HCM CITY (VNS)— The services sector is in a slump along with the rest of the economy, and economists have suggested measures to help it recover.
Services account for a growing share of the economy, expanding in the last four years to account for over 50 per cent of the gross domestic product.
But analysts said even this is far short of potential in a market of nearly 90 million consumers.
To continue growing, however, they said the sector needs many big changes.
Truong Dinh Tuyen, a member of the National Monetary Policy Advisory Council, said the services sector could only grow rapidly if living standards are high.
So, it is essential to improve living standards in the country, he said.
Besides, it is necessary to have policies to encourage foreigners to buy houses in the country so that they would use domestic services, helping the sector develop, he said.
He stressed the need to revive industry since thriving manufacturing companies would use various services.
The Government should allow the currency to depreciate when inflation is down to benefit exporters and improve the economy's competitiveness.
Later it could keep the exchange rate stable to prevent speculation and curb inflation, he said.
Dr Nguyen Duc Kien, vice chairman of the National Assembly's Economics Committee, said overall confidence has to be revived for the services industry to recover.
Authorities need to help businesses overcome their difficulties and enable them to access credit at reasonable interest rates.
Banks should be encouraged to offer cheap loans to certain priority sectors like agriculture, exports, supporting industry, small and medium-sized enterprises, technology- and labour-intensive firms, and developers of low-income housing, he said.
He called on companies to speed up their restructuring process to improve efficiency and minimise costs.
He suggested that they should cut prices to liquidate their massive inventories and make strenuous efforts to expand both their domestic and overseas markets.
Viet Nam is increasing its presence in the global services market through its membership of the Association of Southeast Asian Nations and commitments it made upon joining the World Trade Organisation in 2007.
The country's services sector is forecast to grow by 8.85 per cent annually and account for 42-43 per cent of the country's GDP by 2020. — VNS