Innovation for Green Growth

On the occasion of the Year of the Rat 2020, the correspondent of Vietnam Business Forum Magazine has an audience with Deputy Prime Minister Vuong Dinh Hue, Member of the Politburo, on support policies to promote the strength of the Vietnamese business community in the era of international integration. Le Hien reports.

Mr. Deputy Prime Minister, after the General Statistics Office recalculated the gross domestic product (GDP) in the 2010-2017 period, the GDP expanded by 25.4%. What does this mean for the current moment?

The GDP revision is performed by statistical offices in many countries around the world, including developed countries, because there are always problems arising in the course of calculation. Thus, revision is necessary. For Vietnam, this is not the first time the statistics agency revised, recalculates and reevaluated the GDP. In 2013, Vietnam revised the GDP size in the 2008-2012 period.

The Government also directed the Ministry of Planning and Investment (MPI) and the General Statistics Office (GSO) to not give figures only, but provide analysis and explanation and, importantly, make recommendations for analysis and explain reasons for GDP growth to data users.

Notably, the GDP revision was made with the close cooperation of statistics specialists from the International Monetary Fund (IMF). And, with the advice and assistance of statisticians from the United Nations, the revised GDP growth was 25.4%, not 23.8% as originally announced. According to the Government’s approach, the old GDP data, not the revised one, will be used to review the performance of the Socioeconomic Development Strategy in 2011-2020, and the 5-year Socioeconomic Development Plan in 2016-2020.

GDP is the original data used to calculate other macroeconomic indicators such as public debt, foreign debt, government debt, overspending and fiscal revenue. So, how will these indicators change in the coming period?

At present, ministries and branches are reviewing the GDP size, a step to help complete the political report to be submitted to the 13th National Party Congress and groundwork for drafting the Resolution of the 13th National Party Congress. This result will be also used to work out the Socioeconomic Development Plan for the 2021 - 2016 period and the Socioeconomic Development Strategy in 2021 - 2030. Central and local agencies will also use revised data to formulate five-year development plans. However, under any circumstance, we must achieve major financial standpoints and targets in the Politburo's Resolution 07-NQ/TW dated November 18, 2016 on policies and solutions on budgetary restructuring and public debt management to ensure safe and sustainable national finance. Accordingly, the key goals are to ensure a positive budget balance, gradually reduce the budget deficit to below 4% of GDP by 2020 and to 3% by 2030 to reach a balanced budgetary revenue and spending. The public debt to GDP ratio will not exceed 65% in the 2016 - 2020 period, the government debt will not exceed 55% and the foreign debt will not exceed 50%. By 2030, the respective ratios will be 60%, 50% and 45%.

On the topic of the 5-year Socioeconomic Development Plan from 2021 to 2025, economic experts suggest further valuing the role of the business, not only in Party policies but also in each policy and solution of the Government and in each action within its jurisdiction. Mr. Deputy Prime Minister, could you please tell the Government’s basic orientation on promoting the strength of the business community, especially the private sector, in the coming period?

In the spirit of Resolution 10-NQ/TW on private economy and Resolution 12-NQ/TW on State-owned enterprises (SOEs), enterprises and entrepreneurs are an important driving force for the country's development in the coming period. The Government issued Resolution 02 (previously known as Resolution 19/NQ-CP) on improving the business environment and enhancing national competitiveness in order to create all resources and conditions for business development, showing this spirit very clearly.

The Prime Minister recently also had an article on unlocking resources for the country's development, in which the first task is to focus on improving institutions and laws on enterprises, innovative startups, intellectual property, commerce, investment and business to create favorable conditions for all organizations and individuals, with first of all being enterprises, to actively participate in the Fourth Industrial Revolution. The Government adopted incentive policies for developing new industries and sectors of business that express the spirit of grasping, catching up and surpassing some Industry 4.0 areas.

At the Prime Minister's 2019 Meeting with Businesses, which took place at the end of December, we once again realized the Government's determination to reform the apparatus and proceed to eliminate inertia, authoritarianism and petty corruption to best facilitate operations of businesses and people.

Whatever the country's development stage is, the contingent of businesses and entrepreneurs is always the leading force in the cause of industrialization and modernization, and businesses are always the core force of the Party and the State to carry out economic, cultural, scientific and educational development tasks, and making important contributions to social security.

The Vietnamese economy is now broadly opening with a series of free trade agreements (FTAs) signed and enforced. Mr. Deputy Prime Minister, could you please explain the impacts of these trade pacts, especially CPTPP and EVFTA?

To date, Vietnam has joined, signed and negotiated 17 FTAs, including 13 effective agreements, one signed but unratified agreement (EVFTA), one concluded agreement and two agreements under negotiation.

Vietnam's entry into two new-generation, high-standard FTAs - CPTTP and EVFTA - is expected to have much impact on the country. Specifically, the two agreements will have positive impacts on politics, national security and foreign strategy, enhance our position in ASEAN, in the region and in the international arena, especially in the context of rapidly-changing world and regional political security and rising protectionism, strategic competition, and fierce trade conflicts among major countries.

Economically, Vietnam will continue to foster trade with CPTPP and EU countries, and expand export markets, especially for Vietnamese products of strong competitiveness. As for CPTPP, tariff cuts to zero on commodities by signatory countries, including major markets such as Japan and Canada, will create positive effects on promoting export value. Basically, our strong exports such as agricultural products, seafood, electric and electronic products will be exempted from tariffs when this pact comes into effect. For EVFTA, as soon as it goes into force, the EU will eliminate import duties on about 85.6% of tariff lines, equivalent to 70.3% of Vietnam's exports to the EU. Seven years after the deal enters into force, the EU will eradicate import duties on 99.2% of tariff lines, equivalent to 99.7% of Vietnam's exports. For the remaining 0.3% of exports, the EU commits to giving Vietnam a tariff quota with an import duty of 0%.

Joining the new-generation FTAs will help Vietnam diversify its economic and trade relations, especially diversifying import and export markets and avoiding excessive dependence on certain markets; have opportunities to join regional and global supply chains; have opportunities for institutional reform, create a more open, transparent and predictable business environment to reach advanced international standards to boost both domestic and foreign investment; foster economic restructuring, change growth models (especially in such areas as finance - banking, public spending and agriculture - rural development); facilitate our businesses to draw source technologies; generate opportunities of employment, income and sustainable development as CPTPP can help generate an average of 20,000 - 26,000 more jobs a year. As for poverty reduction benefits, according to the World Bank, by 2030, the CPTPP is expected to lift out of poverty 0.6 million poor now living below the poverty line of US$5.5 a day. All income groups are expected to benefit from this pact.

International economic integration in general and participation in free trade agreements in particular, especially new-generation, high-standard agreements like CPTPP and EVFTA, not only provide the chance but also pose risks and challenges. Competitive pressure is the first matter for Vietnam's economy and businesses. On the one hand, it will be very negative for weak businesses, but it is motivational for innovative businesses on the other. Comprehensive commitments for various sectors according to these agreements will require of Vietnam institutional reforms and relevant domestic regulations. Vietnam will also face challenges in executing its commitments in new areas that have not been included in previous FTAs, such as labor - trade union and environment. The country will confront challenges to fiscal revenue when taxes are slashed.

Vietnam is among countries endeavoring and achieving many important results on the sustainable development path. In 2019, according to the World Bank, Vietnam ranked No. 70 out of 190 countries in business environment. The World Economic Forum (WEF) ranked Vietnam at No. 67 out of 141 countries in competitiveness. In 2018, Vietnam ranked No. 54 out of 162 countries to stand among Top 30% of countries leading sustainable development, in ASEAN second only to Thailand. Do you think that Vietnam is getting ahead in the “green race” relative to other countries with the same level of development, Mr. Deputy Prime Minister?

The concept of sustainable development has been incorporated throughout the Socioeconomic Development Strategy in 2011-2020 and the Socioeconomic Development Plans in 2011-2015 and in 2016-2020. Vietnam has achieved sustainable development in economic, social and environmental pillars such as GDP growth, sustainable poverty reduction, universal education, and access to healthcare services.

Sustainable development goals are aligned with the goal of improving the business environment and enhancing national competitiveness. These indicators, according to reports by international organizations, have been continuously improved by scores. Particularly, in 2019, the Doing Business Index added 1.2 points (from 68.6 to 69.8) and the Competitiveness Index rose 3.5 points (from 58 to 61.5), higher than the world average (60.7 points). Its Competitiveness Index climbed 10 places to No. 67 position from No. 77 a year ago, with eight out of 12 pillars advancing.

Nevertheless, what we have made is only the first step, when the perception of sustainable development by many agencies, units, businesses and people is still incomplete and inconsistent. Socioeconomic policies still favor rapid economic growth and social stability rather than sustainability in the use of natural resources and environmental protection. Master planning, socioeconomic development planning and environmental protection policy lack rational coordination and alignment. Sustainability management and monitoring mechanisms have not been clearly, effectively established. Public investment for social fields has not really focused.

To overcome the above-mentioned shortcomings and limitations, to provide favorable conditions for the successful delivery of Vietnam's sustainable development goals to 2030, the Prime Minister issued Directive 13/CT-TTg in May 2019, which set out important solutions, including many contents on sustainable economic development like incorporating SDGs into the Socioeconomic Development Plan and the SDG Monitoring and Assessment Guide.

Specially, the Prime Minister also assigned important tasks to the Vietnam Chamber of Commerce and Industry (VCCI) and Vietnam Business Council for Sustainable Development (VBCSD) to further direct and support businesses to achieve sustainable development; organize policy dialogues on sustainable development; carry out the Program on Benchmarking and Ranking Sustainable Businesses based on the Corporate Sustainability Index (CSI); engage businesses in the Green Growth Strategy and the Partnering for Green Growth and the Global Goals 2030 (P4G Forum); and deploy initiatives on the circular economy.