PM Nguyen Tan Dung has sent a New Year message emphasising the central tasks of 2013, which include institutional improvement, combination of monetary and fiscal policies, support for businesses, administrative reform, economic restructuring, and guarantee of social welfare.
The year of 2012 was full of difficulties and challenges. However, enduring, combined efforts made by the whole Party, army, people and the entire political system brought us positive achievements: the macro-economy was improved somewhat, inflation was kept at a low rate of 6.81 per cent (compared to 18.13 per cent in 2011); export turnover increased by over 18 per cent; foreign exchange reserve hit a record high, the exchange rate was stabilised and the trust in Vietnamese currency improved. In the context of global economic downturn, Vietnam’s GDP still grew over 5 per cent. Cultural and social affairs made progress; social welfare and security were guaranteed. National defense, security and diplomatic work gained many achievements. Political and social stability was maintained. Generally, development policies proved to be on track.
The above mentioned gains cannot steer the country away from physical difficulties and challenges visibly seen in 2013 as the world economic recovery remains at a slow pace and our major export and investment markets have yet escaped from economic recession. Policy adjustments undertaken by big economies in the world have not brought about desired results with risks and instability remaining high. Potential external shocks are still lingering somewhere, likely leaving negative impacts on our national economy.
Internal weaknesses found in economic structure and growth model are dealt with slowly. The process of restructuring is just at an initial stage and likely to encounter many difficulties. Bad debts are increasing quickly, inventories remain stagnantly big, and high lending interest rates are yet covered by enterprises’ profit-making capacity. State management is coping with weaknesses. A proportion of civil servants have yet displayed a sense of responsibility, proficiency, and virtue they were required to have. Corruption and waste are still serious. All of these weaknesses are reflected in the national economic and social life. The macro-economy is yet stable and inflation hike is likely to rebound. The national economy has not regained its growth momentum. Production, business and job generation are facing extreme impediments; enterprises are experiencing declining resources and people are dealing with shrinking incomes. Market confidence is low. Meanwhile, we are regularly challenged by conspiracies to spark socio-political instability and violate our national sovereignty and territorial integrity.
In such a context, to fulfill the overall targets set for 2013, it is necessary for the entire Party, army, people and the whole political apparatus to make greater efforts in realising uniform solutions that we have set forth, focusing on the following tasks:
1. Improving the quality of institutions and policy response capacity in order to build up market confidence
Institutions are the most important element to effectively distribute and utilise all resources, stabilise the macro-economy and achieve a sustainable growth. High-quality institutions, coupled with simple, open and transparent administrative procedures and a high sense of responsibility, will forge a favourable environment for investment and business activities, preventing corruption and prodigality and significantly contributing to the improvement of the economy’s aggregate competitiveness. This is also a condition to restructure the economy and convert the model of growth towards efficiency. To have proficient institutions and policies, we should strictly observe the Party’s viewpoints of building a socialist-orientated market economy taking into account development needs and people’s interests. Policies without clear-cut execution and supervision methods will not be issued.
Real social efficiency must be calculated to avoid the situation in which the cost for executing a policy is bigger than the development benefits it brings.
In the era of deeper and wider globalisation and international integration, every fluctuation occurred in the world market, especially in a time when the globe is having unpredictable mishaps, will speedily and strongly affect the national economy. This requires us to make quick and proper policy response. In the past years, our response has not always been prompt. In some cases, we cannot help either seize opportunities or mitigate external negative impacts, but create new shocks. To deal with this situation, a firm institutional foundation and a proper economic structure and effective model of growth are needed.
However, no institution can handle all economic phenomena, particularly in the current period full of changes. To have a good policy response, it is important to observe economic laws, improve forecasting capacity, and fully calculate market reactions and possible consequences. The promulgation or adjustment of a policy must not cause big changes and negative impacts on people’s life and enterprises’ operations.
2. Regulating monetary policy in accordance with market realities and inflation targeting. Closely combining monetary and fiscal policies
Given the limited State budget and the narrow-space of fiscal policy, monetary policy plays a vital role in curbing inflation and promoting growth. Based on the principle of maintaining a tight monetary policy, interest rates must be regulated flexibly at levels relevant to inflation targeting. Drastic direction is required to handle non-performing loans to unfreeze capital flow for the national economy. The State Bank of Vietnam (SBV) is tasked to effectively use open market tools to lower lending rates and ensure reasonable credit growth; to strictly manage and supervise operations of credit organizations. The SBV is also asked to reduce administrative measures in regulating the monetary market.
In the context of total demand shrinking, the settlement of bad debts taking time and credit growth likely being low in the first months of the year, fiscal policy plays a decisive role in creating a demand for the economy. It is necessary to quickly implement planned investment projects in a bid to increase total demand to stimulate the economy, thus making pervasive effects on businesses’ operations. During the implementation process, it is required to closely integrate fiscal and monetary policies to accommodate total demand, reduce inflation and obtain a growth that is higher than that of 2012.
3. Removing difficulties against production and business and supporting the market
It is required to attach significant importance to demand-created measures while unfreezing supply sources, to steer the priorities of monetary and fiscal policies to subjects and sectors having high rates of demand growth. They include agriculture, farmers, rural areas, export market expansion, infrastructure development, social housing and dormitories for students. This is also a solution to help improve the living conditions of people and low-income groups.
Within the approved state budget overspending limits, more resources should be sought to raise total demand and support the market; tax measures should be early introduced to ease difficulties against enterprises. More credits with longer terms and lower interest rates should be offered to those who want to buy residential houses so as to reduce real estate inventories. Proper assistance, including debt rescheduling, should be adopted for enterprises with temporary difficulties. New mechanism providing credit guarantee to small and medium-size enterprises will be promulgated. The campaign Vietnamese people prioritise using Vietnamese products should continue. Smuggling and import of commodities which fail to meet technical standards, hygiene, safety and preventive requirements must be resolutely stopped.
It should be noted that measures and policies are important and supportive, but the activeness of enterprises is decisive. Enterprises should know how to convert difficulties into opportunities to speed up their restructuring process in order to raise their competitive capacity and take up market share. They should seek ways to reduce costs as much as they can, effectively utilise resources they have, lower prices to quickly clear inventories, and actively deploy measures to expand domestic and foreign markets.
4. Accelerating administrative procedures reform, upholding the responsibility of officials and state employees in performing public assignments
Good institutions and policies are important but not enough. As institutions and policies are executed by means of administrative procedures together with a contingent of officials and state employees, there are wrongful doings. Unnecessary procedures must be resolutely eliminated; disciplines, rules and responsibilities of officials and state employees in performing public assignments, harassing activities must be seriously punished. One-stop-shop mechanism must be expanded to all districts. State agencies must publicise administrative procedures and processing time must be specified so that citizens and businesses can notice improvements in the field. Officials and state employees must clearly understand that in public assignment relations, they are responsible for implementing duties and serving citizens who have the right of subject.
Ministries, sectors and localities must closely supervise their officials and employees. The examination of administrative procedures streamlining will be enhanced at all levels and local-level administrative reform index will be made public. The National Assembly, People’s Councils, Vietnam Fatherland Front, and people are asked to enhance supervision over administrative procedures reform and responsibilities of officials and state employees in implementing public assignments while demanding for enhanced accountability on administrative procedures reform, attitude and responsibilities of officials and state employees in performing public duties.
5. Stepping up economic restructuring process
It is required to quickly restructure credit organisations in combination with the settlement of non-performing loans. They are the two reciprocal and intertwined processes. Dealing with non-performing loans must be done in various ways in different credit organisations and at the national level. If this complicated issue is not deployed immediately, bad debts will rise making it harder for the settlement, and the economy will become sluggish. We cannot see all angles of an issue at once, so the necessity now is to have right orientations to follow and only by acting drastically can we see through all possibilities and select best solutions.
Of the three pillars of economic restructuring from now till 2015, restructuring state-owned enterprises (SOEs) plays a special role. This is the main axis for restructuring the whole economy not only because SOEs are consuming big resources with low efficiency but they are also key stakeholders in investment. SOEs are also accounting for a high ratio in the economy’s total credits and owing commercial banks a high amount of bad debts. SOEs reform will also create a breakthrough in creating an equal competition among economic sectors, contributing to the improvement of the institution of socialist-oriented market economy. State groups and corporations must steer resources to their core business lines in order to fruitfully realize the country’s industrial policies, push up the process of modernisation and industrialisation, and support the development of the private sector. Transparency must be secured in SOEs’ operations. Mechanism on exercising representative functions of State ownership at SOEs will continue to be perfected and supervision over SOEs’ operation will be strengthened.
6. Ensuring social security and social welfare
Over the past years, the Party and State have poured due investments in ensuring social security and social welfare. In the face of economic hardship, this area needs further attention, particularly for vulnerable groups. In 2013, it is required to boost poverty reduction, especially for ethnic people.
Assistance will be provided to people who live just above the poverty line and those who have got rid of poverty to help them achieve sustainable poverty reduction. A part from Programme 30a (programme to support poverty reduction in 62 poorest districts), the government has decided on a number of new policies for 23 districts with a high poverty rate. It attaches importance to socio-economic development in resettlement regions to ensure that people there have better life, considering it important criteria to evaluate the overall efficiency of an investment project attached to land recovery and resettlement.
Priority will be continuously given to people who render services to the nation, making sure that they have a living standard that is not lower than the average level in the same residential areas.
While focusing on the above missions, we need to fulfill our tasks in other fields successfully, especially security, national defense, social order and safety, national sovereignty, and improvement of Vietnam’s prestige on the international arena.
Promoting the achievements made, resolutely overcoming existing shortcomings, holding high the sense of responsibility, self-reliance, and the tradition of solidarity, our people and country will surely surmount difficulties and challenges to successfully realise socio-economic development targets set for 2013.
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