Vietnam grows but problems persist.

A story in the International Herald Tribune (Neuilly) on April 5, 2007, acknowledges that Vietnam is growing impressively. It reports that the country is "awash" in foreign capital and implies that a financial "bubble" may be forming, but that "Undue pessimism is not justified."

The country's consumers need not worry because, as the Tribune points out, Vietnam's government is approaching its market economy evolution conservatively and, "has always shown a cautious, step-by-step approach to economic reform and is unlikely to be rushed into over-rapid liberalization." Vietnam has "the highest sustained growth" in the region, after China, and has managed to avoid China's "investment excesses," and critical environmental difficulties.

Nonetheless, several problems need to be addressed.

Particularly critical to both consumers and investors is the state of Vietnam's banking system. There is some question, says the Tribune about the actual amount of state bank non performing loans. The official rate is 5 percent. But the Tribune thinks non performing loans may be closer to 20 percent.

In addition, many of the private banks in the country are undercapitalized. A growing foreign bank presence, however, may help the banking sector improve.