Scenario - Vmeph Marketing Processes

Environment The Vietnam economic conditions remained uncertain but its domestic motorbike industry continued to grow at a steady pace. According to the statistics from the Vietnam General Statistics Office, gross domestic product (‘‘GDP'') of 2010 recorded a growth rate of 6.8% over the previous year and the consumer price index (‘‘CPI'') for the year grew by 11.8%, whereas number of motorbikes sold in 2010 amounted to 3.3 million units, representing a growth of 14% over the same period of last year. On 10 February 2010, just before Tet (Vietnam Spring Festival), the central bank devalued the currency by 3.4%, following a devaluation of 5.4% in November 2010. The foreign exchange against US$ has been depreciated from US$1:VND18,479 as at 31 December 2009 to VND19,500 at 31 December 2010. As at 21 February 2011, the exchange rate has been further depreciated to US$1: VND20,880 or 7%.

Vietnam has an unstable economy and high inflation rate for a few years. Measures to address the situation have so far focused mainly on adjusting monetary policy and implementing consumer-oriented programmes. Vietnam's economy has seen steady growth, but instability has increased because the economic structure is gravely imbalanced. Nevertheless, the Vietnam government has decided to pay greater attention to economic restructuring and re-examine public spending policy in order to stabilize the economy and control inflation.

Looking ahead, the Vietnam macroeconomic conditions will remain uncertain. As the Vietnam government has introduced a series of fiscal stimulus measures, we are optimistic that the Vietnam's economy will continue to grow at a steady and rapid pace, whereas the motorbike industry is also expected to have a faster growth. Most countries in the ASEAN region, particularly Malaysia and the Philippines, continue to achieve economic improvements and their motorbike industries will also grow at faster pace