Growing But Not at All Costs

 

Stabilisation of the macro-economy is the most important objective
In the context of limited resources, it is infeasible to focus on many priorities. Therefore, the selection of the priorities s is essential. There are two different opinions on the choice of the priorities. One agrees with the current priority of the macro-economic stability. However, others argue that the government should focus on removing the difficulties for businesses.

In the 2015, the government's strategies focus on not only removing difficulties for businesses but also stabilising the macroeconomy. This view is based on three aspects.

The first comes from the important role of macroeconomic stability for economic growth. Macroeconomic stability is not only the condition for growth in terms of quantity, because the growth could not be achieved if the macroeconomy is unstable, but also the basis for a sustainable growth.

To grow fast is not difficult; it requires only a great amount of the capital investment by borrowing, overspending, increased public debt, and deep exploitation of natural resources for export and import growth. However, this will break macroeconomic stability as well as economic balance, including the budget deficit, increasing public debt, higher debt ratio of the total government revenue, inflation, and rising trade deficit.

Therefore, the second focuses on macroeconomic stability with the role of the government as the facilitator to create a sound business environment that limits the negative impacts and helps increase the positive impacts on the economy.

The third comes from the current situation and requirements of macroeconomic stability. In this regard, Vietnam has achieved some positive results such as low CPI, increasing unremarkably for the third consecutive year, reduction of the trade deficit and increase of the trade surplus, surplus balance of payments and foreign exchange reserves reaching the highest level ever, the ratio of investment to the GDP that is nearly equal to the cumulative rate to the GDP.

 

Paying more attention to the health of the businesses
The macro-economy of Vietnam is coping with the limitations, shortcomings and challenges. The biggest limitations are weak and unstable balance of the economy that occurs anytime when aggregate demand is weak. The biggest challenge is to balance the budgets when the public debt has increased rapidly and at high levels, the loan terms are shorter than before, and many reverse loans have appeared to pay debt and other bad debts are slowly cleared.

The second opinion is important because it is necessary to create a legal framework for the micro-operation and inspection, which helps set the equality for the businesses on the larger markets; besides, the macroeconomic policies are tailored to support the micro economies. In addition to the above items, the macroeconomic policies needs to be focused on the distribution of the national resources of the land and the capital that must be transparent and strictly supervised by the all economic shareholders.

In terms of finance, according to the Minister of Planning and Investment, it is necessary to balance the revenues and expenditures and seek new sources for revenues to ensure three principle pillars that salaries increase no higher than the growth rate of labour productivity; the spending on social security is no higher than the revenue growth rate; and the recurrent expenditure growth rate is no higher than the growth rate in development investment. While the banks are limiting bad debts, other departments need to work effectively to prevent smuggling, counterfeit and pirated goods, tax evasion, and transfer pricing to ensure domestic production.