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Institutional reform, monopoly curbs key to economic growth

Update: February, 10/2014 - 09:26

Economist Vu Dinh Anh of the Finance Ministry tells Viet Nam Financial Times Online that failure to advance administrative reforms and increase competitiveness is likely to land the nation in big trouble this year.

According to the General Statistics Office, the consumer price index in 2013 stood at 6.04 per cent, which is the lowest rate in 10 years. What do you think about this result?

It shows that we are focusing on carrying out measures to stabilise the economy, with priority given to inflation control. All of these measures were done effectively and in a timely manner.

The Vietnamese economy in 2013 recovered well, growing at 5.42 per cent, generating high-levels of exports and foreign direct investment (FDI). The Government was fully committed to tightening credit and monetary policies, thus lifting the economy out of stagnation.

What are the lingering problems for our economy, even though the efforts to control our CPI were respectable?

Obviously, controlling inflation is just one aspect of managing the economy. However, I want to emphasize the price we have to pay for inflation control and tightening policies.

This includes halting and slowing down production of many businesses. In 2013, 60,700 businesses were dissolved. This seriously troubled job prospects and the lives of many workers.

Besides, the low CPI also reflected that consumption has been very low, and weak demand, as well. Besides, total social development investment capital is only about 30 per cent of GDP. All of these will affect production and the mindset of consumers.

I believe we have to work on this in 2014, especially in dealing with stockpiles. And that will make our inflation control measures work in the long-term.

What do you think is the key to economic growth in 2014?

As already seen in Prime Minister Nguyen Tan Dung's new year message, Viet Nam is fully committed to institutional reform, encouraging competitiveness and controlling monopoly. Viet Nam is at a crossroad and if we don't reform, the economy will be in big trouble.

I think restructuring agriculture is hugely important.

I have always been concerned that we have not put enough resources into developing the rural economy, agriculture and farming. The issues of land management, human and natural resources in agriculture are known, but still have not been dealt with properly. The number of businesses investing into this sector is very limited.

What are the advantages that the agriculture sector must seize this year?

It's very difficult to promote investment into agriculture due to inadequate infrastructure, low quality of labour and the lack of education.

In 2014, agriculture definitely will be able to take advantage of many opportunities. In 2015, we expect to become part of the ASEAN Community, which means trading with other ASEAN partners would become easier, as borders become less visible with the increasingly simplified flow of goods.

For all of the potential products that can be exported to these countries, agricultural products are vital. We have the capacity to compete with products from countries like Thailand.

In addition, Viet Nam is entering the Trans Pacific Partnership with Japan. Accordingly, Japan will open its agricultural market to Viet Nam. Japan will certainly pour heavy investment into the Vietnamese agricultural sector. Currently, businesses and farmers in the Mekong Delta are working on this front to make sure that we will be ready so Vietnamese agricultural products can be exported to Japan and by working with other Japanese businesses, we can also export to other third partners.

Besides enhancing productivity, quality, transferring of technology and plant restructuring, we need to increase the connection between producers and businesses. Without doing that, we can't have a stable output market for our products. — VNS

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