3:26:30 PM | 7/8/2005
"There are several upbeat indications to assert that the GDP target of 8.5 per cent this year will definitely be within reach," said president of the Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) Dang Van Thanh.
He cited the fact that even the most sluggish province has now begun improving the business environment, and "rolling out the red carpet" for investors, while the government is putting the market economy onto the right track.
Dominic Scriven, Manager of the UK-based financial company - Dragon Capital said that the country's five economic engines - imports-exports, foreign direct investment, private capital, State investment, and the population's spending - have all contributed to economic growth.
He added that it was a promising indicator that none of them has to run as the main economic engine.
The manager said that in order to improve the economic machine in terms of speed, quality and safety, the Government needed to control credit quality and resolve real estate's soaring prices.
Many other economists echoed Scriven's opinions saying that ensuring the efficiency of in vestment is critical.
"We must stop injecting capital for inefficient projects, and should focus resources on major industries only," said Sacombank’s president Dang Van Thanh.
The nation reportedly obtained a GDP growth of 7.7 per cent last year, and the government is aiming for much higher growth this year in order to fulfill its overall five-yearly target of 7.5 per cent during 2001-05 period.
According to government estimates, the total investment for socio-economic development for 2005 is expected to be around VND300 trillion (US$19 billion), increasing 19.5 per cent over last year.
Economist Huynh Buu Son said that the higher ratio of private and foreign investment to State capital in the development projects should make a positive impact to the nation's economic growth.
"For this reason the government should create a greater opportunity for both domestic and foreign investors by loosening its grip on restricted industries such as electricity, water, and telecommunications," Mr Son said.
He suggested that the use of Overseas Development Assistance (ODA) loans should be more prudent.
Pham Chi Lan, a consultant specialist in the Prime Minister's Research Committee, said that last year's foreign capital investment only accounted for 14 per cent of the total investment.
To remedy the problem, the Government will continue to improve the business environment this year so as to attract more foreign investment, while helping the private sector get easier access to land, credit, market, training and other supporting services.
The specialist said that the development of non-State enterprises needed strong support from the Government, and making the State's purchasing and investment projects public is one area to show support.
"The Government is the biggest spender, therefore, a certain part of its projects should be reserved for the country's small and medium enterprises (SMEs).
Only by doing that, will the SMEs have the chance to get involved in large projects," Ms Lan said.
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