VN shows signs of recovery, despite difficulties

Thursday, Jan 08, 2015 09:46

The National Assembly approved socio-economic development targets for 2015, including in GDP and CPI growth. Nguyen Thanh Binh, deputy director of the Ha Noi Institute for Socio-Economic Development Studies, spoke to Viet Nam News about the country's potential for reaching these goals.

The National Assembly has approved the country's socio-economic development resolution for 2015, including many targets for growth. Which target do you think is most important?

Nguyen Thanh Binh. — VNS Photo

The National Assembly has approved the 2015 plan with 14 main targets for the country's socio-economic development. I think all targets reflect the country's development.

I am especially interested in GDP growth rate, CPI, total investments in social development and export turnover rates.

But I want to turn back to the results from 2014, which we can use to thoroughly evaluate the NA targets set for next year.

2014 had an estimated GDP growth rate of 5.8 per cent, which is a very positive figure, as it was predicted to be a very challenging year for Viet Nam. The country faced many difficulties, including China's illegal placement of its Haiyang Shiyou-981 drilling rig in Viet Nam's exclusive economic zone and continental shelf, and the impact of the global economic depression that caused many hardships for domestic businesses.

The CPI is estimated to be 5 per cent for 2014, but earlier the NA allowed it to be below 8 per cent. That is a really significant gap.

How can we reach our development goals while dealing with these challenges?

We have simultaneously carried out several activities. Success depends on many factors.

We mobilised from various sources an estimated investment capital of 30.1 per cent of the GDP in 2014, of which US$12.5 billion came from foreign direct investment (FDI), marking an increase of 8.7 per cent on the year. Meanwhile, the investment capital raised from the State budget and Government bonds increased of 18.3 per cent compared with 2013, thanks partly to the Government's successful sale of sovereign bonds worth $1 billion.

This year also saw record export sales worth $148 billion, an increase of 12.1 per cent over 2013. This is the third consecutive year we have had more exports than imports. Key export products are crude oil, garments, leather shoes, seafood, agricultural products, phones and electronics.

Vietnamese coffee and rice are an important link in the global value chain. Viet Nam is one of the leading rice exporters in the world. In addition, we have been producing garments and shoes for several famous firms across the world.

In this case, the Government has shown its leadership, and its ability to resolve difficulties and boost economic development. The Government has issued policies related to the currency market, interest rates and bank operations. I think this is a positive development. It has helped domestic businesses overcome difficulties and restructure the finance system.

However, we have failed to reach a number of targets.

The equitisation of State-owned enterprises (SOEs) has been slow. We planned to equitise 432 SOEs by the end of 2015, but up to now only 71 have been equitised.

Most private enterprises are small and do not focus on developing technology. Due to financial troubles, a large number of businesses are still having to suspend operations or close down.

Some of the above-mentioned factors are causing Viet Nam's competitiveness index to stay low. The country is currently number 68 out of the 144 countries on the list. It's rank is higher than in 2012-2013 (75/144), but lower than 2010-2011 (59/144) and 2011-2012 (65/144).

Meanwhile, the country ranked 98th in the economic institution index in 2013-14, nine spots lower than in 2012-2013.

Can you evaluate the targets the NA has set for 2015?

The NA has set a GDP growth target of 6.2 per cent for 2015. This is achievable, because the country's economy has shown signs of recovery.

Viet Nam will integrate well with the world economy next year, and fully participate in the ASEAN Economic Community, seen as a landmark that will help the country reach its GDP target. Meanwhile, we will continue negotiations to join the Trans-Pacific Partnership.

The country will continue its reform following the NA's approval of the Law on Public Investment, which will help the Government set up and carry out long-term economic projects with ease. This is one of the factors that will help Viet Nam reach its GDP target in 2015.

However, in my opinion, the GDP target is too low – it does not match the country's potential.

The NA has set the CPI goal for 2015 at about 5 per cent. I think this matches our current capabilities. To reach this ambitious figure, I think the Government will have to manage the economy, while maintaining the CPI rate at around five per cent to prevent the return of inflation.

The expected investment capital goal of 30 to 32 per cent of GDP for 2015 is good news. Investors will mobilise the capital. However, the most important thing is how to attract investment in areas that need the most support, such as agriculture, rural areas, tourism, logistics and subsidiary industries.

The NA set an export turnover target of $162.8 billion for 2015, 10 per cent higher than in 2014. I think we can reach this target, even at the higher level, when we integrate with the global economy. In addition, we have a stable number of export orders for products such as coffee, rice, garments, leather shoes and seafood. And we are still expanding the market.

However, it's necessary to increase the export of finished products, and reduce the export of basic materials, as this will help us earn higher profits.

2015 will be the year we close the five-year 2011-2015 socio-economic development plan. During this time, we had an average annual growth rate of 5.8 to 5.9 per cent, lower than our expectations.

The year 2015 is going to be the year of management, creating foundations and institutions, restructuring for the economy and creating advantages for development in the coming years. — VNS

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