Foreign Ministry’s spokesperson Nguyen Phuong Nga Vietnam was “very disappointed” with the European Parliament’s recent resolution about its human rights and religious freedom status, foreign affairs department’s spokeswoman Nguyen Phuong Nga said last Friday.

The resolution, which was passed on Thursday, makes “absolutely wrong judgments about Vietnam’s real status without goodwill and objectiveness,” Nga said. “Human beings are the target as well as the driving force of Vietnam’s establishment and development.” Nga said approving the solution was an act against the benefits of the relationship between Vietnam and the European Union and has displeased Vietnamese citizens. While the European Committee’s representatives are in Hanoi for negotiations on a Free Trade Agreement, the European Parliament has proposed a binding clause on human rights and democracy be incorporated into current discussions on new cooperation agreements with Vietnam. Source: Tuoi Tre

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A worker at her rent house in Hanoi. Housing prices are so steep in suburban Hanoi that few people will ever be able to buy a place of their own.

The average income in the national capital is between VND10 million and VND15 million, while the cheapest dwelling of 50 square meters costs VND300 million, according to the Hanoi Socioeconomic Research and Development Institute. “That means a person would have to work for 25 to 30 years, and spend nothing in that time, to save up for a house,” the institute’s head, Nguyen Dinh Duong, said at a conference held by the Hanoi Construction Association on Friday. “So a huge number of urban residents will never buy a home.” The alternative, renting, is nearly as big a problem. There are now 55 industrial zones in Hanoi, but almost none supply accommodation for their workers, Do Quoc Tuan, deputy director of Hanoi Construction Department, told the audience. According to his department, only 30 percent of state workers have been provided with housing, and the college and university dormitories can barely accommodate 20 percent of the city’s 800,000 tertiary students. Hanoi will need investment of VND43.5 trillion to build enough housing for 60 percent of the students, 50 percent of the workers and five percent of low-income earners in the built-up area by 2015, Tuan said. His superior, Do Xuan Anh, said the task ahead was beset by “difficulties with policies to develop home funds and ensure investors get their money back.” “Housing development efforts are yet to meet the demand of young laborers and young married couples,” he said. In Hanoi so far this year, construction of 800 houses for low-income earners has begun in Long Bien District, and plans have been made to build housing for college students on nearly six hectares of land in two new satellite towns in Thanh Tri and Tu Liem districts. Duong said housing could be made more affordable by reducing the average area to 30 square meters or less and using inexpensive building materials. Nguyen Trong Ninh, deputy head of the Housing and Real Estate Management Department of the Ministry of Construction, suggested the government either invest directly to build housing for rent to low-income earners, or supply property developers with land to do the same. Duong gave the idea his support and suggested the housing problem might be eased if low-income earners accepted the idea of renting and gave up all thought of ever owning a place of their own. Source: Tuoi Tre

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Banks in Vietnam cut their dollar lending rates on the interbank market in the past week due to a growing surplus after firms switched to borrowing in Vietnamese dong under a government stimulus package, bankers said.

The State Bank of Vietnam said on Monday banks cut their dollar lending rates for nearly all terms in the week ending August 27. Rates on 12-month loans dropped to 1.7 percent from 2.8 percent the previous week. Many companies that needed dollars earlier this year have switched to borrowing in dong because of a government rate subsidy package, leaving banks with a surplus of the foreign currency, the official Securities Investment newspaper said. It said central bank measures to limit the use of the dollar in domestic markets had also helped reduce demand. On August 20 the central bank and the Industry and Trade Ministry agreed to tighten control over foreign exchange as dollar rates rose on the unofficial market and the country's exports were forecast to fall 6.4 percent this year to US$58.6 billion. On the unofficial market, the dollar rose to 18,390/18,430 dong on Monday from 18,370/18,390 last Friday. Commercial banks lent businesses about VND398 trillion ($22.3 billion), equivalent to 81 percent of the government’s loan-subsidy program, as of August 27, according to a statement on the government’s website. Last week the value of subsidized loans rose 0.43 percent from a week before, accelerating from 0.25 percent the previous week, central bank data shows. Governor Giau told a seminar last week the central bank would maintain its looser monetary stance, with the annual credit growth target lifted to 30 percent from the 25-27 percent set earlier by the government. Money supply would be targeted to expand 30 percent in 2009, accelerating from 20 percent growth last year, Giau said in a statement seen on Monday. “Inflation is on a rising trend in the last months of the year due to the impact of the easier fiscal and monetary policy,” he said, forecasting inflation this year at 6 percent to 8 percent. Consumer prices surged 22.9 percent in 2008. The central bank said state-run banks raised their dong deposit rates slightly, offering to pay 8.2-8.4 percent on six-month deposits against 8.0-8.4 percent a week ago, but that was below the 8.5-8.9 percent offered by partly private banks. Last week bankers said commercial banks extended their campaign to raise dong funds by increasing interest rates and in one case offering gold prizes. Source: Thanh Nien, Reuters

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The number of diabetes patients in Vietnam is increasing at one of the highest rates in the world with around 65 percent of people with diabetes unaware they are affected, health experts said Thursday.

The number of diabetics increases 8-10 percent every year, Vietnam Medical Association and the Construction Informatics and Consultancy Joint Stock Company said in their national communication joint-project on how to fight and prevent diabetes. Pham Song, chairman of the association, said 4 percent of urban residents in Vietnam have the disease with 2.5 percent in rural areas, accounting for 4.5 million patients across the country. The project aims to raise around US$5 million from individuals and businesses to establish consultancy channels and stronger connections between doctors and patients. The funds will also be used for public education specifically targeting the most vulnerable such as overweight children and people who don’t do physical exercise. Reported by Nam Son

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The Asian American Association (AAA) has received 114 Vietnamese antiques for an exhibition in the US starting next month and another one in February next year.

The antiques are considered typical of Vietnam’s north, south and central regions and will be first exhibited at the Museum of Fine Arts in Houston from September 13 to January 3 next year. They will then be showcased at the Asian Association Museum in New York from February 2 to May 2. The items, ranging from fine arts pieces to those relating to revolutionary history, are on loan from prominent museums nationwide including in Hanoi, Da Nang City, Hue, Ho Chi Minh City, and neighboring Dong Nai and Long An provinces. Source: Tuoi Tre

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Investors place orders at Viet Dragon Securities Corp. in Ho Chi Minh City. Foreign investment in Vietnamese stocks stands at US$5 billion, including shares in commercial banks, insurance firms and major companies, an industry report said Friday, up from $4.6 billion at the end of last year.

Earlier industry reports had shown a steep drop in portfolio investment from $7.6 billion in December 2007. The current investments included $1 billion by foreign strategic investors in financials and $4 billion from funds and institutions not based in the country, the Vietnam Association of Financial Investors’ report said. Vietnam caps foreign ownership in listed domestic banks at 30 percent, with a 15 percent limit for strategic investors that can be increased to 20 percent with government approval. Foreign investors now have shares in a number of Vietnamese banks, such as Saigon Thuong Tin Bank, Asia Commercial Bank and Vietcombank, the country’s largest partly private lender. The VN Index on the main Ho Chi Minh Stock Exchange has risen 70 percent this year. It added 1.8 percent on Friday. Source: Reuters

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A child peeks around the corner at a care center for HIV-afflicted in Ho Chi Minh City. Hundreds of HCMC parents pull their children out of school upon learning HIV-positive orphans have been enrolled.

It was just the second day of classes of the new school year, yet the An Nhon Tay Primary School in Ho Chi Minh City’s Cu Chi District was nearly empty on Tuesday. Just 98 students turned up with between five and 10 students in each class. It wasn’t because enrollment numbers were down this year, however, or because of influenza A (H1N1) fears. The reason for the sparsely populated school was in fact because hundreds of parents pulled their children out of classes upon learning the school had admitted 15 HIV-positive students this year. Principal Nguyen Van Chan said that on the first day of classes, many parents rushed into the building to remove their kids after seeing students from the local Mai Hoa Center for HIV-affected children entering the school. “In total, 255 students followed their parents home, and only 44 students stayed at school,” despite the school’s efforts to convince parents to let the kids stay, said Chan. Not until the school sent the 15 HIV-affected children back to Mai Hoa, did some parents allow their kids to return on Tuesday, a teacher said. The incident was a bitter experience, say officials from both An Nhon Tay School and the Mai Hoa center, as the two schools have made significant efforts to integrate the Mai Hoa children into the public school. The 15 children, mostly orphans, had been attending second to fifth grade classes at the center when they were finally given permission to transfer to An Nhon Tay School. Up until recently, nuns from Mai Hoa had been bringing the 15 kids to join some of the school’s ceremonies as well as festivals and sightseeing tours. Mai Hoa had applied for permission to let the HIV-affected children attend classes at An Nhon Tay School this year and had gained approval from the district’s education division, according to Chan. Yet, in the end, they still failed to gain approval from parents whose children were attending the school. “From the teachers’ viewpoint, all students are the same and should have the chance to go to school and study,” Chan said. “However, [allowing HIV-infected kids to attend a public school] is a very sensitive problem and it’s difficult to get society’s acceptance,” he said. “What we are most concerned about is that the HIV-affected children may get hurt [emotionally]. They are too little to be aware [of the stigma],” Chan added. A dream out of reach Since 2006, the Mai Hoa center has been making efforts to give the 15 children, of whom most were infected with HIV from their parents, the same education as offered in public schools. In 2007, Cu Chi District authorities finally agreed to let Mai Hoa offer academic classes for the children with textbooks provided by An Nhon Dong Primary School. However, they were still refused when applying to send the children to public schools last year. The children, who have already faced a host of untold hardships in their young lives, were extremely excited and hopeful upon learning of their acceptance into An Nhon Tay School this year, said Sister Bao from Mai Hoa. “The night before the first day of school the children were so excited,” Sister Bao said. “In the morning they got up at 5:30 a.m. and were ready to go to school. “But in the end, parents objected so much. My heart was broken seeing them stare at and dodge the kids,” Sister Bao said, adding that several of the Mai Hoa children began crying upon learning they would have to return to the center for the rest of the school year. A conference held in May on care programs for children with HIV/AIDS or who have family members with the disease, heard that discrimination against such kids is still rampant in Vietnam despite some schools accepting the children. Source: Tuoi Tre

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Vietnam’s largest banks will lower their interest rates on dollar deposits to 1.5 percent in June from around 2 percent now in a move to help avoid dollar hoarding in domestic markets, the central bank said.

All state-run banks plus Vietcombank, Vietnam’s largest partly private lender, have also agreed to set the ceiling for dollar lending rates at 3 percent, the State Bank of Vietnam said in a statement seen on Saturday. “The governor of the SBV is asking Vietnam Banks Association to seek consensus with other commercial banks to lower interest rates and (help) stabilize the forex market,” it said. The new rates come into effect tomorrow. The interbank 12-month dollar lending rates rose to 2.29 percent on Friday from 2.20 percent a week ago. This is still below the rate of 2.45 percent on April 29, according to Reuters data. The central bank said its inspectors will also step up large-scale checks from next month to deal with corporate dollar hoarding, which has pushed the exchange rate beyond regulated levels and led to a dollar shortage for the past several months. The Dow Jones newswire quoted Hanoi-based bankers as saying the SVB is implementing measures to make dollar holders sell greenbacks to banks, and encourage enterprises to borrow dollars instead of buying them. Earlier this month the government asked authorities, including the police, to help regulate foreign exchange transactions as part of efforts to reduce dollarization in the economy and control dollar rates on the black market. The central bank will accept the country’s recently issued dollar-denominated bonds as collateral in its dollar lending operations to help ease the tightness in dollar supply, bankers said on Friday. The central bank said it would accept foreign currency denominated “valuable papers” as collateral for the first time, without elaborating. Bankers said these papers would primarily include Vietnam’s US$230 million dollar bonds issued in March and they would be accepted in the central bank’s dollar lending operations. “This will accommodate the supply of short-term funds to banks which suffer from liquidity shortfall,” the bank said in a statement seen on Friday. Importers have been complaining they were unable to buy dollars at the official exchange rate due to dollar shortage at the banks. “The new rule would create a new mechanism for the central bank to intervene to solve the dollar shortage issue but given the amount of domestic dollar bonds, it will not be much,” a banker in Ho Chi Minh City said. The central bank said earlier this month that banks had plenty of dollars that they can lend but a shortage of dollars to sell as exporters preferred to keep their export earnings in the greenback on fear of a faster depreciation of the dong. Vietnam devalued its dong currency twice last year and the currency remains under pressure because of general economic uncertainty, an expected turnaround in the trade balance to a deficit and the fact that the dong has weakened less than many of its peers recently. The government estimated earlier this week that the trade deficit in May would widen to $1.5 billion from $1.18 billion in April. But State Bank Governor Nguyen Van Giau said last week he saw no need to adjust the dong’s exchange rate against the dollar on the grounds that the dollar was depreciating against other major currencies. The central bank allows interbank dollar/dong transactions to trade up to 5 percent on either side of the official reference rate. It set the rate at VND16,938 per dollar on Saturday. Source: Reuters, Thanh Nien

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An immigration counter at the Tan Son Nhat Airport. The Ministry of Health Sunday confirmed the first case of influenza A (H1N1) in Vietnam after a 23-year-old Vietnamese student returning from the US tested positive for the flu.

This is also believed to be the first case of influenza A recorded in Southeast Asia. “The patient was in the early stage of the disease and did not have high temperatures and symptoms of the disease when arriving at the airport,” said Deputy Health Minister Trinh Quang Huan. He said his ministry had instructed strict supervision of all passengers arriving on the same flight with the student, known only as Le Quang T., and people who had contact with him. T., who is being quarantined at the Hospital for Tropical Diseases in Ho Chi Minh City, has recovered well with normal appetite and has a normal temperature, the municipal Department of Health told the media at a briefing Sunday. The Vietnamese student studying in the US state of Wisconsin arrived at the Tan Son Nhat International Airport last Tuesday at 10 p.m. on United Airlines’ flight UA869 from Chicago that transited in Hong Kong. Arriving in Ho Chi Minh City with him were 189 passengers from HCMC and 23 other cities and provinces. “The patient arrived with no high temperature and later came to Thong Nhat Hospital in Tan Binh District to be examined after experiencing fatigue,” said Nguyen Van Chau, director of HCMC Health Department. A test carried out on Saturday found T. infected with the influenza A (H1N1) virus. The samples were then sent to the National Institute of Hygiene and Epidemiology and the HCMC Pasteur Institute for cross testing, and both tests provided similar results. A source told Thanh Nien that T. was initially diagnosed with a sore throat by Thong Nhat Hospital, and a viral fever by the Hospital for Tropical Diseases. On Wednesday, the Hoan My Hospital in Tan Binh District recommended that he get tested for the influenza A (H1N1) virus at the Hospital for Tropical Diseases after learning he came from the infected zone. He did not follow the advice initially but was persuaded to do so later by the Health Department which had been informed of the case by the Hoan My Hospital. Doctor Phan Van Nghiem of the HCMC Health Department said tests on five relatives in T’s house proved negative for the virus, adding that these people were still quarantined and being treated with preventive medicines. Tests are under way on other relatives, the housekeeper and a taxi driver who had taken him from the airport to his house, Nghiem said. The department has informed authorities in Hong Kong where the patient’s flight had transited, VietNamNet news website reported. High alert Health Minister Nguyen Quoc Trieu Sunday held an urgent meeting with representatives of the World Health Organization in Vietnam and concerned agencies to discuss measures to prevent the flu from assuming epidemic proportions. WHO representatives said the preventive health system in Vietnam has been actively monitoring the flu and timely detection in the first case would help prevent further spread of the disease among the larger community. The agency said it would closely monitor the case and would raise the alarm level to phase six – pandemic or community level outbreak - when it is necessary. Deputy Health Minister Huan said the ministry had instructed 24 cities and provinces to closely monitor the health of 189 people who had arrived on the same flight as the patient. “These passengers should voluntarily check their health at local facilities to protect themselves and the community,” he advised. Officials from the Bureau for Preventive Health came to HCMC to check on some families of the passengers. Meanwhile, medical workers at the hospitals where the patients had been examined are also required to follow quarantine regulations, the Vietnam News Agency reported. The city’s Agency for Preventive Health has sterilized the house of the patient in Tan Binh District with lime powder or Chloramine B, like other places the patient had visited before he was placed in quarantine. The city’s health department has instructed health facilities in all 24 districts to stand ready to fight against the possible spread of the virus, previously known as swine flu. “The Hospital for Tropical Diseases will be authorized to treat patients if there is an outbreak,” said department Director Chau. However, Chau said people should not be over anxious because authorities were doing their best to prevent any spread of the disease. Health authorities have called on the public to contact hotlines about any suspected case, at 0989.671115 for the Health Ministry and 08.39309981 for the HCMC Health Department. PREVENTIVE MEASURES AGAINST INFLUENZA A (H1N1) Wash hands with soap regularly. Use sterilizing spray/drops for nose and throat. Maintain strict hygiene at home. - Limit use of air conditioners. Go to the hospital immediately on symptoms of fever, cough and sore throat. Source: Vietnam’s Ministry of Health Reported by Thanh Tung – Nam Son

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Doctor Jean Meynard (2nd, R), vice chairman of the France-based Vietnam les Enfants de la Dioxine (The Children of Dioxin in Vietnam), visits the family of an Agent Orange victim in Hanoi’s Ba Vi District. The long-drawn out struggle for justice waged by Agent Orange victims continues despite the many setbacks posed by indefensible actions of the courts and successive US administrations.

The architect of Vietnam’s legendary military victories against the far more powerful French and American armies is 98 years old, but the soft-spoken general minces no words as he accuses the government and courts in the US of double standards. In a letter sent to the International People’s Tribunal of Conscience, Vo Nguyen Giap contrasts the courts’ dismissal of the suit filed by Vietnamese victims against US companies that produced the toxic chemical sprayed by American forces during the Vietnam War with the generous compensation given to US soldiers by the companies and the US administration. The wrong and unfair verdict of the US courts is unacceptable legally and morally, Giap says. The international tribunal will hold its hearing on the Agent Orange case in Paris on May 15 and 16. “I strongly believe that the International Peoples’ Tribunal of Conscience will come up with conclusions which will force the US side to be responsible for dealing with heavy and long-lasting consequences of the chemical warfare waged by the US against Vietnam,” Giap says in his letter. A 14-member delegation representing over three million Vietnamese victims of Agent Orange will depose before the tribunal. Late Monday afternoon, five members of the delegation, which includes three experts in the environmental, health and chemical disciplines, left Vietnam for Paris. The others will depart for Paris tomorrow, including three Agent Orange victims: war veterans Ho Ngoc Chu of Quang Ngai Province and Mai Giang Vu of Ho Chi Minh City, and Pham The Minh from Hai Phong City. As witnesses and victims, the delegation will supply the tribunal with specific evidence of the harmful effects of Agent Orange on Vietnam’s natural environment and human health, clarifying legal issues, so that the US side shoulders responsibility for compensation, said Nguyen Van Rinh, chairman of the Vietnam Association for the Victims of Agent Orange (VAVA), at a press briefing in Hanoi Monday. Between 1961 and 1971, the US Army dropped some 80 million liters of the defoliant known as Agent Orange, containing 366 kilograms of the highly toxic dioxin over large areas of southern Vietnam. The tribunal, convened at the initiative of the International Association of Democratic Lawyers (IADL), will consider the evidence and draw conclusions about the consequences to the environment and ecology of Vietnam and to the health of the Vietnamese people. It will also consider the responsibility of the US administrations during the period for the conduct of chemical warfare in Vietnam under Customary International Laws; as well as the responsibility of the US in remediation of the consequences suffered by the Vietnamese people. Ho Ngoc Chu, one of three Agent Orange victims attending the tribunal, said: “I propose the US government and US chemical producers accept the obvious fact, not cover it; and shoulder responsibility for dealing with consequences of the toxic chemicals on Vietnam's people and environment, including compensating them. There is no reason for the US government ignoring what they did in the past." The Vietnam Fatherland Front, the umbrella organization of all political and social groups in Vietnam, Monday called for the public to support the International Peoples’ Tribunal. The front’s presidium reaffirmed their support for the VAVA lawsuit and individuals representing victims of Agent Orange, and expressed their belief that the tribunal will fairly consider the evidence and draw conclusions. “We continue to affirm that the struggle for justice of Vietnamese victims of Agent Orange/dioxin is the voice of conscience and human rights, not only for local victims but also for the legitimate interests of other victims, including soldiers from the US and many other countries who participated in the Vietnam War,” it said. The presidium also called for governments, international organizations, scientists, lawyers, social activists and people in the US and other countries to speak up for the truth and take concrete actions to support and help Vietnamese victims in their struggle for justice. The legal case In 2004, Vietnamese Agent Orange victims filed a case against 37 US Agent Orange manufacturing firms in the Brooklyn District Court, New York. In March 2005, Judge Jack Weinstein dismissed the suit, ruling that there was no legal basis for the claim and that the US chemical companies were not liable for how the government used Agent Orange during the war. Three judges from the Circuit Court of Appeals in Manhattan then heard the Appeals case in June 2007 but upheld Weinstein’s ruling. In August 2008, VAVA petitioned the US Supreme Court to hear the case but it refused to do so in March 2009, without citing reasons. AGENT ORANGE CRUSADER STARTS ANOTHER ONLINE PETITION Secretary of the Britain-Vietnam Friendship Society Len Aldis is once again urging the US to bear responsibility for Vietnamese victims of Agent Orange and is looking to get one million signatures on his latest petition. Aldis created and wrote the “Justice for Victims of Agent Orange Petition” to President Obama and Members of Congress on Thursday. It can be found at http://petitiononline.com/Monsanto/petition.html. In the petition, Aldis notes that after the case brought to the US Supreme Court by dioxin victims demanding restitution from the companies was rejected in March, “Over three million Vietnamese and thousands of American servicemen and women, and their children, will continue to suffer from the serious illnesses and disabilities caused by Agent Orange.” Aldis also quotes the statement that Nguyen Duc made in November 2006 to an American journalist. Duc and his late brother Viet, both victims of Agent Orange, were born conjoined in 1981. Aldis, who expressed his frustration in a letter to President Obama immediately following the refusal on March 2, on Thursday urged the US president and Congress to heed Duc’s words despite the Supreme Court decision, and accept responsibility for and the moral obligations to the victims of Agent Orange. Reported by Bao Anh

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Residents of the Mexican capital are taking precautionary measures

Mexican authorities have closed schools and public buildings in the capital in a bid to contain a new flu virus suspected of killing up to 60 people.

Public events were suspended and residents donned face masks as concern grew over the outbreak.

Health experts say tests so far seem to link it with a new swine flu virus that sickened eight in the southern US.

US experts said they were taking the virus seriously and working to learn as much as possible about it.

But both the US Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) said that there was no need at this point to issue travel advisories for parts of Mexico or the US.

In Geneva, the WHO said an emergency committee would likely convene over the weekend. It said it had prepared "rapid containment measures" in case they were needed.

In the US, the White House said it was monitoring events.

US links

Mexican authorities suspect the virus may have been involved in the deaths of about 60 people, mostly in and around Mexico City, since mid-March.

A new swine flu strain has been confirmed in 20 of the deaths and 40 others are being tested, Mexico's health secretary said. More than 900 other people are thought to have been infected.

SWINE FLU Swine flu is a respiratory disease found in pigs Human cases usually occur in those who have contact with pigs Human-to-human transmission is rare and such cases are closely monitored

Officials said most of those killed so far were young adults - rather than more vulnerable children and the elderly.

On Friday, Mexican President Felipe Calderon cancelled a trip and convened his cabinet to coordinate a response.

Masks were being handed out to residents and reports said the streets were far quieter than usual.

Dr Richard Besser, acting director of the CDC, said that preliminary tests on seven out of 14 samples from patients in Mexico had matched the virus found in the US.

Eight people have fallen sick - six in California and two in Texas - with a virus that experts say is a new strain of swine flu. All eight have recovered and only one was hospitalised.

Dr Besser said more information was needed to determine the extent of the threat posed by the virus.

"We are not at the point - WHO is not at the point - of declaring a pandemic; we are at the point of trying to learn more about this virus, understand its transmission and how to control it," he said.

"In Mexico, other influenza viruses are circulating there, so sorting out which cases are caused by swine flu, which are other viruses and which are co-infections will be very important public health information."

Both the CDC and the WHO say they plan to send experts to Mexico to help investigate the virus.

Swine flu is a respiratory disease which infects pigs. It does not normally infect humans, although sporadic cases do occur usually in people who have had close contact with pigs.

There have also been rare documented cases of humans passing the infection to other humans.

Such cases are monitored very closely because of fears that a new strain of swine flu with the ability to pass from person to person could spark a pandemic.

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By Steve Schifferes Economics reporter, BBC News

Bank losses are even bigger than expected one year ago, the IMF says

The International Monetary Fund (IMF) has warned credit crunch losses could reach $4 trillion (£2.75tn), damaging the financial system for years to come.

It says that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery.

Banks may need $1.7 trillion in additional capital, the IMF forecasts.

And it warns that the cost of the bail-out will severely hit UK government finances with its added debt burden.

The power to force banks to raise additional capital rests with national regulators, such as the FSA, not the IMF Robert Peston BBC Business Editor Read Robert's blog

But the IMF corrected its estimate of the cost to the UK of the bail-out from 13.4% of GDP, or £200bn, to 9.4% of GDP, or £130bn.

The Treasury confirmed that the chancellor will be making a "prudent" estimate of the cost of the bail-out in the Budget, but many commentators believe this will be around £60bn, or half the IMF estimate.

The US and Ireland will face even higher government bills for the bail-out, according to IMF estimates.

Rising bill

One year ago, the IMF estimated that total losses from the credit crunch would be $1tn, which has been exceeded, showing how rapidly the financial meltdown has escalated.

The IMF now says that banks are likely to lose $2.7tn, but other financial institutions such as insurance companies and pension funds are also coming under strain.

And it says that emerging market economies, which will need $1.8tn in refinancing next year, will be hard-hit by the collapse of cross-border lending. It predicts that there will be no net private lending at all to developing countries this year.

WHY $4TN LOSS MATTERS The banks' huge losses have made them reluctant to lend The lack of lending has pushed the world economy into a deep recession Government budgets are strained by the cost of the bail-outs, hitting taxpayers

The report comes as the IMF and World Bank are beginning their spring meeting in Washington, after receiving a promise of $750bn in fresh funds agreed at the G20 summit.

Policy response

The IMF's latest Global Stability Report says that the banking system has not yet been stabilised, despite the billions of dollars spent by governments.

But it warns that political support for further bank bail-outs is waning.

It says that there may be "a real risk that governments will be reluctant to allocate enough resources to solve the problem" because the public has become "disillusioned by what it perceives as abuse of taxpayer funds".

The situation is especially difficult in the US, where Congress appears reluctant to allocate additional bail-out funds above the $700bn approved last autumn despite the inclusion of another $750bn in President Obama's latest budget proposal.

Systemic risks remain high and the adverse feedback loop between the financial system and the real economy has yet to be arrested IMF

The US Treasury has instead proposed a private-public partnership to buy up troubled assets underwritten by loans from the Federal Reserve.

But the IMF comments that "uncertainty about political reactions may undermine the likelihood that the the private sector will constructively engage in finding orderly solution to financial stress".

Deeper recession

The IMF says that restoring the banking system so that it functions normally is likely to take several years, and this will make the recession longer and deeper than usual.

But it warns that if policies are unclear or not implemented forcefully and promptly, "the recovery process is even more delayed and the costs, in terms of taxpayer money and economic activity, are even greater".

It adds that the worldwide recession has deepened the financial crisis.

COST OF REBUILDING BANKS US banks: $275bn Eurozone banks: $725bn UK banks: $250bn Other European banks: $225bn Source: IMF, based on 6% capital/assets ratio

"Systemic risks remain high and the adverse feedback loop between the financial system and the real economy has yet to be arrested, despite the wide range of policy actions and some limited improvement in market functioning.

"Further effective government action - particularly geared toward cleansing balance sheets and strengthening institutions - will be required to stabilise the global financial system and to provide the foundation for a sustainable economic recovery."

On Wednesday, the IMF will present its world economic forecast.

It is expected to be the gloomiest for 60 years, with the world falling into a global recession, and an even sharper decline in output in the rich countries.

An earlier version of this story referred to an IMF estimate that the total cost of bailing out the UK banking system would add 13.4%, or about £200bn, to government debt. The IMF has since corrected this figure, and has returned to their earlier estimate that it would cost 9.4% of GDP, or about £130bn.

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The remains of a nghien tree in Hao Nghia Commune forest in Bac Kan Province. Deep inside the Hao Nghia forest, the sounds of nature are absent.

No bird chirps, no insect buzzes, not even the sound of wind rustling the leaves can be heard. The sounds of the forest are completely drowned in the roaring and buzzing of electric saws that are felling huge nghien trees that flourish in more than 400 hectares of limestone forest in Na Ri District’s Hao Nghia Commune in the northern province of Bac Kan. The forest is considered the province’s treasure because of the nghien trees, whose timber is hard, heavy and fairly worm-resistant. It is suitable for making tools, vehicles, ships and furniture. Scientifically known as Burretiodendron hsienmu, this species is also found in China, where it is called xianmu. In China, over-felling of both young and large xianmu trees have pushed it to the edge of extinction. Guided by a Nung ethnic minority resident, Thanh Nien found four fresh stumps in an area less than 0.05 hectares, each measuring more than a meter in diameter. The guide, Lam Truong Ngang, estimates that the biggest tree, would have weighed more than 30 cubic meters before felling. At least 100 nghien trees in the forest have been chopped down in the past two months, says Nung, who has lived in the area for about 40 years. Nguyen Ba Ngai, acting director of the provincial Department of Agriculture and Rural Development, admits “the forest of Hao Nghia Commune is being devastated. “The price of nghien timber chopping-blocks sold to China has surged almost double over the past two weeks.” A block 20 centimeters thick and around 50 centimeters in diameter can sell for VND200,000 (US$11) inside the forest and VND350,000 ($20) when brought to the main street. “It’s hard to protect the forest then,” Ngai says ruefully. Locals say illegal logging in the forest became rampant last November after the department allotted the Agriculture and Forestry Development Investment Company 56 hectares to gather burnt, spoilt and dry wood left behind by the loggers. More locals have become loggers since then, fearful of losing the timber pie to the company under Vietnam Timber and Forest Products Association. Quite a few people have lost their protective spirit, saying authorities have made it easy for the company to destroy the forest. Ngai rejects this. “Our supervisors can guarantee that the company doesn’t abuse the permit,” he says. Last February, Na Ri District administration appointed a team of six officials of the Hao Nghia Commune to take turns to oversee 100 workers and 20 electric saws deployed by the company at all times. The supervisors were supposed to work independently, but they have received VND4.5 million ($254) a month from the company from November to February. Head of the team, Hoang Khai Chien, who is also chairman of the commune’s People’s Committee, says he did this work only on the weekends. He adds that the team only signed written receipts for being paid as a “kind of salary for supervision.” No labor contract exists between the parties, yet Ngai says: “There’s no mystery here. “The supervisors cannot work for no payment, and they’re not allowed to get paid from the state budget.” The team has given the company a clean chit while the provincial Forest Management agency recently found more than four cubic meters of nghien timber in the company area and more than 38 cubic meters just outside, all newly felled. Farmland invasion In the Central Highlands province of Dak Lak, many hectares of forests have been, and are being cleared for use as farmland for growing cash crops like coffee, cashews and pepper. The impacts of forest loss have been obvious - severe droughts, floods and the loss of groundwater. Droughts every year for the past 12 years have caused losses of more than VND8 trillion ($451.6 million) for local farmers, while floods in the same period have killed 127 people, damaged houses, orchards and fields worth some VND1.4 trillion ($79 million), according to the provincial agency responsible for disaster mitigation and flood and storm prevention. Yet the flow of immigrants is unchecked, and they continue to replace forests with farmland. Nguyen Dai Nguong, director of the provincial weather bureau, says immigrants first destroy the forests for farmland, which are in turn damaged by droughts and floods caused by deforestation. The rapid loss of forests over the past 10 years has loosened the soil and caused rainwater to flow straight into the rivers and lakes instead of recharging the groundwater, he says. This also robs the area of its topsoil, which can have disastrous implications for agriculture in the long run. Le Cuoc of the provincial Forest Management agency says the coverage of forests in Dak Lak has dropped to 45.8 percent from 70 percent 20 years ago. Districts that grow a lot of coffee are also the ones that have small coverage of forests, Cuoc says. Coffee has taken over more than 170,000 hectares of forestland. The province’s capital city Buon Ma Thuot used to be surrounded with thousands of hectares of forests. “Wild animals wandered into the city sometimes,” he says. But now, the city only has 551 hectares left, covering 1.5 percent of the area. Of these, less than a tenth is natural forest. Reported by Vu An – Tran Ngoc Quyen

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A broker (2nd, L) at real estate company Dat Xanh points out locations to potential buyers Interest rate cuts and cheaper construction material costs have pushed down housing prices in Ho Chi Minh City, said a senior executive at a property company.

Some developers have reduced apartment prices by 40-50 percent from last year as construction material prices have fallen to a three-year low, said Luong Tri Thin, general director of property firm Dat Xanh. He also said builders could now borrow easier from banks, enabling them to complete projects at lower initial costs. Efforts to stimulate the economy have seen the central bank slash the key rate from 8.5 percent to 7 percent, allowing commercial banks to charge interest on dong loans up to 50 percent above the benchmark rate, which is now only 10.5 percent a year. Dat Xanh plans to offer 224 apartments in the SunView Apartment building in HCMC’s Thu Duc District at the price of US$764 per square meter, a drop of more than $500 a square meter from last year. According to the HCMC-based firm, 60 percent of its customers wanted to pay no more than VND1 billion ($57,200) for a full apartment while only 10 percent were in the market for apartments at $1,500 per square meter or more. Property firm Vinh Tuong has begun selling apartments in Block 3 of the Tan Tao Building in Binh Tan District at some VND9 million ($515) per square meter. Each 70-120 square meter apartment has two bedrooms. Apartments in Nam Long Company’s Ehome Building in District 9, which is under construction and scheduled to open by September, are on sale for VND11.5-14.5 million ($671-847) per square meter. Apartments larger than 50 square meters at the 17-storey Sunshine Building under construction in Thu Duc District are expected to be sold for only VND500-VND600 million ($29,197-35,036). HAGL Land cut prices for its new Hoang Anh River View apartments in District 2 by 40 percent to US$1,350 per square meter last week. It has also lowered prices at another project in Nha Be District to $1,250 from $1,800 per square meter. Le Hung, director of HAGL Land, said the price cuts would “revolutionize” the HCMC property market in line with government efforts to stimulate the economy. In Hanoi, medium and low-income apartments are selling for a whopping VND25 million per square meter, said Le Xuan Truong at property firm B.D.S Co. Thin told Thanh Nien that property firms didn’t expect profits this year to look anything like they did in 2007, when prices and sales went through the roof. But 2009 is set to beat dreary 2008. “Their earning growth target is 20- 30 percent this year,” said Thin. In another boon to the local property market, several banks have recently begun offering loans for house and apartment purchases. Western Bank is lending a maximum of VND1 billion to potential homebuyers at interest rates of between 10.5-13.2 percent a year for the first three months. Tien Phong Bank is offering 15-year mortgages worth 70 percent of the house value at 10 percent interest. Vietnam Export-Import Commercial Joint Stock Bank, or Eximbank, Asia Commercial Bank and Sacombank are also offering housing loans. Reported by Thanh Nien staff

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Ho Chi Minh City will encourage more investment in advanced mechanical engineering and the electrical, electronic, and chemical industries in its industrial parks, an official said.

By 2020 about 7,000 hectares of land would be earmarked for setting up factories in three export processing zones and 12 industrial parks in the city, up from the current 4,000 ha, Vu Van Hoa, chairman of the HCMC Export Processing and Industry Zone Authority (Hepza), said. By last year the parks and zones housed nearly 1,200 projects with an investment of US$4.36 billion, of which 463, worth $2.63 billion, are foreign-owned, according to Hepza. They contributed $17 billion to the country’s total export of $62 billion last year, it said. Reported by Minh Quan

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A Ho Chi Minh City court Wednesday sentenced 24 defendants, including three Malaysians who are still on the run, for organizing and participating in illegal gambling.

Lim Leong Seng, Goh Ming Huat, and Chan Chee Sing, all from Malaysia, received five, four, and three years respectively for organizing gambling, the court ruled Wednesday. The Malaysian trio fled Vietnam after charges were laid last year and they were placed under house arrest. The Vietnamese police have been working with the International Criminal Police Organization (Interpol) but have not been able to locate them. Vietnamese Le Anh Tuan was jailed for three years, Vietnamese Le Thi Hong Nhung two and a half years, and Vietnamese-American Hua Quan Timmy six months and 22 days, also for organizing gambling, the court said. The other 18 Vietnamese defendants, found guilty of illegal gambling, received sentences ranging from one-year suspensions to two and a half years in jail. All 24 defendants were fined between VND10 million-50 million (US$572-2,860) each. According to the indictment, the six people charged with organizing gambling had connived to lure Vietnamese citizens to casinos at three luxury hotels in HCMC between April 2006 and May 2007. Vietnamese law prohibits Vietnamese citizens from gambling but allows hotels rated four-stars and above to operate casinos for people holding foreign passports. The police shut down the operation in May 2007 after raiding three clubs: De Palace Club at the Saigon Food Center in District 1, the Victoria Club at the Duxton Saigon Hotel in District 1, and the OV Club at the Equatorial Hotel in District 5. All of the clubs were run by Malaysian businessman Yap Kim San, who still hasn’t been charged. The court Wednesday also called for continued investigations into Yap’s role in the case. Reported by Le Nga

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At least 350 households at the 727 Tran Hung Dao apartment block in District 5 have refused to relocate, citing unsatisfactory compensation. The block is in imminent danger of collapsing. Unsatisfactory compensation and relocation plans are blamed as residents stay on.

Its foundation has sunk and cracks run up and down the walls as though they are ropes used to tie the building to the ground. Residents of the apartment block in Ho Chi Minh City’s District 5 know that their building is crumbling and on the brink of collapse, but they are staying put. The deadline for relocating the residents, so that the 727 Tran Hung Dao apartment block in District 5 could be demolished for a skyscraper to take its place, was April 30 this year. As with other similar projects, inadequate compensation and relocation plans have left residents angry and uncertain about their future. On December 10, the municipal administration issued another dispatch saying the eviction and site clearance of the apartment block, home to 535 households, must be completed by next March at the latest. But so far at least 350 households have declined to move, despite the fact that the block could collapse at any time. Under the relocation plan, each evicted resident would receive compensation of between VND7-8 million (US$412-471) per square meter depending on the floor they live. “The compensation fees for my apartment, covering an area of 25 square meters, would be just around VND200 million ($11,772). How can I buy a new house with that money?” asked a resident on the third floor. Nguyen Van Nha, the block’s deputy manager, pointed out another shortcoming hindering the relocation. As part of the plan, the block residents are set to be moved to the Nguyen Bieu apartment block in the same district. Since each apartment there is nearly double the size of their current residences, evicted residents are being asked to pay for the surplus area which costs between VND23-29 million ($1,350-1,700) per square meter. That means each evicted resident would have to pay an additional VND600 million (about $33,400) each for their new apartment, Nha said, saying this was another reason discouraging hundreds of households in the block from moving. Compensation disputes have also bogged down two other dilapidated apartment blocks in the city. In its December 10 dispatch, the city government mentioned that the buildings on 192 Nam Ky Khoi Nghia Street in District 3 and 289 Tran Hung Dao Street in District 1 will also have to be demolished by March 2009. But 15 households sharing the same walls with the 289 Tran Hung Dao apartment block in an adjacent alley have insisted on staying though the investor has offered to increase their compensation fees to VND90 million ($5,300) from VND69 million ($4,061) per square meter. The investor also promised to provide them with financial assistance of between VND350-450 million ($20,600-26,500) each. Recently, the District 1 government warned it would carry out compulsory eviction of those 15 households if they continued to defy the relocation directive. At the apartment on Nam Ky Khoi Nghia Street in District 3, two evicted households have lodged complaints about unsatisfactory compensation. THE MASS RELOCATION PLAN In a dispatch issued on December 10, the HCMC government said it would spend around VND1.78 trillion (US$104.4 million) for revamping dilapidated apartment buildings with around 2,000 households set for eviction. The Department of Construction is tasked with overseeing the demolition of 20 ramshackle apartment buildings between now and 2010 and ensuring evicted residents are properly housed in new homes. The apartment buildings at 289 Tran Hung Dao Street in District 1, 192 Nam Ky Khoi Nghia Street in District 3 and 727 Tran Hung Dao Street in District 5 will be the first to be demolished. After 2010, another 156 apartment buildings are set to be demolished and some 14,300 households resettled, the dispatch said. Reported by Tran Thanh Binh

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Hanoi’s Department of Labor, Invalids and Social Affairs said the highest annual bonus granted to employees in the capital so far was VND80 million (US$4,500) each.

The employees who will receive the fat bonus work for a foreign-invested beverages company, according to the department. Further details were not available. The average bonus at foreign-invested enterprises in the capital city was VND3.1 million ($177) – a 1.5 percent increase over last year; and the lowest bonus at a foreign-invested firm was VND300,000 a person. Overall, the lowest bonus given in Hanoi this year was VND100,000 a person ($5.71). Only 79 businesses have provided information about bonuses. Source: SGGP

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The Vietnamese people remain positive during this time of economic difficulties, according to a recent survey by The Nielsen Company While much of the world is in turmoil over the current economic and financial environment, there’s a relative calm over Vietnam.

Although it might be naïve to assume Vietnam is immune to the woes of the global economy and financial sector, some experts are presenting a rather buoyant and optimistic outlook for Vietnam and Asia in 2009 and beyond. Growth in Southeast Asian economies has slowed dramatically as the global economy withers, but the region is by no means experiencing what the US, Europe and Japan are. The Asian Development Bank forecasts Vietnam’s GDP growth at 5 percent; the World Bank forecast is higher, at 6.5 percent – significantly lower than previous growth of around 8 percent. Ayumi Konishi, Vietnam Country Director of Asian Development Bank (ADB) believes the situation in Asia right now is relatively good. Speaking at a luncheon hosted by Eurocham on Thursday, Konishi said that the impact of the global financial crisis is likely to be deeper and longer than expected. But he expressed some positive prospects for Vietnam and Asia in general. The ADB expects good growth in the short-to-medium term for Asia, with the region and the economies fundamentally sound. Konishi said he doubts that there will be a repeat of the Asian financial crisis of 1997. The global financial crisis, which started in the G3 countries in the financial sector and moved to the real economy, has now impacted businesses and bottom-lines somewhat indiscriminately, and affected both blue collar workers and executives. Konishi said that with any impact in Asia, we’re likely to see the reverse trend, with the real economy being hit first – businesses and banks’ balance sheets are likely to be hurt – followed by a weakening of the corporate and then the financial sector. These comments come off the back of three economic agreements signed by Southeast Asian nations on Tuesday, aimed to encourage investment and reduce tariffs. The trade agreements by the Association of Southeast Asian Nations (ASEAN) were ratified after the enactment of a new charter in Jakarta on Monday, setting free trade and political liberalization standards for the 10 members. The Vietnamese government this week announced it would expand a proposed US$1 billion economic stimulus package to $6 billion, in part through increasing tax breaks for importers, manufacturers and consumers. The details of that package are yet to be announced. Konishi, who recently attended the Consultative Group Meeting in Hanoi, indicated the direct impact of the global financial crisis on Vietnam would be small. He said Vietnam’s financial sector would feel little impact since the big financial institutions that are in trouble have little investment here. According to Vietnam’s General Statistics office and ADB’s calculations, Vietnam’s exports and imports have declined from July 2008 onwards. The country’s stock market has performed poorly and was one of the worst in Asia this year, with the benchmark index tumbling by about 67 percent. The Ho Chi Minh Stock Exchange has seen dramatic fluctuations this year, and it’s now back to its 2006 level of about 300. “As long as it stays at 300 level... I don’t think we should be too worried,” Konishi said. There will be indirect impacts on Vietnam as well. The ADB predicts Vietnam will see slower exports, further decreases in tourist arrivals, weaker foreign direct investment (FDI) and declining remittances and labor exports. International Market Assessment (IMA) Asia’s latest Asia Pacific Executive Brief for December 2008 states that industrial production has slowed down to 5.6 percent year-onyear in November compared to a peak of 35.7 percent year-on-year in March. As the global economy slows down, many companies which have production based in Asia, will start to close down some manufacturing plants, but also open up others, said Konishi. “The question is will Vietnam be attractive enough? It will depend on how Vietnam can improve the business climate,” he said. And on Friday, grim news from the President of the World Bank, warning of a worldwide struggle in the first half of 2009. “I am afraid that the first six months of 2009 are going to be problematic worldwide, including Asia and Southeast Asia,” Robert Zoellick told journalists during a visit to Singapore. “Governments’ monetary and fiscal policy, as well as open trade systems, will determine whether the situation can improve later next year,” he said. But the Vietnamese people remain positive during these uncertain times. A recent survey by The Nielsen Company shows consumer confidence in Vietnam is still relatively high, ranked 9th worldwide, although it has been declining over the past year. The Global Consumer Confidence Survey carried out in the midst of the crisis in October, found 45 percent of Vietnamese expect the recession to end within 12 months. Reported by Asha Phillips

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