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(Or why boring isn’t always bad) However, macro instability – in the form
of bouts of inflation and trade deficits –
continues to concern investors
2
Macro
Economics abc
26 May 2010
Although some semblance of order returned by Competitiveness Report by the World Economic
the start of 2009, inflation began trending up in Forum.
the last few months of the year, rising close to
So, why is Vietnam prone to episodes of
double-digit territory. The trade deficit embarked
macroeconomic instability?
on an unfriendly trajectory again, hitting USD2bn
by November 2009, and has lingered substantially Our analysis suggests that the country’s
above the USD1bn per month level since. In incomplete transition – from the state-controlled
response, the government has already depreciated economy that it was, towards a more market-
its currency twice in the past 6 months, as foreign based system – may be one of the reasons behind
exchange reserves are thought to have fallen. its macro volatility.
3. Trade deficit exerts pressure on the currency For instance, the still-large state sector may be
contributing to the country’s trade deficit. At one-
USD/VND, % y -o-y
2 third of GDP, state-owned enterprises still
0 command a dominant role in the economy and its
allocation of resources. As such, the country’s
-2 04 05 06 07 08 09 10
nascent private enterprises have yet to be given
-4
the resources to grow and move up the value
-6
chain – and become more competitive exporters.
-8
To increase the country’s export receipts (and
-1 0
help to turn around the trade deficit problem), one
Source: CEIC, HSBC option the government could pursue is to boost
the relative importance of private enterprises
While both the trade deficit and inflation in recent within the domestic economy.
months are better than in 2008, they nonetheless
paint a volatile macroeconomic picture – not least On another front, as the experience of some
because they have come barely two years after the countries which have moved towards central bank
previous episode, still fresh in the minds of many independence suggests, Vietnam may benefit from
investors. giving the central bank, the State Bank of Vietnam
(SBV), more operational independence as this
Tell me why could go some way to better anchor inflation
Finding the root cause of such volatility is a expectations and help minimize the frequency with
crucial first step towards creating macroeconomic which bouts of high inflation occur.
stability in Vietnam. This is especially important As a measure of the intertwined nature of these
considering the fact that the country has joined the factors, getting a better handle on inflation may
middle-income ranks – which means that Vietnam also encourage higher savings, which could in
will increasingly have to compete with better- turn help to finance domestic enterprises in their
positioned peers. drive to gain competitiveness on the global stage
As of now, Vietnam is low on the list in terms of – a positive for the trade position.
macroeconomic stability, at 112th out of 133 Such interconnectedness is best illustrated in the
countries, according to the 2009-2010 Global following stylized flowchart. The various causal
linkages will be detailed throughout the report.
3
Macro
Economics abc
26 May 2010
In com p lete
T ra de D e ficit Tr a n s itio n to In fla tio n B o uts
M a rk e t E c on om y
S ta te S e ct or: C en tr al B a n k Au to no m y :
Im po rts
re m a in s d om ina n t a w o rk-in -p ro gre s s
>
Exp or ts H an d s are tie d in
P riva te Se c tor ’s pu rsui n g pro a ct iv e
c ro w d e d o u t m o n et ar y p o li c y
The takeaway message will hopefully be clear: reform has also been the main force of attraction
lying at the root of the macroeconomic problems for foreign investors over the past years.
that Vietnam has been experiencing is the fact that
Though we remain hopeful that important reforms
the country is still very much in a hybrid stage –
will be carried out in due course, we believe that it
with the state-owned sector remaining dominant
may be premature to expect major steps to be taken
and the central bank still to gain enough
in the near term. The 11th Communist Party
operational independence to begin enhancing its
Congress to decide the country’s next leadership
inflation-fighting credibility.
cohort is due next year, making it less likely that
To establish stability on the macro front and to there will be a significant push for reforms at this
better position the country to compete against other juncture.
middle-income countries, the Vietnam economy
This means that the crucial next steps towards
may benefit from the pursuit of further structural
establishing macro stability (and a more ‘boring’
reforms.
market to watch) through structural reforms may
We are aware that we live in a world where have to wait a while more.
governments are playing much bigger economic
roles even in the staunchest of capitalist nations.
However, we believe that further liberalization
remains the best way to unlock more of Vietnam’s
great economic potential. And after all, that was
the goal when the country stepped on the path that
it chose in 1986. Equally important, continual
4
Macro
Economics abc
26 May 2010
Trade deficit
Vietnam’s growth rate may be admirable but it is running current
account and trade deficits – very unlike faster-growing China
With national savings at a relatively low level, an improvement in
the efficiency of capital allocation will be favourable
Improving the competitiveness of domestic enterprises could help
to boost exports and offset an affinity for foreign imported goods
The same but different follow the exceptionally high-growth path set out
by China.
Vietnam began its economic reforms (doi moi)
and adopted a “socialist-oriented market Alas, even as China powered ahead, Vietnam
economy” in 1986. Although investment never quite made it past the high single-digit
subsequently started to trickle in, it was not until growth of the preceding years – posting 8.5%
2006 that the country began to garner serious growth in 2007. Not shabby but well below
investor attention, with its integration into the China’s 13% growth that year, for instance.
global economy epitomized by entry into the
5. Playing catch-up
World Trade Organization in November that year.
Real GDP grow th ( % y-o-y)
Attracted by the double-digit GDP growth of 14
economy into a market-based one – with all the Source: CEIC, HSBC
5
Macro
Economics abc
26 May 2010
0 40
-5 98 99 00 01 02 03 04 05 06 07 08 09
20
-10
-15 0
Vietnam China VN CH US HK IN ID KR M A PH SG TA TH
8.5% of GDP on average. In contrast, over the During the global crisis, the large share of private
same period, Vietnam’s current account balance consumption helped keep the Vietnamese
stood at a deficit of 6.0% of GDP. Moreover, it economy relatively shielded, even as the trade
sometimes ballooned further – posting a 12% of sector suffered from the slowdown. In fact, China
GDP deficit in 2008, for example. itself is now actively trying to boost private
consumption (at less than 40% of the economy) in
With that in mind, we ask: what is so different
an attempt to rebalance its growth drivers.2
about Vietnam that it should be running current
account deficits that threaten to balloon further However, this consumption buffer does not come
occasionally, while China has continually run cheap. For one, Vietnam’s consumers appear to
surpluses that have helped it to accumulate the have developed a taste for foreign goods, pushing
largest foreign reserves in the world?1 up imports and contributing to the country’s trade
deficit. (Please see the section ‘For the love of
Not saving enough
imports: Taste for iPhones & foreign scrap’ for
By definition, Vietnam’s current account deficit details).
stems from an excess of investment over savings.
The flipside of having such a high share of
While much has been said about China’s high consumption in the economy is that Vietnam’s
saving rate and low consumption, Vietnam’s saving rate is comparatively low. According to
economy appears to have the opposite situation of IMF estimates, gross private savings stood at 23%
not saving enough and consuming too much. of GDP in 2009, less than half of China’s 51%.
Moreover, Vietnam’s saving rate has been falling
As much as two-thirds of Vietnam’s GDP can be
in recent years, with the latest data 5ppts of GDP
attributed to private consumption, a level that,
lower from the 28% registered in 2006.
within Asia, is only surpassed by the Philippines.
1
Although China ran an USD7.2bn trade deficit in March –
the first monthly deficit in six years – it proved to be 2
temporary as April saw a trade surplus again. For details, For details, please see the 26 February report “China
please see the 10 May note from our China economists, Economic Spotlight: NPC Meeting: What can we expect?”
“China’s Exports (Apr): Upbeat recovery extends into 2Q”. from our China economics team.
6
Macro
Economics abc
26 May 2010
8. Not saving nearly enough Demographics aside, there may be another reason
% of GDP why the Vietnamese are not saving much – they
50 12 are simply not economically incentivized to do so.
45 10
40 8 It is perhaps no coincidence that the saving rate in
35 6
30 4
Vietnam started to suffer a decline right when
25 2 inflation in the country accelerated, starting from
20 0 late 2007 till mid 2008. Rising above 10% y-o-y
2005 2006 2007 2008 20 09 in November 2007, inflation powered on to reach
Cu rrent Ac count Defic it - RHS
Sav ings
28% by mid-2008.
Inv estment
Meanwhile, policy rate rises were too late to
Source: IMF, CEIC, HSBC. Note: Saving and investment data for 2009 are estimates
by the International Monetary Fund. prevent real interest rates from falling deep into
negative territory throughout 2008.4
Why does Vietnam save so much less than China,
9. It doesn't pay to save?
and especially in recent years? A number of
factors might be at play. % % y -o-y
10 80
On that note, the difference in family structure Real Rates - LHS Dem and Deposits
between the two countries may be one reason that Source: CEIC, HSBC. Note: Data on deposits is available only up to December 2009.
7
Macro
Economics abc
26 May 2010
100bps in November 2009, we believe that more capital, no matter the source, has become less and
needs to be done. less efficient in Vietnam in recent years. The
decline in capital efficiency can be seen most
The willingness of the central bank to move
clearly in terms of the trend of what is called the
further might be curbed by their lack of
incremental capital-output ratio (ICOR), which
operational independence. There appears to be a
measures the ratio of investment to the increment
gradual build-up of support coming from the
or change in output.
authorities on that front, but we do not expect any
major breakthrough soon. (Please see the next 10. Capital inefficiency: Up, up and away
picking up rapidly. In 2007-08, Vietnam’s 19 90 1993 1996 1999 2002 2005 2008
closer to that of China. Unlike its northern Source: CEIC, HSBC. Note: It is not yet possible to calculate the 2009 ICOR for China,
because it has not released the expenditure breakdown of its GDP for the year.
neighbour, however, Vietnam’s investment is not
fully funded by its domestic savings, as reflected
As the chart above shows, Vietnam’s ratio has
in its current account deficit.
recently increased to its highest level in at least 20
So far, two external sources have been plugging years. Comparing its ICOR value of 7.9 in 2009
the domestic funding shortfall. FDI inflows have with the 4.5 figure of 2000 suggests that it took
proved to be strong, even during the extremely 75% more capital to produce one unit of output in
challenging global environment of recent times. 2009 than at the start of the decade. Moreover,
The other source remains development aid with Vietnam has been a more inefficient deployer of
bilateral lenders such as Japan, and multilateral capital than China in recent years, even as the
ones such as the ADB and World Bank pledging latter has often been accused of ‘wasting capital’
USD1-2bn commitments each this year.5 in its investment-driven growth. The country, in
short, relies on foreign savings to complement its
While we believe that the external sources should
domestic funding needs, but will have to continue
broadly cover the domestic funding shortfall in
to demonstrate to investors that it can deploy
the coming years, we are watchful of the declining
resources more efficiently.
savings in the country. This is particularly true if
we consider the fact that the deployment of Moreover, this challenge has become more marked
if we zoom in on the last two years. Going by the
ICOR value, it took 20% more capital to produce
5
In the case of multilateral aid, it will be interesting to watch one unit of output in 2009 compared to just a year
their loan terms in the coming years, as Vietnam graduates
above the low-income threshold. Already, the World Bank’s ago. The increase in inefficiency, of course, in part
USD1.2bn loans in the past few months come from its IBRD
arm (which provides loans to middle-income countries, with
may be related to the fact that the government
higher interest rates) as opposed to its IDA arm (which funds stimulus package ratcheted up state investments –
the world’s poorest countries with grants and concessional
loans). which jumped 38% y-o-y compared to the 15%
8
Macro
Economics abc
26 May 2010
Vie tnam
In this section, we look at the issue via the balance USD bn
10
of payments breakdown. 5
0
Specifically, Vietnam’s trade deficit is the chief -5
-10
culprit. In 2007 and 2008, its goods balance
-15
registered sharp deficits of around 15% of GDP. If -20
not for the substantial transfers in the form of -25
remittances and ODA grants, worth about 8-9% of 1997 1999 2001 2003 2005 20 07 20 09
6
“Vietnam’s currency now in balance – central bank,”
Reuters, 15 April 2010.
9
Macro
Economics abc
26 May 2010
13. While China's surplus proves to be a joint effort 14. Bring ‘em in!
USD bn China 60
Between 2004 and 2009, for every dollar that More recently, however, perhaps as a reflection of
Vietnam’s domestic sector exported, it imported how globalized Vietnam has become, the import
USD1.74 worth of goods on average – compared of iPhones has apparently surged as well. The
to imports worth USD1.20 in 1997-2003. (For the import of electronics and computers in total
sake of comparison, Chinese domestic players exceeded USD1bn in 1Q10, an increase of 53%
spend less than a dollar, roughly 80cts, on imports y-o-y, prompting a senior government official to
for every dollar they gain from exports). lament that “It’s not necessary for a poor country
to spend US$1 billion importing the iPhone!”7
The skewed export-import dynamics of Vietnam’s
domestic sector may be as much a reflection of its 15. If the iPhone did this, what might the iPad do?
10
Macro
Economics abc
26 May 2010
country’s capacity for exports – something that Why can’t they export more?
can hardly be said of consumer goods.
Not adding much
A taste for foreign goods extends beyond As we noted in the previous section, Vietnamese
consumer goods to influence choices made by products seem to have problems finding
domestic enterprises as well, it seems. customers even at home, such that local
consumers prefer imported goods.
It is seemingly bizarre, for instance, that Vietnam
should be importing scrap paper. Apparently, If that is the case, then what are the chances that
domestic paper product enterprises are hesitant to Vietnamese firms can compete to push their
source it from small domestic merchants who do products globally? Quite low, unfortunately.
not have official business permits from the
Looking at the breakdown of manufactured
government.8
exports, we find evidence suggesting that Vietnam
Less bewildering, but no less troubling, is still largely entrenched in low value-added
Vietnamese firms spent over USD1.4bn importing production.
fertilizer in 2009, despite the fact that domestic
16. The value-add gap widens
fertilizer factories have been running below
Mac hine ry exports, % of manufac tured expo rts
capacity, with 300,000 tons in storage to boot.
50
Vietnam’s sugar producers are 15% higher than 199 5 1997 1999 2 001 20 03 2005 2007
11
Macro
Economics abc
26 May 2010
The bigger role that the state is playing in Vietnam For its home-grown industries to compete
is probably largely due to the fact that it started its successfully in the cutthroat global markets and
reforms later than China did – by eight years, to be turn around the country’s trade deficit, it is hard to
imagine them doing so without the dynamism that
10 privately run enterprises typically deliver. On top
China has recently re-engaged further liberalization to
encourage the growth of the private sector, particularly in of that, let us not forget that the story of Vietnam
investment. For details, see the 13 May note “China transforming from a state-led economy into a more
further deregulates to lift private investment” by our
China economics team.
12
Macro
Economics abc
26 May 2010
market-based one is the underlying structural theme businesses disproportionately. Economies of scale
that the government and investors bought into to work within the context of lobbying power as
begin with. well, and their small size means that private
enterprises in Vietnam have had to adhere to
Small enterprises…remaining so
regulations drawn up by various state agencies
Apart from privatizing state-owned companies, with limited potential for recourse. As many as
boosting competitiveness should also entail giving 400 new such regulations have apparently been
existing private enterprises the space to grow. issued, sometimes putting heavy requirements on
Private and household enterprises currently private enterprises, even as 180 old ones were
contribute about 40% of the GDP – a sizeable abolished during the last major push to help the
chunk that could play an important role in private sector in 2005.12
boosting Vietnam’s competitiveness, but only if Lately, there have been some hopeful signs that
nurtured fully. the government is recognizing the need to level
Most of the private enterprises are small and have the playing field between small private enterprises
remained so. They are, by and large, engaged in and big state-owned ones. For instance, there is
low-tech production and are yet to be now a proposal to allow private firms to access
internationally integrated. The architect of financing from ODA sources – a funding privilege
Vietnam’s enterprise reforms, Dr Le Dang Doanh, that state-owned enterprises alone have been
stressed this fact by saying that about the only enjoying to date. However, as some observers
integration he knew of was that of household point out, this might have come too late given that
enterprises supplying spring rolls to big the country is scheduled to soon graduate away
international hotels in Hanoi.11 from its low-income status – which means that
preferential loan rates from development agencies
For these enterprises to grow beyond spring rolls may soon become less available overall.13
and the like, and have an improved chance of
competing globally, a number of hurdles need to Can foreigners do more?
be overcome. Access to financing is one of them. As we have noted in the previous section,
According to Dr Le, “it’s a fact” that as many as Vietnam’s trade deficit problem reflects more on
64% of small enterprises are denied access to the export-import gap of home-grown enterprises
bank loans, starving them of crucial funds to than its foreign-invested companies which are
expand and grow their trade. To some extent, already running trade surpluses in aggregate.
small businesses anywhere in the world tend to be
disadvantaged when it comes to funding, due to However, we wonder if there is any potential for
higher perceived risks. In Vietnam’s case, this foreign companies operating in Vietnam to
issue is compounded by the fact that the country’s contribute more towards the narrowing of the
banking sector remains relatively early in the trade deficit. After all, the foreign sector
development stage. commands a significant chunk of the economy –
at nearly 19% of GDP in 2008. Judging from the
Apart from funding difficulties, administrative still-rapid pace of FDI inflows into the country,
requirements may be affecting small private
12
“Bureaucratic hurdles still hobble private sector,”
VietNamNet Bridge, 10 April 2010.
11 13
“Bureaucratic hurdles still hobble private sector,” “Hopeful signs for the private sector,” VietNamNet
VietNamNet Bridge, 10 April 2010. Bridge, 11 March 2010.
13
Macro
Economics abc
26 May 2010
18. Vietnam's taking in FDI in droves 19. FDI getting less export-oriented?
the role that foreign-owned companies play in the indications that recent FDI into Vietnam may be
economy (and its potential to help turn around less export-oriented than before.
trade deficits) will continue to be important.
Compare the FDI inflows that the country is
As a proportion of GDP, Vietnam has been a receiving versus the trade balance of the foreign-
significantly larger recipient of foreign direct invested sectors, for instance. Even though
investment than China (Chart 18). Even at the realized FDI into Vietnam more than doubled
height of the Great Recession, it appears that from USD4.1bn in 2006 to an estimated
Vietnam remained a favourite destination for FDI. USD10bn in 2009, the trade balance of foreign
Despite a challenging global environment, the firms in the country stayed largely stagnant at
country took in realized investments of USD6-7bn, and dipped below USD5bn in 2009
USD11.5bn in 2008 and an estimated USD10bn in when faced with the especially tough global
2009 – a testament to the continued attractiveness environment of that year.
of Vietnam’s long-term growth story.
There seems to be less trade surplus bang for the
On an ongoing basis, the healthy FDI inflows, FDI buck, essentially. So, why is that the case?
together with the still-extensive development aid
For clues, let’s take a look at the sectoral
and overseas remittances have enabled the country
breakdown of foreign investments going into
to escape an outright balance of payments crisis,
Vietnam in recent years.
despite the perennially large current account
deficits that it has been running. However, the Interestingly enough, Vietnam has witnessed an
structural imbalances within the system are clear increasing share of foreign investment into its real
and it is inherently unsound to depend to such a estate sector. In 2009, the real estate sector
large extent on these inflows to plug the trade gap accounted for nearly 40% of foreign investment,
on a sustainable basis. It is much better to narrow for example, surpassing investment into the
the deficit somewhat to begin with. manufacturing sector, which has been slipping on
a relative basis. In contrast, the sectoral
Going local?
breakdown of investment going into China seems
In the context of enlisting the foreign sector to to have stabilized in recent years – at about 50%
narrow Vietnam’s trade deficit, it is slightly into manufacturing and 20% into real estate.
worrying to see that there are some early
14
Macro
Economics abc
26 May 2010
20. Are investors in Vietnam getting more 'grounded'? In the Executive Opinion Survey by the World
% o f total FDI Economic Forum, business leaders rank
80 Vietnam’s local supplier quantity at 74th and its
60 quality at 92nd out of 133 countries – as opposed
40 to China’s 11th and 53rd, respectively.
20 In an era where higher-end manufacturers are
0 adopting the extended production chain model,
03 04 05 06 07 08 09 Vietnam’s relative lack of suitable local suppliers
VN Manufacturin g VN Real Es ta te acts as an impediment towards attracting investors
CH Manufacturin g CH Real Es ta te who may be keen on using it as an export base,
Source: CEIC, HSBC particularly in the higher value-add production
stages – precisely the type that the country needs
One could interpret this as a trend where investors to narrow the gap between its imports and exports.
are keener to capitalize on the growing wealth of
the Vietnamese population by selling them houses Moreover, the lack of domestic suppliers means
and apartments, than to utilize the country as a that manufacturers are forced to import the
manufacturing base. If this trend continues, there necessary parts from other countries, further
may be some ramifications on the size of the trade compounding the trade deficit.
surpluses that the foreign-invested firms have The need to promote domestic suppliers
generated for Vietnam as a whole. After all, there reinforces the call for greater competition between
is arguably nothing less exportable or more local private and state-owned enterprises.
domestic-orientated than real estate. Alongside state firms, private enterprises can play
Foreign investments going into the manufacturing a key role in strengthening the local supplier base.
sector, in contrast, carry the potential of Without that, Vietnam may find it difficult to
increasing Vietnam’s exports and the chance to narrow its trade deficit on its own. It may also
help narrow its trade deficits. prevent foreign enterprises from taking their
Help us help you operations in Vietnam to a higher level, and
bringing the host country along with it.
To fully nurture the potential of foreign
manufacturers as export dollar generators,
improving the quantity and quality of local
suppliers is an important part of the game.
15
Macro
Economics abc
26 May 2010
Inflation
Vietnam has a tendency to suffer bouts of high inflation
Although factors such as food prices play a role, the lack of
central bank autonomy may matter more, structurally speaking
To successfully grow within the middle-income band, it needs to
project macroeconomic stability, including stable inflation
16
Macro
Economics abc
26 May 2010
territory again.14 In 2008, the policy rate hikes Discussions about granting more operational
came too late, such that real rates dipped as low as autonomy to the central bank have been going on
-14% in September that year. Together with for a long while now. In 2006, the prime minister
exchange rate depreciation pressure, this resulted approved a master development plan whereby the
in the significant dis-saving activities we saw SBV, by the year 2020, will be “independent in
earlier – demand deposits in the system dropped setting policies on monetary, interest rate and
more than 20% in y-o-y terms by November 2008. exchange rate management.”16
This might help More recently, a new draft law has been submitted
to the National Assembly for approval. Although
Despite robust growth and price pressures, the
this law would potentially grant more operational
SBV has kept the policy rate on hold since hiking
powers to the SBV, it stops short of dropping the
it by 100bps and removing the 4ppt subsidy on
ministerial agency status – a sign that central bank
interest rates on loans at the end of last year. This,
independence would remain elusive for a while
arguably, may reflect a preference among
longer.17
policymakers for growth over inflation. Allowing
more autonomy for the central bank might help to Having said that, there appears to be some gradual
alleviate this issue. build-up of support within the National Assembly
to promote central bank independence. The Vice
Its current legal framework stipulates that the
Chairman of the parliament’s Economic
SBV is a “ministerial agency of the
Committee recently acknowledged that the new
Government”.15 As of now, the SBV’s monetary
central bank law should be amended to give it
policies need the government’s approval before
“increased autonomy and flexibility in creating
they can be carried out.
and implementing monetary policies.”18
In addition to not having full control over policy,
All in all, however, the process of granting the
the SBV can sometimes have conflicting
SBV more independence looks unlikely to come
objectives. Lately, the government has been
any time soon, especially considering the elevated
directing the central bank to embark on cutting
political considerations in the run-up to the next
interest rates while achieving price stability at the
national congress early next year. This means that
same time – an unenviable, if not virtually
the anchoring of inflation expectations may
impossible, task barring a sharp fall in
remain an uphill battle.
international commodity prices.
14
For the calculation of the real interest rate, we have used 16
“State Bank law opens door to greater power,” Vietnam
the actual inflation rate as proxy for inflation
Investment Review, May 2009.
expectations, given that there is no data on the latter. 17
15 “Central Bank Independence: Another Perspective,” The
“Decree: Prescribing the functions, tasks, powers and
Saigon Times, 26 August 2009.
organizational structure of the State Bank of Vietnam,” 18
No. 96/2008/ND-CP, the Government of the Socialist “Vietnam lawmaker wants more autonomy for central
Republic of Vietnam. bank,” Thanh Nien, 14 April 2010.
17
Macro
Economics abc
26 May 2010
Conclusion
Vietnam’s challenge is to adopt strategies that will
see it progressing within the new middle-income
‘club’ that it has worked so hard to join. To this
end, minimising the occasional bouts of high
inflation and currency depreciation arising from
its trade deficit would help to reduce perceptions
about the country’s macroeconomic volatility.
18
Macro
Economics abc
26 May 2010
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personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Wellian Wiranto
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19
Macro
Economics abc
26 May 2010
Disclaimer
* Legal entities as at 31 January 2010 Issuer of report
'UAE' HSBC Bank Middle East Limited, Dubai; 'HK' The Hongkong and Shanghai Banking The Hongkong and Shanghai Banking
Corporation Limited, Hong Kong; 'TW' HSBC Securities (Taiwan) Corporation Limited; 'CA' Corporation Limited Singapore Branch
HSBC Securities (Canada) Inc, Toronto; HSBC Bank, Paris branch; HSBC France; 'DE' HSBC
Trinkaus & Burkhardt AG, Dusseldorf; 000 HSBC Bank (RR), Moscow; 'IN' HSBC Securities 21 Collyer Quay #03-01
and Capital Markets (India) Private Limited, Mumbai; 'JP' HSBC Securities (Japan) Limited, HSBC Building
Tokyo; 'EG' HSBC Securities Egypt S.A.E., Cairo; 'CN' HSBC Investment Bank Asia Limited, Singapore 049320
Beijing Representative Office; The Hongkong and Shanghai Banking Corporation Limited, Website: www.research.hsbc.com
Singapore branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities
Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC
Securities (South Africa) (Pty) Ltd, Johannesburg; 'GR' HSBC Pantelakis Securities S.A.,
Athens; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv, 'US' HSBC Securities
(USA) Inc, New York; HSBC Yatirim Menkul Degerler A.S., Istanbul; HSBC México, S.A.,
Institución de Banca Múltiple, Grupo Financiero HSBC, HSBC Bank Brasil S.A. - Banco
Múltiplo, HSBC Bank Australia Limited, HSBC Bank Argentina S.A., HSBC Saudi Arabia
Limited.
This document has been issued by The Hongkong and Shanghai Banking Corporation Limited Singapore Branch ("HSBC") for the information of
its institutional and professional customers; it is not intended for and should not be distributed to retail customers. The Hongkong and Shanghai
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contact in Hong Kong. If it is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in
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In Japan, this publication has been distributed by HSBC Securities (Japan) Limited. It may not be further distributed in whole or in part for any purpose.
© Copyright. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch 2010, ALL RIGHTS RESERVED. No part of this
publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying,
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MICA (P) 177/08/2009
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