Vietnam Steps up Socioeconomic Development Next Year 

Vietnam is centred on strengthening economic growth, reinforcing the stability of the macro economy, enhancing the performance of public utility entities with a service-based orientation, and improving the ties between administrative agencies and people, Prime Minister Phan Van Khai said at the ongoing sixth session of the 11^th National Assembly of Vietnam, which lasts from October 25 to December 4.

To realise the major economic targets set for the period 2001-2005, the country must post gross domestic (GDP) growth of around 8.5 per cent next year, much higher than the average of 7.2 per cent in the previous four years, Khai said. However, it must gain economic growth of 8.8 percent in 2005 to attain the goal of achieving GDP growth of 7.5 per cent set for the five-year period.

Other key economic targets planned for next year include total development investment of VND295-300 trillion Vietnamese dong (nearly US$18.7-19 billion), up 15.7-19.5 per cent over this year, and the creation of 1.6 million jobs, including 70,000 overseas ones. To this end, the country must rely on intensive growth factors like productivity, management, technology, product quality and cost reduction, along with extensive factors such as investment, employment and exploitation of natural resources, Khai said, noting that investment efficiency and the economy's competitiveness are still lower than those of many regional countries.

Its incremental capital output ratio, which measures the productivity of investment in the economy, has risen considerably in recent years. Growth of one dollar now needs investment of nearly US$5, compared to only US$3.4 prior to 1997 when the regional financial crisis broke out. To tackle these problems, Vietnam will focus on improving the efficiency of state investment, promoting private and foreign-owned sectors, speeding up the privatisation of state-owned enterprises (SOEs), privatising and attaching agricultural production to markets, facilitating services, and promoting international economic integration and export, Khai said.

The country is reviewing works under construction and projects slated for implementation next year, and accelerating the restructure of SOEs to improve the efficiency of state investment which now accounts for more than half of the total investment in the economy. The government has asked ministries and localities to accelerate the restructure process by changing wholly state-owned businesses into one-member limited liability companies, and state corporations into holding companies. It approved a plan to privatise 2,053 SOEs between 2002 and 2005, including large ones in such key industries as electricity, aviation, metallurgy, cement, transport, telecommunications, banking and finance like the Bank for Foreign Trade of Vietnam, the Bao Minh Insurance Company, the Cuu Long Housing Development Bank, and the Vietnam Construction and Import-Export Corporation.

In addition to divesting SOEs, the government will focus manpower and financial resources on some large firms to gradually convert them into economic groups, with the first one expected to be a telecommunications consortium. It is instructing relevant state agencies to carry out schemes to raise the investment capital of state corporations by issuing shares and bonds.

The government is also gradually eliminating corporate monopoly and discrimination against non-state sectors, improving the business environment with healthy competition among economic sectors, since investment of the private sector has increased more rapidly than that of the state sector in recent years. It plans to increase its number of private enterprises from 150,000 at present to around 500,000 by 2010.

Regarding the foreign-invested sector, Vietnam will publicize an additional list of projects calling for foreign investment this year, and adjust plans for developing industries in ways suitable to luring the more active participation of foreign investors. To remove discrimination against foreign investors, the country is compiling the Law on Investment Encouragement and Protection to apply to both local and foreign investment, and to apply the single-price mechanism to foreign businesses from January 2005, under which foreigners will pay the same charges for services they use as local people do.

Vietnam is also paying greater attention to fostering enterprises, cooperatives and household businesses which specialise in processing and finding outlets for agri-products, or in offering farmers materials, equipment, credits and technical services. For the export of large volumes of farm produce, government agencies are seeking closer relations with foreign partners, especially multinational companies, to help such products gain a stronger foothold in foreign markets.

Besides the market-based agricultural production, the country is beefing up the service sector, mainly by fostering new services, especially ones relating to intensive use of well-trained employees, and business assistance and consultation. It is also making public entities operating in the fields of healthcare, education, research, culture and sports financially independent. In other words, these entities are supposed to burden the state budget less, by offering more profitable market-oriented services.

With regard to external policies, Vietnam continues to fulfil its commitments within bilateral and multilateral frameworks. It is presently progressing negotiations with key partners, including the United States and China, in an effort to become a member of the World Trade Organisation by late 2005. Forecasting that prices of petroleum products and other key materials in the world market will remain at high levels in the coming months, the country will take proper actions to reinforce the economy's stability, such as stabilizing prices of essential products such as fertilizers, petroleum and plastic products in the domestic market, slashing state budget spending, and improving financial and banking systems

This year, Vietnam is predicted to post GDP growth of 7.6 per cent, just within the target of 7.5-8 per cent; export revenues of US$25 billion, a year-on-year rise of nearly 24 per cent; and a consumer price index of around 9.5 per cent, much higher than the goal of under five per cent.

Local lawmakers, during the sixth session, are expected to pass six bills, namely the Law on Electricity, the Law on Competition, the Law on Promulgation of the Legal Normative Documents of the People's Council and the People's Committee, the Law on Amendment and the Complement to Some Articles in the Publication Law, the revised Law on Protection and Development of Forests, and the Law on National Security.

• Dong Phong