Striving for 6.7 Pct GDP Growth in 2017

The second plenary of the 14^th National Assembly opened in Hanoi on October 20. The meeting was scheduled to be wrapped up on November 23, 2016, after 26 days of working.

 

 

At the opening session, Prime Minister Nguyen Xuan Phuc presented a report on socioeconomic situations in 2016 and tasks for 2017.

To date, macroeconomic stability was maintained and major indicators were secured. The Government adopted flexible policies, particularly fiscal and monetary policies, to control inflation, stabilise macro economy and promote growth. Consumer price index (CPI) climbed 3.14 per cent in the first nine months and was estimated to end the year with a 4 per cent growth. Market-based pricing applied to education and health services had been prepared carefully and left no major impacts on consumer prices.

Non-performing loans were tackled to raise credit quality and ensure liquidity and system safety. Credit for the economy increased 11.24 per cent in the year to date. Some credit institutions continued to lower deposit and lending rates by 0.5 - 1.5 per cent. Exchange rate, foreign exchange market and gold market were kept stable. Foreign exchange reserves made an all-time record of over US$40 billion.

 

The Government also imposed strict measures and controls to prevent budget leakage and transfer pricing, reduce overdue taxes and tighten budget spending. State Budget revenue in the first nine months fulfilled 70.8 per cent of the full-year estimation and was expected to rise 2.4 per cent this year. Overspending was kept under the line drawn by the National Assembly.

 

Vietnam also sped up investment capital mobilisation for development. In the first nine months, disbursed foreign direct investment (FDI) value rose 12.4 per cent from a year ago. Roughly US$2.7 billion of official development assistance (ODA) capital and preferential loans was disbursed. The market capitalisation of the stock market equalled 63 per cent of the country’s gross domestic product (GDP), the highest rate ever. Portfolio investment capital surged. This year, total social investment capital was hoped to reach 32.5 per cent of GDP, higher than the plan by 31.5 per cent.

 

Prime Minister Phuc said Vietnam had adopted various measures to boost exports against the backdrop of slowing global and regional trade growth. Total exports rose 6.7 per cent in the first nine months. Trade surplus was estimated at US$ 2.8billion.

 

However, he admitted that GDP was lower than expected in the first nine months (5.93 per cent versus 6.5 per cent). Agricultural production expanded just 0.65 per cent (versus 2.08 per cent a year earlier). The index of industrial production (IIP) looked up 7.4 per cent (compared with 9.9 per cent a year ago), of which the mining industry fell 4.1 per cent (rising 8.6 per cent a year ago). GDP growth was projected at lower than the target of 6.7 per cent. Exports looked up just 6.7 per cent in the first nine months (compared with 9.1 per cent a year ago). Budget revenue collection was tough. Settling bad debts and weak banks was ineffective.

 

People's lives remained difficult, especially in areas affected by disasters, storms, floods, droughts, saltwater intrusion and environmental incidents. Natural disasters and climate change caused mounting losses. Environmental pollution was found in many localities.

 

 

Prime Minister Nguyen Xuan Phuc said, with high determinations and efforts, Vietnam will fulfil and exceed 11 out of 13 criteria in 2016. GDP growth and export growth were slightly below their targets. In 2017, the country targets to have GDP growth of 6.7 per cent, inflation growth of 4 per cent, export growth of 6 - 7 per cent, trade deficit to export of 3.5 per cent, budget overspending to GDP of 3.5 per cent, and total social investment capital to GDP of 31.5 per cent.

 

To achieve these goals, the Government needs to further effective administration policies, closely combine fiscal policy and monetary policy, control inflation as planned, carry out flexible monetary policy, decide interest rate policies based on macroeconomic developments, inflation and currency markets, and ensure enough credit for the economy, especially in priority areas (agriculture, rural areas, export, small and medium-sized enterprises, supporting industries and high-tech application).

 

The Prime Minister reiterated that the Government will mobilise all available resources for development investment. It will consider issuing policies and mechanisms to mobilise gold and foreign currencies in society and draw foreign capital for infrastructure development. It will review export and import procedures for further simplification and effectively deploy the National Single Window mechanism while supporting enterprises to integrate and take part in ASEAN and free trade agreements (FTAs).

 

It will submit draft laws to the National Assembly for ratification, including the Law on SME Support; and amend credit guarantee mechanisms for SMEs. The government will effectively enforce amended laws on investment and business endorsed by the National Assembly. Furthermore, it will effectively provide incentives, particularly in tax, credit, land and employment, to support enterprises to expand operations and apply modern technology. It will encourage effective economic and cooperation models.

The Government will substantively restructure the economy together with changing growth model, enhancing productivity, quality, efficiency and competitiveness; developing culture and society and taking care of the people’s livelihoods; actively responding to climate change, disaster and environmental pollution; strengthening resources management; building an effective, disciplined administration; defending national independence, sovereignty, political security, social order and safety; improving the efficiency of foreign affairs and international integration; and promoting communication and social consensus.