Wednesday, August 22 2018


Confidence key to recovery

Update: June, 29/2013 - 09:00

Ha Sy Dong from the National Assembly's Committee for Finance and Budgetary Affairs told Thoi bao Kinh te Viet Nam (VN Economic Times) of the need to restore public confidence in the economic recovery.

For years, Viet Nam has failed to reach a number of its major socio-economic development goals targeted by the National Assembly. What do you think of the argument that the National Assembly does not actually have a clear picture of the real situation and has set unfeasibly high targets?

I don't think so. For example, at a NA meeting late last year, the nation's predicament was discussed and closely examined. Subsequently an analysis was produced that outlined the major challenges the country has yet to face this year during its economic recovery and restructuring process.

Overall, the resolutions on the national socio-economic development plan for 2013, that was approved by the NA, focused on stablising the macro economy, lowering the inflation rate and encouraging growth.

Even so, Viet Nam's economic picture has remained gloomy during the first six months of this year as over 69 per cent of all enterprises have reported losses. Stockpiles of goods and financial reserves are adequate.

However, growth in the agricultural sector, which has always been considered pivotal to the national economy, is even lower than it was at this point last year.

It is widely acknowledged that the targeted GDP growth rate of 5.5 per cent this year will be hard to achieve.

These days, a lower inflation rate is not seen as a result of effective policies that have been aimed at curbing inflation but as an indicator that the cycle of growth has gone full circle.

Although the NA has already warned of a gloomy economy, the situation has got worse. Is this due to the Government's management agencies performing inadequately or the severity of the problems?

Both of these points have caused the situation to get worse. For example, at the last meeting, the NA asked the Government to stablise the domestic gold market and ensure that domestic gold prices were more closely aligned with global prices.

However, in first few months of this year, after the State Bank of Viet Nam's gold auctions, the domestic gold price sat at between VND6 -7 million higher than international prices. At that time, the Governor of the State Bank of Viet Nam said that they had merely followed the Government's decision to prioritise stabilising the gold market.

The increasing high stockpiles being ratcheted up by domestic businesses has also been fairly high on the agenda at NA meetings but practical sustainable solutions to this problem have not been forthcoming. Many of the economy's major problems have not been resolved so it's hard to expect an impending recovery any day soon.

This reduces confidence in the economic recovery, doesn't it?

Individuals and enterprises have lost confidence in the economy and rectifying this is crucial for any recovery, especially when our economy is suffering from "serious problems".

Another difficulty for enterprises is the "inventory" of recommendations and responsibilities. Unless these recommendations are acted upon and the responsibilities are clearly identified and shouldered, drastic changes will have to be made.

How do you predict economic growth to turn out this year?

I think that this year, GDP growth will be around 5 per cent. Much more effort will be needed to achieve a growth of 5.5 per cent because we have not seen any promising indicators for producers or consumers in the last six months.

However, our priority now is not only to achieve a higher growth rate but to stablise the macro economy so we can carry on restructuring the economy and allocate social resources more effectively. —VNS

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