Vibrant Changes Needed

Dr Nguyen Dinh Cung said that the biggest goal in 2013 is maintaining a stable macro-economy and solving the difficulties of restructuring Vietnam’s financial system and the overall economy.

 

If you look at the recent statistics by the General Statistics Office (GSO), there are still many things to be mentioned. The first is that the GDP growth rate is still low. It only reached 5.03 percent. This figure is considered relatively low compared with those of some countries in the region. It is also lower than the target set by the National Assembly. As everyone knows, in the first months of 2012, we had expected GDP growth rate to reach 5.7 percent, 5.3 percent, and then 5.2 percent. In addition, the inventory index of many commodities remains high. This represents significant stagnation of the economy. Moreover, the consumer price index (CPI) was changing irregularly, different from other years. However, in the economy, there are still bright spots. Specifically, after almost 20 years, we were able to reach a trade surplus. FDI attraction is still rather high. Although it is less than in 2011, but in such a tough economic situation, this year it is still acceptable. We can easily recognise the ascendancy of investors from Japan with large investments, ranking first among international investors. The investment focus is moving away from industries that can earn quick profit such as real estate, stocks and shares, to basic investment into other areas like manufacturing, ports and transportation infrastructure.

Overall, the economic growth rate has increased. A stable macroeconomic situation is the prerequisite for operating policies in 2013.

 

We did recognize the economic strength in 2012, but we still must frankly recognize that in the current and future context, if we want to develop sustainably, we have to clearly define socio-economic tasks. First of all, it is essential to improve the strength of the banking system. Because in the last year, the economy witnessed the collapse of many banks, both commercial and state-owned, which failed to operate effectively. The increased liquidity and lower ceiling interest rate are all rescue measures, but only useful in the short term. In the long run, there should be policies strong enough to improve the capacity of the entire banking system. We are even willing to remove or merge weak banks to create a new banking model which can operate more efficiently. Besides, there should be changes in the implementation strategy of fiscal policy. The state should cut spending to reduce taxes so that it create resources for the development of the private and social economy.

 

In addition, Vietnam also needs to really take economic restructuring into consideration. I think it is crucial to allocate resources across the economy to establish an economic structure promoting market competitiveness and sustainable growth. The state must act as an agency to build institutions and policies and help the market operate efficiently to return to the task of restructuring. The state does not do the work of enterprises. Also the state should gradually remove subsidies in a number of industries and fields showing inefficient operation. Specifically, in the field of public investment, state-owned enterprises (SOEs) currently account for nearly 40 percent of active social investment, but they are operating very inefficiently. We need to apply the breakthrough in many stages and consider the business community the centre of economic development if we hope to succeed.

 

The CPI released by the General Statistics Office recently did not show positive changes. Accordingly, while in previous years people always had a trend to shop more in the end of the year, it is predicted that in the early months of 2013, customers will not have much demand due to the ill effects of the domestic and international economy. This has a direct impact on the business community which has suffered difficulties such as reduced purchasing power, higher cost and raw material price fluctuations.

 

These difficulties can lead to an increased number of business faced with stagnation, bankruptcy and suspension of production activities. As noted, the biggest challenge for enterprises is that it is still difficult for them to access loans to reinvest for business. To overcome the difficulty, the only way for enterprises is to recruit highly skilled and well trained human resources, to have good governance ability and to come up with good development strategies. If those businesses can make it through this tough time, certainly they will gain no small success once the economy gets stable again. As for weak businesses, we should not retain and consider this an inevitable law of the market.