Vietnam's economic recovery in the first eight months of 2013 has been slower than expected and growth forecast for this year was only 5.3 percent. This reality called for more effort from the Vietnamese government and relevant ministries and agencies to meet the objective of stabilising the economy and controlling inflation. This was assessment made by the government spokesman at the August regular press conference held recently in Hanoi.
Slow economic recovery
According to the report of the Ministry of Planning and Investment, the general picture of Vietnam’s economy has had positive changes. Even though the GDP growth of 5.3 percent is still lower than the forecast of 5.5 percent, the consumer price index after 8 months has increased 3.5 percent compared to 2012. Experts said that this result reflects a huge effort by the Vietnamese government as well as the ministries and agencies in curbing inflation and stabilising the economy. However, in order to achieve the key goals outlined for 2013, the government determined not to rest on its laurels, but continue to push forward the target of keeping inflation at a low level of seven percent and stabilising the economy.
Regarding the market prices issue, Minister/Chairman of the Government Office Vu Duc Dam said in the upcoming time, the government will soon start the free price mechanism as scheduled for the goods which used to set price by the government, including electricity, water, public services in education and health. This move aims to eliminate subsidy and the issue of price controlling. Petroleum products particularly, if gas price were approved to fluctuate according to the world market, it can help tackle the problem of smuggling and corruption. There had been some cases when gas providers could earn hundreds of billions VND from a gas tanker simply by withholding the gas to wait for the price go up after information of increased price had been disclosed.
As for electricity price, the government up until now has been providing subsidies to nearly 25 percent of national electricity production. If the free price system increased electricity price, the government would still be able to ensure social security for the poor, at the same time reduce the subsidy. Besides, raising price at a reasonable pace would also push investors and businesses to be more effective in using investments. As for the poor households accounted for 16 percent of the population, the government will continue the state support of VND30,000 per households, including the households which do not use up the supporting money.
According to data from the Government Office, in August there were 10,700 enterprises getting back to operation. This was considered one of the positive signals when the economy is still struggling to regain progress.
However, the Vietnamese government also agreed that some key economic channels still have difficulties such as credit growth, NPLs settlement are still slow; manufacturing and trading remains difficult; market and buying recover slowly; exports of major agricultural commodities such as rice and fishery products faces difficulties; government revenue are low; restructuring some sectors of the economy progresses slowly.
Continued restructuring system of credit institutions
According to the roadmap of economic restructuring, the Vietnamese government has set restructuring the system of credit institutions as one of the priorities. Evaluating this field, data of the Department of Monetary Policy - State Bank shows that up to August 22nd 2013, credit grew 5.6 percent compared to the end of 2012, accomplishing about 46 percent of the 12-percent target set for 2013. Accordingly, the government will continue encouraging the growth of credit to fulfil the objective of 12-percent growth and focusing on the priority areas, meanwhile adjusting rates in line with inflation, stabilising exchange rate and foreign exchange market, effectively governing the gold market.
Specifically, the restructuring measures considered by the government are merging institutions on a voluntary basis or restructuring major shareholders, to ensure that shareholders have sufficient financial capacity to put more capital into recovering losses required by restructuring process, as well as professional experience sufficient for banking management and execution. Minister Vu Duc Dam also affirm that the purpose of restructuring banking and credit institution systems was to strengthen the banking system in order to prevent a collapse, and the government would not take advantage of this to nationalise private property into State’s.
Additionally, the government officially denied the launch of a second stimulus package in the future, announced that it would instead continue to focus on stabilising macroeconomic, sustaining growth at a reasonable level, ensuring social security until the end of 2013.
Anh Phuong
Vietnamese
