Firm with Tasks in Last Months

Minister Vu Duc Dam said socioeconomic situations were changing positively and moving in the right track. Inflation was expected to be kept below 7 percent this year. GDP growth was higher quarter to quarter and the rate was expected to be higher in the fourth quarter. However, the government also considered revising down the target GDP growth to 5 - 5.5 percent rather than 6 percent as planned at the beginning of this year. He said the overall target for 2013 is the continuation of strengthening macroeconomic stability and preventing the recurrence of high inflation. GDP growth was forecast at about 6 percent in 2013 while inflation was lower than in 2012.

 

According to the Government, consumer price index (CPI) rebounded again after two straight months seeing a negative growth. August CPI expanded 0.63 percent against July, making it the highest rise in six months. Prices climbed 2.86 percent from January to August 2012 and 5.04 percent from a year ago, much lower than the rates in previous years.

 

Monetary policy was regulated actively and more flexibly. Regulatory interest rates dropped rapidly, by 4 -5 percent, to more easing rates for inflation development, macroeconomic stability and monetary market. Many banks were providing low-rate loans for good performing enterprises. Currently, lending rates for operations related to agriculture, export, supporting industry, small and medium enterprises are commonly at 10-13 percent per annum. Commercial loans for companies in other sectors stood at 12-15 percent per annum.

 

Agricultural production developed stably and generated good results. Aquatic output was estimated at 3.7 million tonnes in the first eight months of the year, up 4.9 percent year on year.

 

However, as forecast by the Government, socioeconomic situations were still prone to difficulties and challenges. For example, industrial index in the first eight months equalled only 64.6 percent of the growth rate in the same period in 2011. Export growth in August was lower than in July. Handling of bad debts of the banking system has not engendered positive changes while financial and monetary markets were developing complexly. Businesses were still facing with numerous hardships because of low domestic purchasing power, high inventory index, increasing bankruptcies, stagnant credit growth, and disappointing State budget collections.

 

Minister Vu Duc Dam said banks are always the lifeblood of economy. According to experts, the current banking system is not actually strong and this is a reason for economic volatility in the past time. Therefore, bank restructuring is one of three pillars of national economic restructure strategy. To ensure the healthy status of economy, this task must be placed atop.

 

Mentioning the captivity of banking tycoon Nguyen Duc Kien, Minister Dam said it was not until this incident the Prime Minister instructed relevant bodies to give an emphasis to bank crime prevention, especially illegal takeovers. Nonetheless, according to Dam, in recent years, many individuals and organisations sought ways and tricks to hold excessive stakes of banks. Therefore, the Government is determined to clean up the banking system to ensure the healthy lifeblood of economy and smooth performance of banking sector. Any violator will be strictly settled, he asserted.

 

Dam said the Government was looking to pull down the number of State economic groups to around five or seven from current 11, meaning several conglomerate-type groups will be disbanded. Kept conglomerates are the key to the nation like Electricity of Vietnam (EVN), the Vietnam National Oil and Gas Group (PVN) and the Vietnam Posts and Telecommunications Group (VNPT.) The remaining groups will be reorganised through dissolution, consolidation or handover to ministerial and local agencies.

 

As regards petroleum price regulation, Minister Dam said: We must move towards the market mechanism in order to avoid economic distortion. We must make clear factors constituting gasoline prices. The Governmental Decree 84 does not assign entire power of adjusting fuel prices to petroleum companies but hands the administration power to ministries. The Government wants petroleum prices to be made clear. The Decree 84 will be adjusted pricing mechanism to suit situations in 2013.