Viet Nam News
Director of the Hồ Chí Minh City Cadre Institute, Trần Hoàng Ngân, spoke to the Thời báo Kinh tế Việt Nam (Việt Nam Economic Times) newspaper about tasks facing the new government in achieving a high GDP rate.
How do you respond to the “legacy” of the previous legislature (2011-2015) to the freshly elected 2016-2020 legislature?
I should say, the country’s socio-economic conditions in the period from 2011-15 scored a certain success, particularly in curbing the inflation rate, stabilising the macro-economy while meeting the nation’s major sectoral balances.
In the last five years, in the first two years, we were able to cut down the trade deficit with import surplus from 10 per cent to 2 per cent and in the following three years we were able to achieve the trade deficit with exports exceeding imports.
Generally speaking, the legacy of the last government left for the new government is rather challenging. However, I just want to mention three major points.
Firstly, it is the year on year budget overspending while the public debt is climbing fast and there is high pressure on paying the due debt. In 2015 alone, the government had to borrow VNĐ436,000 billion (US$ 19.62 billion), of which VNĐ250,000 billion ($11.25 billion) would come from selling government bonds. This is an indication that the government debt has surpassed the ceiling.
Secondly, the weak state management in various fields, including society, natural resources, environment, urban planning, food safety seriously affected people’s quality of life and the business environment as well.
And finally, the number of Vietnamese enterprises declared either bankrupt or stopping operations increased considerably compared with previous years. In 2010, some 40,000 enterprises stopped their business, by late 2015, the figure jumped to 71,391.
In your opinion, what are the challenges the new government will face in the next five years?
As our country is integrating deeper and deeper internationally while the negative impacts of climate change (CC) have become fiercer, the road ahead will be very rough for the new government.
In 2015, Việt Nam’s export turn-over was reported at $328 billion – equal to about 170 per cent of the domestic product. These two figures speak of the vulnerability of our economy if big changes are reported in world socio-economic conditions.
Meanwhile, our economy has been seriously affected by the impacts of CC and the El Nino phenomena. For example, in early 2016, a long cold spell in some northern provinces or the serious infiltration of salt water in the Mekong delta, South Central Region, South East Region and the Central Highland has caused extensive damage and losses to agriculture production and affected local people’s daily life as well as other social issues. It is estimated the loss was up to thousands of billions of đồng. As a result, in the first two quarters of 2016, our Gross Domestic Product (GDP) saw a very low growth rate. So the target of 6.7 per cent for GDP in 2016 poses a big challenge for the new government.
How do you respond to the two proposed options for the national economy: high growth rate or the stabilisation of the national economy with average growth rate?
In my own opinion, we should pursue the objective of having a stabilised macro economy while ensuring sound social security. In addition, the government should do its best to improve the people’s quality of life. In order to restore high economic growth, it is important that the government should adopt measures to cap the inflation rate through proper adjustment of prices of essential commodities such as petrol, diesel, electricity, tap water, medical services and others.
Do you have any suggestions to propose to the new government?
The first thing I would like the new government to do is to monitor closely the country’s public debt, the government debt and foreign debt while tightening national fiscal policy and the budget overspending to under 4 per cent of the GDP.
I also suggest that the government needs to tightly control the borrowing of ODA. In the context of tight national budget, we should only give priority to only urgent projects and ask local governments and people’s councils at all levels to ensure they use public money responsibly.
In the meantime, I ask the new government to continue the administrative reforms along the line of streamlining staff yet having more effectiveness and efficiency.
The government should review the business environment towards the objectives of transparency and fairness. This is the most effective way to improve the business environment._VNS