Economist Lê Xuân Nghĩa

Economist Lê Xuân Nghĩa, former Vice President of the National Financial Supervisory Commission, talks to Nông Nghiệp (Agriculture) newspaper about the role of agriculture in reviving the economy after the COVID-19 pandemic

What are your personal opinions on the impacts of the COVID-19 pandemic on the Vietnamese economy?

We all know that the COVID-19 has spread rapidly worldwide and has slowed world economic development. Many countries have projected gross domestic product worldwide in 2020 will be reduced by at last 1 per cent compared to 2019. Our study has also come up with a projection that the Vietnamese GDP will be reduced by 1 per cent as Việt Nam will be economically hit hard by the pandemic.

In our study, we listed three main causes of impeding world economic development in 2020.

First, the COVID-19 pandemic in China, where 15 per cent of Việt Nam’s exported products go while some 30 per cent of the country’s imported products come from China. Most Chinese imported products are raw materials and machinery equipment or spare parts. This has become a severe problem for the Vietnamese processing and manufacturing industry.

Many textile and leather shoes companies have lamented that they can't continue their production as they don’t have raw materials which mainly come from China. This has led to quite a few Vietnamese companies going bankrupt or closing their factories.

Secondly, the service sector is also grievously hit by the pandemic, particularly the tourism sector. According to the Việt Nam National Administration of Tourism, the Vietnamese tourism sector lost between US$5.7-7.7 billion in the first quarter of 2020.

The third Vietnamese sector that has been hard hit is the agriculture sector due to disease and natural disasters. Severe drought and salt intrusion, coupled with the narrowing down of the exported market, have left very serious impacts on agriculture – one of the country's primary industries. In 2019, Việt Nam recorded some $42 billion in agro-forestry and fishery exports. In 2020, it is projected that the export revenue will drop to $37-38 billion.

However, through this hard time, Việt Nam knows its strengths.

At a recent meeting of the National Financial and Monetary Policy Advisory Council chaired by Prime Minister Nguyễn Xuân Phúc, we all agreed that good control of the disease is the most important element in the national economic growth and it is an essential condition to help the economy to develop.

Addressing a recent meeting of the National Financial and Monetary policies, the PM said: “Disease control is a very important element to help the national economy to develop”. Why? It will help cut the losses caused by the pandemic while still keeping the Vietnamese prestige high in the international arena. Foreign tourists will then return and Vietnamese products will be able to secure a foothold in international markets.

That’s why good control of the COVID-19 is a top important task for Việt Nam now. Along with that Việt Nam should adopt measures to develop its economy immediately when the pandemic is finished.

We hope when the COVID-19 comes to an end and our traditional tourists from China, South Korea and others will return to Việt Nam. So it is now time for us to think about how to attract more foreign tourists. This is food for thought for all Vietnamese economic sectors, be they tourism, agriculture or others.

What should Việt Nam do when the pandemic ends?

Many experts have lamented that investment in the agriculture sector faces many risks. However, 2019 was a successful year for the Vietnamese agriculture sector. It earned $41.3 billion in export turnover while receiving some 30 per cent of the needed investment into the sector. A new investment wave has come to agriculture. In the long run, agriculture will remain one of the most important pillars in the country’s development strategy.

Each Vietnamese locality has its own food speciality. They may use the same ingredients, yet their cooking styles are quite different. And in his opinion, the novel nature of Vietnamese food is in its cooking. Most of the cooking ingredients come from agricultural products and from farmers themselves. Việt Nam’s strength comes from the combination of agriculture, tourism and national culture.

No country in the world has such a rich diversity of food as Việt Nam. Now it is time for Việt Nam to make its delicious food known to people in other countries.

We have conducted a lot of research on the Vietnamese catering and based on our research Viet Nam’s strength is not its industry, but its agriculture, tourism and culture.

These three components are intertwined with each other, particularly in the Vietnamese countryside.

How should Việt Nam restructure its agricultural practice?

If Việt Nam considers agriculture as one of the important pillars in the national economy, we should make some adjustments in our national economic structure. And if Vietnamese agricultural production applies good agriculture practice and products are well preserved to meet the requirements of global market I’m confident that agriculture will surely become a main pillar in the national economy. This is food for thought for  Vietnamese authorities. In my opinion, the weakest point of our products is that they cannot be preserved after harvest. It is time for Việt Nam to apply new technology to overcome this. 

The Government has already adopted a national programme on the restructuring of the agriculture industry. Yet, until now the programme’s successes are still limited. In my opinion, we need more specific guidelines and programmes on how to restructure the Vietnamese primary industry – agriculture.

In the course of restructuring the national economy, the Government should select some important programmes in the most important sectors: agriculture and finance as they are the key driving force in the national economy. Adding to these two sectors, I think that the Government should pay more attention to the banking, education and training sectors.

Last but not least, the Government should adopt special financial support to the farmers. — VNS