Systematically Tackling Integration Challenges

 

From the end of 2008 to June 2009, the most important economic fields like industrial production, manpower export, credit and banking operations in Vietnam were put under higher pressure rooted from global trade slumps. Vietnam will face more difficulties in penetrating foreign markets because of declining imports and trade barriers raised by importing nations to protect their production. Clearly, the plunging purchasing power on international and regional markets pulled down commodity prices as a result. Many exporting enterprises found it harder to sell goods when markets got narrower and export orders were cut.

 

Vietnam’s exports to the US are estimated to decline 7 per cent, to the EU (10 per cent) and to ASEAN (6 per cent). Prices of exported goods were lower than in the corresponding periods in 2008, especially crude oil, rubber, pepper, coffee and tea. Thus, export turnover in the first half of 2009 fulfilled only 39 per cent of the annual plan and fell 18.1 per cent year on year. To realise the goal of increasing the annual export revenue by 3 per cent to US$64.68 billion, Vietnam will need to rake in more than US$37 billion in the last six months, for nearly US$6.2 billion a month. This is a major challenge and it depends on the global economic recovery as well as export prices.

 

After more than two years entering the WTO, Vietnam has reaped successes on both internal and external fronts. But, amid challenges arising from economic crisis, Vietnam’s economic strategies need to shift its focus from controlling inflation to actively warding off economic slowdown in combination with macroeconomic stability and social security guarantee. Many policies and regimes have been applied to boost industrial and agricultural production, enhance economic competitiveness, accelerate trade promotion, expand export markets, control imports, narrow trade gap and stimulate domestic consumption. To deal with the hard penetration of locally made goods into the home market, Vietnam plans to scale up production, export, expand domestic market, and implement stimulus packages to avert economic slowdown and revive growth.

 

The two-year WTO entry is the time for Vietnam to examine its integration into the world and to find out best behaviours and methods. The crisis should be regarded as a blood-changing lesson for us to know values of the time to renovate and adapt comprehensively.

 

At present, active economists and leaders have adopted a new viewpoint. They regard economic crisis as the root that the economy needs to to tackle its weaknesses like exploiting natural minerals, taking advantage of low-cost labour and revamp high-level sciences and technologies. In an increasing competitive market, Vietnam will hardly effectively integrate with such weaknesses. Thus, it needs to restructure its regime and commodities in relation to the world.

 

Regarding policy change, Dr. Vo Tri Thanh, Deputy Director of the Central Institute of Economic Management (CIEM), said: “How is the adjustment and how is suitable to the reality and capacity of the Vietnamese economy. If we tighten the belt excessively, the economy will collapse or if we loosen excessively, the inflation will soar.”

Besides, the country needs to boost export promotion activities as it motivates or hinders the export growth. In 2009, it must double its spending for trade promotion activities to expand export markets. Measures to control inflation and narrow trade gap are seen crucial tasks in the last six months of 2009 to ensure stable import of crucial goods to serve export-oriented production, boost export growth and expand the GDP.