A majority of economic specialists attending the seminar on “Solutions to economic stimulus and problems against the Vietnamese economy” held by the National Assembly’s Vietnam Economics Committee and the Vietnam Social Sciences Institute in Thanh Hoa province recently agreed that Vietnam should double its consideration before pursuing demand stimulus policy.
Stimulus to right addresses?
Dr Tran Dinh Thien, Head of the Vietnam Economics Institute, said, according to the report by the State Bank of Vietnam, among VND400 trillion lent under the 40 per cent interest subsidized programme as of end-August 2009, up to VND264 trillion was provided for private enterprises and some VND70 trillion for household businesses. However, the intermediary sector has benefited the most from the stimulus programme, not the direct production.
According to the data of the General Statistics Office (GSO), the production sector received VND100 trillion of additional investment capital in the same period. “So, where has the remaining VND230 trillion gone to? How are the money flows affecting the market?” Mr Thien said.
Mr Uong Chu Luu, Vice Chairman of the National Assembly, the largest legislative body in Vietnam, said: “It is said that intermediary sectors have benefited more from economic stimulus packages than direct production fields. Initial statistics and inspection results show that direct production enterprises do not make high profits. Meanwhile, many commercial banks posted remarkable profits in the first six months of the year. This needs analysing and clarifying.”
Mr Benedict Bingham, Country Director of International Monetary Fund (IMF) in Vietnam, said: “Investment flows from the private sector had slumped since late 2008. In the first quarter of 2009, this flow of direct capital declined an additional US$1 billion and the figure was US$818 million in the second quarter. The addition of US$670 million into the State-run sector in the first half of the year was smaller than US$1.824 billion drawn from the private production sector.
Although there has not been official conclusion or report on the misuse of soft loans, the rally of the stock market and real estate market suggests capital inflows for these markets.”
Long-term solution needed
Benedict Bingham remarked: “Recently, IMF has worried about the imbalance of the Vietnamese economy.” The easily visible development is the widening gap between official exchange rates with the free market rates, he said.
Payment imbalance is reflected in both current account balance and capital account. According to Mr Benedict Bingham, if gold export is included, Vietnam’s current account is now minus VND2.4 billion. In regard to capital account, although foreign investors disbursed US$3 billion, the macro capital balance is still minus US$1.15 billion.
Mr Nguyen Dong Tien, Vice Governor of the State Bank of Vietnam, said: “The payment balance of Vietnam is under very high pressure as the deficit has already amounted to roughly US$3.6 billion in the first half of the year. If the deficit is large in 2009, the payment balance will be further burdened in 2010.
Mr Ha Van Hien, Head of the National Assembly’s Economics Committee, frankly said: “Several experts proposed to prolong the short-term stimulus programme, which is based on granting 4 per cent interest rate for borrowers, or an extra stimulus package called by some experts, to reduce the shock for enterprises. In my opinion, I support stopping the short-term lending and the remaining capital of the short-term stimulus package will be used for medium-term and long-term lending.”
However, the disbursement for medium and long-term loans with 4 per cent interest rate subsidy is so far slow. According to a source from the National Financial Supervision Committee, the figure was around VND33 trillion as of end-August 2009. Thus, the method of the new supporting programme needs to be considered in a different angle.
Tuan Duong
Vietnamese
