Nguyen Duc Kien, Vice Chairman of the National Assembly Committee for Economic Affairs, spoke to Kinh te Viet Nam & The gioi (Viet Nam & the World Economic Affairs) newspaper about growth goals.
How would you assess the 2014 performance of the Government and line ministries in economic management?
I would say that 2014 was the first time in many years that Viet Nam achieved its socio-economic targets, except for the consumer price index. This achievement bespeaks of a success in macro-economic management. Experience has shown that in the past, for many years, we tended to paint a rosy picture of our economy through nice figures. Actual economic growth rates were always lower. This had seriously affected macro-economic management in the country.
We must remember that last year, our economy was affected by external forces, including the illegal placement of the Chinese oil rig in the East Sea and conflicts in former Eastern Europe, including Ukraine. Other incidents in Binh Duong and Ha Tinh provinces also come to mind.
However, thanks to timely, appropriate actions, our prestige in the eyes of investors inside and outside Viet Nam was further been consolidated.
In 2014, we scored many breakthroughs compared to previous years, particularly in the areas of public investment disbursement and ODA funding as well as social security.
What do you make of our 5.9 per cent GDP growth in 2014?
If we just look at the simple growth rate, Viet Nam would be ranked somewhere in the middle among ASEAN nations. But if we talk about the absolute growth rate, we're way behind our peers. Anyway, the 5.9 per cent growth rate should be put in its actual context of 213,000 enterprises not making any profit.
Do you think the settlement of bad debt was on the right track in 2014?
In the first nine months, we were able to eliminate gold and foreign currencies from payment instruments. As a result, the Vietnamese dong gained value and was strongly protected.
Although there were some fluctuations in the last few months of the year, the exchange rates between dong and foreign currencies throughout the year was generally stable. Thanks to this, our foreign currency deposits were sufficient to meet requirements from enterprises and other economic sectors.
However, if we compare our lending interest rate with those in the region, it remained high. This is an important task for us in 2015 - to cut down the interest rate.
About bad debt, in the first eight months of 2014, the figure was between 4 and 4.1percent. In the last 4 months of 2014 and the first weeks of 2015, the rate has been reduced to about 3 per cent.
Hopefully, the balanced state of the monetary market will help Viet Nam achieve targets set for 2015.
In your opinion, what are the foundations on which the National Assembly has set a GDP target of 6.2 per cent for 2015?
The targets of 6.2 per cent GDP growth and inflation rate of 5 per cent set by the National Assembly are based on an appraisal of hurdles as well as realistically achievable targets.
The Government had introduced policies in 2014 to help the 213,000 enterprises (mentioned above) facing problems in restoring production.
Then, if our inflation rate target matched that of other regional countries, it would create difficulties in managing our exchange rate and public debt, and in promoting economic development.
Another factor taken into consideration is the public debt target, which is equal to about 64 per cent of the GDP.
Can you comment on the Government's plan to handle our public debt?
In the five year (2011-2015) plan period, public debt has skyrocketed. I still remember that for the 2006-2010 period, our public debt was just 40 per cent of the GDP. But it is projected that by late 2015, the figure will be about 64 per cent. That means in the five years, the public debt has increased by 15 per cent – not something we want to happen.
The National Assembly spent a lot of time discussing this problem in its year-end session. The general agreement was to handle public debt with greater transparency and accountability, and to use public investment only for important projects.
What about SOE restructuring?
As the direct manager, the Government should be able to select the right sectors and areas for targeted breakthroughs. It should not lean too much towards being a production government. Instead, it should be a co-ordinator and economic manager. The government should not exercise its ownership of enterprises to directly interfere in their production.
The enterprises, for their part, should learn from foreign firms participating in global value chains. This is the only way for them to expand their market and create new, high value added products.
What are the opportunities and challenges awaiting us in 2015?
To implement the 2013 Constitution, the National Assembly and the Government issued last year a series of legal documents, particularly the Law on Public Investment, the Law on Corruption and Amendments to the Law on Enterprises. In 2015, negotiations on several free trade agreements could be concluded, and others will take effect. There will be good opportunities for us to expand our international markets. — VNS