(VOVWORLD) - Vietnam's GDP grew by 3.32% in quarter 1, which was les than in the same period in recent years, but a good result considering current global economic difficulties. Some National Assembly deputies say economic challenges lie ahead which will require targeted solutions if Vietnam is to achieve its growth target of 6.5% this year.
 (Illustrative photo: VNA)) |
Vietnam's economy has grown slowly since the end of last year, according to the National Assembly's Economic Committee. In a report released on May 22, the Committee said Vietnam’s GDP in the first quarter grew only 3.32%.
Identifying challenges
Minister of Planning and Investment Nguyen Chi Dung said the big challenges to businesses are capital flow, markets, orders, and the ability to absorb capital. These challenges stem from global challenges and internal shortcomings in competitiveness, productivity, and economic resilience.
 Minister of Planning and Investment Nguyen Chi Dung. (Photo: hanoimoi.com.vn) |
Businesses are concerned about cumbersome administrative procedures in many localities. If this problem is not resolved quickly, it will affect business operations and the general economy.
The disbursement of public investment capital in the past 4 months was only 15.6% of the year’s target, wasting development resources.
Ha Sy Dong, a deputy for Quang Tri province, said the amount of state capital deposited in the banking system is high, more than 42.5 billion USD in the middle of May, a paradox that affects money circulation in the economy.
 Tran Hoang Ngan, a NA deputy for Ho Chi Minh City (Photo: VNA) |
Tran Hoang Ngan, a deputy for Ho Chi Minh City, said the three locomotives of Vietnam’s economy are export, consumption, and investment. Exports and consumption are slow because of a purchasing decline in the global and domestic markets.
“The third factor, investment, including public investment, still has room for development. Last year we disbursed about 21.2 billion USD. This year we expect to reach 29.7 billion USD. Public investment must be the main driving force at the moment,” said Mr. Ngan.
Resolving difficulties
In order to achieve the yearly GPD growth target of 6.5%, GDP in each remaining quarter must grow 7.5%. That’s a big challenge, requiring drastic measures from the government.
Ministries and sectors should combine plans to cut investment in projects with a low disbursement rate and divert money to major projects that need to accelerate progress and disbursement. Information technology should be applied to investment procedures and building a mechanism to oversee the disbursement of public investment capital.
National Assembly deputies recommended that the government create more incentives to help businesses recover production and trade.
“We need stronger policies to help businesses boost exports. In addition to reducing import taxes, value-added taxes, and taxes on land use, we should consider exempting, deferring, and reducing interest rates, following the global trend of cutting loan interest rates so businesses can access capital more easily,” said Tran Anh Tuan, a deputy representing Ho Chi Minh city.
A shortage of orders since last year has forced many businesses to shrink production. Deputy Ha Sy Dong said, “The export market is breaking down. Many manufacturers have a large inventory. Production is facing lots of difficulties. We need to carefully review and evaluate the situation to come up with radical solutions, including credit solutions. A second solution is to reconnect export markets to create jobs. A third is to review policies and mechanisms which have not been effective. We need to decentralize power to boost economic recovery.”
The year is half over. To achieve their annual goals, the government and sectors need to address the challenges and find new development opportunities.