Professor Trần Thọ Đạt, Rector of the National Economics University, speaks to the Kinh tế & Đô thị (Economic and Urban Affairs) newspaper about how Việt Nam can achieve sustainable economic growth

How do you assess potential economic growth for our economy in the near future?

We are determined to achieve the growth target of 6.7 per cent for this year. I’m confident the target is achievable. The quick recovery of our primary industries, agriculture, forestry and aqua-products, and the notable growth of the service sector in the first six months of this year have laid a strong foundation for us to achieve the target.

Regarding aggregate demand, the consumption lays a firm foundation for us to achieve a stable growth rate. We all know the consumption accounts for about 70 per cent of GDP. Việt Nam is a consumption market with a high increase in both scope and scale in the region. That’s why we should encourage the population to spend more money on Vietnamese made goods.

On the other hand, potential for investment within our population is still high. But, I think, the Government should adopt workable solutions to settle bad debts in accordance with the National Assembly resolution. I’m confident that when the bad debts are solved, banks will be able to lower their interest rates, an important move to take the country’s economy to a higher level.

Can you elaborate on the possibility for expansion of financial and monetary policy to boost our economic growth?

I’m sorry to say, there is not much room for our money or fiscal policies to grow. In the first half of this year, our credit growth rate was remarkable – the highest rate in the last eight years. Some economic experts have said if we’re able to maintain the current price index, we can adjust the credit growth rate another 1-2 per cent (the current growth rate is 18 per cent). However, in my opinion, we should be cautious with this measure as our credit in the past three years increased strongly. In addition, the relationship between the credit growth rate and GDP in the past 3-4 years was not simple. The credit’s quality is more important than its quantity. The State Bank should closely monitor the flow of increased credit and detect any signs of ‘bubble’ growth in either real estate or stock exchanges.

Regarding fiscal policy, in the circumstances that our growth model has basically remained the same, if we focus on the aggregated management policy, I’m afraid to say it won’t help increase productivity, but it will pressure inflation. As a result, it might make our macro economy become unstable. This has already happened in the past. The mainstay of our economic growth rate comes from foreign direct investment enterprises while our supporting industry remains weak. As a result, the value added generated in our country is very low in the global value chain. What we should do now is to increase our Gross National Income, not increase our GDP.

Some people say Việt Nam has entered the era of a new growth rate. In your opinion, what is the key for us to achieve a sustainable growth rate?

When we talk about the growth rate, we have to follow the principle of quality and quantity with stable and sustainable growth in the long term. In my opinion, the most important task for the Government is to ensure the stability for the macro economy and to improve the business environment, particularly for small- and medium-sized enterprises. This policy will provide conditions for all market forces to operate effectively.

Operating in a friendly, fair and transparent environment, enterprises are the key to implement the Government’s policy of sustainable development. — VNS