Viet Nam needs to implement strategic breakthroughs and macro solutions to improve the economy, which is currently mired in depression, said Assoc Prof Dr Tran Dinh Thien, director of the Viet Nam Economic Institute, at the Autumn Economic Forum held in Hue yesterday.—VNS Photo Phuoc Buu

by Phuoc Buu

THUA THIEN HUE — Viet Nam needs to implement strategic breakthroughs and macro solutions to improve the economy, which is currently mired in depression, said Assoc Prof Dr Tran Dinh Thien, director of the Viet Nam Economic Institute, at the Autumn Economic Forum held in Hue yesterday.

Since joining the World Trade Organisation, Viet Nam has not seen economic growth, while other economies in the region have made progress, Thien told participants.

"The economy seems to be showing signs of recovery, but actually it is on the way to the bottom of a depression, and we can no longer blame objective, external causes," he said.

During seven years of economic depression, the Government has implemented flawed short-term fixes rather than an overall solution, he said.

The lack of strategic action resulted in credit growth of only 6.5 per cent in the first half of the year and low social investment (30 per cent of GDP).

"A total of 25,000 businesses shut down in the first six months of the year, equal to the rate of the last two years," he said, stressing, "Viet Nam is lagging behind."

Weak policy planning is a major hindrance, Thien said, and the lack of reliable data makes things even harder. Because many GDP figures reported by provinces and cities are not accurate, the national GDP does not offer a reliable basis for policy creation.

Moreover, the Government does not have sufficient resources for restructuring the economy. Restructuring Vinashin alone could cost VND100 trillion (US$5 billion).

Thien suggested that two or three State owned corporations be selected for restructuring, while the restructuring the banking system focused on clearing bad debts.

He also recommended changes to the power price of coal and electricity, payment of businesses' debts, wage adjustments and amendments to the law on national budget.

As for medium-term solutions, Thien asked the Government to change its strategy for attracting foreign investment.

Specialized economic zones should be placed at the entrance of national key economic zones, he said, which would mean Quang Ninh - Hai Phong for the north, Ba Ria - Vung Tau for the south and Da Nang - Chan May Lang Co (Hue) for the central region.

Experts at the forum agreed with Thien and demanded further discussion about specific solutions.

"What the economy is experiencing are the consequences of six continuous years of depression of the macro economy," said Dr Tran Du Lich, a member of the Economic Committee of the National Assembly (ECNA).

"To deal with the problem, we must examine our practices and remove any illusions that the economy will recover," he noted.

Bakhodir Burkhanov, United Nations Development Programme deputy country director in Viet Nam, said the country had dropped 10 places to the 75th in the 2012-13 edition of the Global Competitiveness Report, so it was imperative to implement the solutions recommended at the forum.

"Viet Nam's ability to move towards a higher, sustained growth trajectory will depend on the pace of reforms, sound policy solutions and ability of institutions to respond to the changing context and to the rising aspirations of people," he said.

ECNA Chairman Nguyen Van Giau pledged to inform the National Assembly and the Government of the forum's conclusions so that they could be put into practice.

The forum was sponsored by ECNA, UNDP, the Viet Nam Social Science Academy and the Viet Nam Chamber of Commerce and Industry. — VNS