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Economic restructuring not up to expectations

Update: May, 03/2013 - 10:26
Workers make products for export at Cau Tre Food Processing JSC, a subsidiary of the State-owned Sai Gon Trade Corporation, in HCM City. Viet Nam's economic restructuring process has been slower and generated fewer results than expected. — VNA/VNS Photo Thanh Vu

HA NOI (VNS)— After a year of economic restructuring, Viet Nam still faces grave problems including high inventory, bad debt and falling purchasing power.

Representatives from the Ministry of Planning and Investment acknowledged that the economic restructuring process had failed to meet expectations during a meeting last week held by the NA Economics Committee.

In response, deputies emphasised that speed was of the essence. The slower the restructuring measures were carried out, the more difficulties the country would face, warned committee member Cao Sy Kiem.

"Enterprises will start showing reduced trust and even cynicism concerning governing authorities," he said.

Vu Viet Ngoan, head of the National Financial Supervisory Commission, agreed that market confidence was reduced to an alarming level and more effort was needed to regain enterprises' confidence.

"A detailed roadmap is necessary to ensure the success of the restructuring," said former director of Trade Research Institute Nguyen Van Nam.

Ministry representatives made the case that they already had such a "roadmap" but that the process would take time because of its complicated nature. They cited current policies that sought to address the high real estate inventory and balance supply and demand, such as measures encouraging investors and consumers to involve themselves in the social housing sector and changing commercial housing projects to social housing.

Nine ailing banks are also being restructured, which involves classifying and evaluating bad debts in line with international practices and curbing the increase of bad debts. Public investment, in terms of both capital and the number of projects, has been reduced.

Upcoming Governmental decisions, the ministry said, aim to get State-owned enterprises to operate under market mechanisms. They stipulate information that enterprises can make public as well as methods to evaluate enterprises' performance.

At the meeting, the State Bank acknowledged that the restructuring of ailing commercial banks also lagged behind. While the central bank had planned to restructure 5-8 banks in the first quarter, only two banks (TienPhong Bank and Habubank) had so far implemented restructuring plans. NA Economics Committee vice chairman Nguyen Van Phuc said to facilitate the restructuring efforts, the country also needed more comprehensive laws on management of public spending as well as bidding and corporate law. — VNS

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