Preferential policies to stimulate economic recovery need to be reviewed

June 29, 2021 - 07:00

Nguyễn Đình Cung, former director of the Central Institute for Economic Management spoke to Thời Báo Tài Chính Việt Nam (Việt Nam Financial Times) about promoting economic growth in the context of the pandemic.


Bars and beer shops on otherwise bustling Tạ Hiện Street in Hà Nội's Old Quarter shut in mid-June as part of the city's authorities attempts to curb local virus spread. — VNA/VNS Photo

Dr Nguyễn Đình Cung, former director of the Central Institute for Economic Management spoke to Thời Báo Tài Chính Việt Nam (Việt Nam Financial Times) about promoting economic growth during the pandemic.

How do you assess the impact of the fourth wave of COVID-19 pandemic on our economy?

The fourth outbreak is more complicated than the previous ones. It has spread to many localities, especially in some industrial zones in Bắc Ninh and Bắc Giang provinces.

Therefore, pandemic prevention and control is more difficult, complicated and expensive. It also takes more time to stamp out.

The impact of the fourth wave on the socio-economic situation is similar to the previous ones. Tourism, passenger transport, services, especially airlines, restaurants and hotels continue to be heavily impacted with a sharp drop in revenue, profit and a rise in unemployment. 

With difficulties from previous waves, many businesses in this industry may not be able to survive and have to dissolve or go bankrupt.

Additionally, it has caused production disruption and suspension at some factories in some industrial zones in Bắc Giang and Bắc Ninh provinces. Since then, the growth rate, especially the processing industry, will decrease. The growth rate of export turnover may drop. With these impacts, growth rate in the second quarter will be lower than planned and GDP growth in the first six months of the year will also be lower than expected.

Regarding social security, the number of workers who lost their jobs increased. Their lives become more difficult, unstable and vulnerable.

Some experts suggest that new economic support packages are needed. What is your opinion on this?

In 2020, the Government provided support packages to help businesses cope with the coronavirus pandemic through measures such as tax breaks, delayed tax payments, interest rate reduction and debt payment rescheduling... and support businesses to keep labourers employed.

Currently, the Government also has a policy to continue to extend deadlines for tax payment and land lease fees in 2021, new regulations on deductible expenses for enterprises' taxable income.

We need to have a longer-term solution, aiming to support businesses to recover and develop.

After a year of being impacted by COVID-19, many firms could not survive and had to reduce the number of employees, even close or switched to other business. Reality forces businesses to reshape their production and business strategies.

Likewise, employees also are not at home to receive support and wait to return to work like last year. They have to look for new jobs. So the proposal and development of policies to support businesses also need to change.

The Government should have a comprehensive economic recovery programme, with solutions to stimulate the economy. 

What issues should policies to stimulate economic recovery focus on?

For businesses, the necessary policy at this time is to support and encourage investment to boost domestic investment and attract foreign investment. To do this, it is necessary to review the existing preferential policies to see if they are still appropriate, and then propose appropriate additional solutions. 

It is also needed to review the business that are being encouraged to invest such as digital transformation, innovation, new business models, etc., to see if there are any problems in policy implementation or more incentive policies are needed in order to submit to the Government and to the National Assembly. The target is to boost investment activities to create new capacity for the economy and impetus for structural reforms.

The bottlenecks in investment procedures must also be drastically removed.

Economic centres such as Hà Nội and HCM City, Hải Phòng, and Đà Nẵng are places that need support to promote economic restructuring at this time. There must be specific and strong policies to support and encourage investment in regions that are creating new growth opportunities for the economy rather than spreading support.

In terms of macroeconomics, with the current more complicated pandemic situation, stabilising the macro-economy and promoting growth will be much more difficult. We still have to work towards achieving the dual goals of fighting the pandemic and promoting economic growth, but we need to be more specific. 

We need to determine how the economy will grow and if the planned growth target needs to be adjusted. The fight against the pandemic also needs to continue to get positive economic results. — VNS