy where annual per capita incomes still remain under $1,000 per year, owning a car is still a distant dream for many. "I wish it would come true one day," said Tran Hoang Anh, a student in Hanoi as he admired a sleek Mercedes SLK sport car on display at the show.

Vietnam punishes journalists over coverage of anti-corruption case

The Vietnamese government said Saturday that four journalists had been stripped of their accreditation because they wrote and edited false information on an anti-corruption case and had defended colleagues arrested for their coverage of the case. They journalists "directly wrote articles... edited and approved, without checking sources, news and articles with seriously untrue information concerning the PMU18 case," said a statement on the government's official website. Public outrage was sparked in 2005 when the media unveiled a corruption case in the tranasport ministry's PMU18 infrastructure unit, where officials allegedly embezzled funds and used money to bet on football. The scandal led to the resignation of Vietnam's transport minister.

In May this year, journalists Nguyen Van Hai and Nguyen Viet Chien, who were particularly active in covering the case, were arrested over accusations of "power abuse" and "false information", sparking a media outcry. Newspaper Thanh Nien immediately wrote that "honest journalists must be freed" while Tuoi Tre said its reporter was "paying the price for his news on... a matter which is not yet over but which unravels in a very strange manner."

However, the papers ended their protest two days later after receiving a warning from the government, sources said. But earlier this month, four leading journalists at the two newspapers were stripped of their press cards by the government but given no concrete reason why. But on Saturday, the government explained the four had "instigated objections against legal protection agencies for investigating and arresting journalists Nguyen Viet Chien and Nguyen Van Hai" in several articles.

International human rights groups and observers have condemned Hanoi for the arrests, saying they are a serious violation of press freedom. American ambassador to Vietnam Michael Michalak on Wednesday raised his concerns, saying: "We think this has a negative effect on other journalistswho want to report whatever story they can find. We hope that as soon as possible the government will publish a full explanation of exactly what were the charges they found out and what were the results of their ultimate investigation."