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Rapid renovation key to handling economic crisis

Update: January, 12/2012 - 10:25

HA NOI — Viet Nam could achieve high economic growth at 6.5 per cent and retain a single-figure inflation this year if it implements renovations rapidly and systematically, said Nguyen Mai, chairman of the Viet Nam Association of Foreign-invested Enterprises.

He made the statement at the conference "Economic Forecast 2012-15" that was held by the Ministry of Planning and Investment (MPI) on Tuesday in Ha Noi.

International and local experts forecast that the global economy, including Viet Nam's, would continue to face many difficulties in 2012.

According to the International Monetary Fund (IMF), the global economy will likely keep an average growth rate of 4 per cent this year. Citigroup, Fitch and Goldman Sachs reported expected rates of 2.9, 2.7 and 3.2 per cent respectively for this year. The expected figures are lower than those from last year.

In the face of economic crisis, authorities of the EU, the US and many others countries in the world will tighten their belts, raise tariffs, and reduce public expenses, among other actions. In addition, the unemployment rate in the world will accelerate, causing lower consumption.

These will negatively impact Viet Nam's economy, in terms of trade, foreign investment, business performance and others. According to an official report of the Ministry of Planning and Investment, more than 48,700 enterprises have dissolved or stopped operations last year, up around 22 per cent from one year ago. Many companies have had to narrow production and suffer losses.

Before-tax profits of State corporations only stood at 13.1 per cent, lower than the interest rate of commercial banks.

"The great challenge for this year is how to stabilise the macro economy, reduce inflation, but still not "strangle" production and business. To do this, we have to flexibly implement monetary, fiscal and exchange rate policies," said Vo Tri Thanh, director of the Central Institute for Economic Management (CIEM).

Nguyen Mai said that the development scenario of the Vietnamese economy in 2012 would heavily depend on the world economic situation, and the ways Viet Nam respond to the international market fluctuations.

He pointed out five key elements. They include synchronised and rapid innovation on macroeconomic policies; enhancement of the State management capacity; and favourable conditions for business and investment environment with attractive legal frameworks.

To bolster development of local firms, he mentioned the two remaining elements: enterprises must map out professional development strategies and seek new initiatives; they also must improve the qualification of leaders and staff.

Also at the conference, the MPI reported that it expected to obtain a total foreign direct investment capital of US$15 billion this year from both new projects and ongoing ones.

According to the ministry, Viet Nam's entire FDI capital influx was about $14.7 billion last year, 26 per cent lower than one year earlier.

Do Nhat Hoang, director of the MPI's Foreign Investment Agency, blamed the poor FDI performance on the global economic downturn. Additionally, he said Viet Nam paid more attention to the quantity of investment projects rather than quality.

He added: "We also should focus on the disbursement process of FDI capital resources."

Among the newly registered FDI projects last year, about 76 per cent were of the agricultural and construction sectors, and nearly 6 per cent in real estate.

FDI firms earned $47.8 billion from exports last year, a year-on-year increase of 29.3 per cent. — VNS

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