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New year brings many challenges

Update: January, 15/2015 - 09:49

Vietnamese enterprises should be proactive when it comes to international integration, Minister of Planning and Investment Bui Quang Vinh told Thanh Nien (Young People) Newspaper.

What challenges will Viet Nam face in 2015?

I'd like to focus on two major issues in 2015.

First, we are internationally integrating our politics and economy on a deeper and more policy-heavy way than in past years. This year we join the ASEAN Economic Community and will implement a series of Free Trade Agreements to which Viet Nam is a signatory.

Viet Nam will therefore be presented with development opportunities while Vietnamese enterprises will face increasingly fierce competition right here at home.

If we don't do well, we won't be able to keep our economy's competitive advantages, nor keep our markets expanding. It could place our economy in a difficult situation.

Secondly, the health of our enterprises will be another major issue. A strong and autonomous economy is an economy that boasts of strong local enterprises. So far we have done quite well with attracting foreign investment. In 2014, export turnover from foreign direct investment (FDI) accounted for 68 per cent of our total export revenue. However, looking at the health of our economy in general, there is room for improvement.

There aren't many strong enterprises capable of receiving advanced technology transfers from FDI enterprises. Samsung products are made in Viet Nam and sold all over the world, but ask mobile users where their phone is from and they all say, "South Korea." If we don't try harder, our economy will remain dependant and tied down to other economies.

If oil prices continue to go down should we expect to see big impacts on our economy in 2015?

This is a very big issue that the government and responsible ministries will have to calculate thoroughly to ensure we maintain a balance at a macro level.

If crude oil drops to under US$50 per barrel, our projected state budget will be short by 40 to 50 trillion dong ($1.9 - 2.38 billion) since our projections for this year's national budget was based on an oil price of $100 per barrel. Part of our national revenue comes from taxes on petrol and diesel imports. If the tax revenue from petrol and diesel imports is cut by a half, it will seriously hurt our state budget.

On the other hand, petrol and diesel are input costs for a lot of economic sectors like transport and business. Low petrol prices will help reduce transport fees and production costs and will have positive impacts on the economic growth rate. In the short term, it will heavily impact our revenue collection, but in the long run it could have a positive impact on our economy. We have to make changes so that our economic growth is based on the efficiency of our production and business, not simply on natural resources.

In 2015 some major laws will come into force. Do you think they will help create favourable conditions for the economy?

The National Assembly approved several major laws last year, the Law on Investment (revision) and the Law on Enterprises (revision) to note. I hope that when these two laws come into force on July 1st, they will help people and enterprises exercise their right to invest or make careers however they choose, unless prohibited by law.

These laws will provide favourable conditions for enterprises to do their business and to participate in the market at low cost.

However, these two laws are not enough. We need supporting policies from government, especially ones that will tackle credit issues and debt settlement so that enterprises can access capital resources easier. We also need to make some improvements to our investment and business environment.

Has the Ministry of Planning and Investment worked out a plan to help struggling private enterprises return to their previous production levels?

Enterprises are created and dissolved or stopped production everyday. Normally in other countries, for every newly-found 100 enterprises, five years later maybe 65 survived. For us, the numbers are not so promising. We gave our macro policy a "red carpet" treatment and so quite a few enterprises struggled and declared "dead". But, in reality, they should not be given up for dead.

In my opinion, we must do something to resuscitate the "dead" enterprises so that can resume production. Our economy is on the road to recovery and the business environment has been improved.

At present, we have been considering drafting a law for small and medium enterprises that develops helpful policies about credit, vocational training, market research, technology transfer and more. Once such a law enacted and our proposed policies adopted, they will be very helpful to SMEs.

Do you foresee any challenges in the implementation of the new policies and laws?

What I worry about the most are the small pragmatic actions necessary to turn laws into reality and the inconsistencies that arise in the implementation and enforcement of the laws. For example, the policy that sub-contracts certain public services to the private sector (e.g. schools and hospitals) will face some resistance, especially on the grounds that many people are still poor and they should be given subsidies.

It is high time for us to move away from old ways of thinking—of depending so much on state subsidies! — VNS

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