Progress made in 2014 can be the foundation for a robust economic recovery in 2015, Vuong Dinh Hue, Chairman of the Central Economic Commission, tells Nong thon ngay nay (Countryside Today).
What were the economic bright spots for us in 2014?
There were three bright spots. Our macro-economy remained stable and developed steadily while inflation was much lower than the target set by the National Assembly. In 2014, our GDP was 5.98, the target set by the National Assembly.
Secondly, our monetary and financial market situation in 2014 was much better than in 2013. An indication of this was the reduction in interest rates for both deposits and loans. In addition, the exchange rate between Vietnamese dong and US dollar was rather stable, pushing up exports and boosting business confidence.
Another bright spot was the success of our economic restructuring process.
What is the current status of our economic restructuring process?
I will focus on three major issues – the restructuring of State- owned enterprises, the banking system and public investment.
In 2014, the SOE restructuring focus had two main prongs - equitisation and withdrawal of capital from non-core businesses. According to a National Assembly report, in the first 10 months of 2014, the capital withdrawal from non-core businesses was 3.5 times higher than in 2013, and the number of big SOEs successfully equitised was also higher.
Thanks to timely restructuring efforts, Viet Nam was able to push back the imminent bankruptcy of our banking system. As a result, our payments system became stable and served as a catalyst in restoring production. In 2014, we gained initial success in handling bad debt.
In 2014, we took the right course in restructuring our public investment. A significant success was the efficient use of capital investment.
How do you assess our 2014 performance compared to other countries in the region and beyond?
Our credit ratings by Moody jumped from B1 to B2. Fitch Ratings raised the rating of our internal and external debts from B+ to BB-. The ratings were based on four criteria – an increase in our GDP compared with countries in the same group; a reasonable reduction in credit growth; inflation being under control; and a higher rate of public investment compared with countries in the same group.
What are the challenges facing Viet Nam in 2015?
We will continue to face the same challenges as 2014, particularly the issues of balancing the budget, energy and national food security.
Another challenge would be the slow recovery of domestic demand. In addition, enterprises are still facing many difficulties. According to the General Department of Tax Administration, just 30 per cent of enterprises operating in the country have posted profits.
The other challenge we cannot ignore is high public debt. We'll have to borrow money to service it. At a recent meeting, the National Assembly spent quite a lot of time discussing this issue.
So what should be our focus for 2015?
This year, the world economy will continue to recover. However, quite a few countries face many challenges.
I would say 2015 is a very important year for us as it is the last year of our latest national five-year plan. All provinces and cities are trying their best to achieve socio-economic targets.
In addition, 2015 will also be the year that negotiations on many free trade agreements are concluded and when other agreements come into force. These agreements will become important catalysts for growth and international integration.
Also in 2015, many of our new laws will come into force, including those relating to business and investment environment, like the Law on Enterprises, the Law on Investment and the Law on the Use of State Capital in Enterprises. Hopefully, these laws will breathe new life into the national economy.
Do you think the drop in world oil prices will affect our economy significantly?
Viet Nam is both an oil importer and exporter. So no doubt, when the oil prices drop, it will hurt our crude oil revenues. However, we have developed several scenarios to cope with the situation.
As an oil importer, we'll also have some benefit. We can say that the recent reductions in petroleum and diesel prices in the past months have positively affected the lives of citizens. — VNS