No change for Vietnamese economy in 2016

Thursday, Nov 12, 2015 17:46

"Foreign investment will continue coming to Viet Nam thanks to free trade agreements and to take advantage of the chance, Viet Nam must accelerate innovation for business environment," Cung said. — Photo

HCM CITY (Biz Hub) — There will be no significant difference in Vietnamese economy in 2106 comparing with this year despite that a lot of free trade agreements and Trans-Pacific Partnership are going to take effect, delegates heard at Wednesday's Viet Nam Economic Outlook 2016 conference, organized by HCM City's CEO Club.

"I must warn that to avoid expectation about a remarkable change in Vietnamese economy only because of deeper international integration," Nguyen Dinh Cung, president of the Ministry of Planning and Investment's Central Institute for Economic Management delivered his speech at the conference.

He agreed that Vietnamese economy has recovered but the recovery mostly depends on mineral exploitation industry and there is not sustainable growth.

Anther factor to promote economy is growth of agriculture, forestry and seafood but the industry is facing challenges for both short and long-term.

"Household-production model in the industry has no longer proper anymore. We need a new model of production with huge land to be matched with industrial production but in fact, there is no policy for this model right now," Cung added.

Another sign presented weakness of the country's economy.

"Our economy has just recovered but trade deficit immediately appeared. It means that our production is deeply depended on import," he said.

"Economic structure and growth style are still the same and there is no change at all," he warned.

The president also pointed out some unusual things in economy, such as low inflation but banking interest rate was the same.

"It shows a fact that there are so many problems in our economy, like bad loans, huge Government bonds, fluctuated foreign exchange, capital expenditure for enterprise is so high," he said.

One achievement of Vietnamese economy is to maintain low inflation but there are so many factors to threat the fact, including fluctuated banking interest, foreign exchange.

Investment from private and foreign are increasing, accounting for 35 per cent but they are not met potential because pressure from public investment.

For State budget, Cung analysed that excess of expenditure over receipts, investment spending lower than usual expenditure, over-spending is increasing while public debt is significantly going up.

"This kind of State-budget is harmful for both stabilizing macro-economy and economic growth," Cung concluded.

For 2016, international economy will recover but in different level. Meanwhile in China, there will be a remarkable adjustment for Chinese economy and it will be unpredictable effect to Vietnamese economy.

"Local economy will slowly recover but there won't have any change in growth model and no sustainability. Macro-economy will temporarily stabilize but depend on outside factors, especially for State budget and public debt."

"Foreign investment will continue coming to Viet Nam thanks to free trade agreements and to take advantage of the chance, Viet Nam must accelerate innovation for business environment," he said.

Head of Japan External Trade Organisation (JETRO) in HCM City, Hirotaka Yasuzumi provided a fact that from 2013 -2015, Viet Nam has attracted over 500 Japanese companies each year.

"Japanese enterprises have released a strategy of Thailand + 1 and China + 1 to cope with increasing of human resource's price in these two nations along with natural disaster risk in Thailand and diplomatic difficulties in China," Yasuzumi said.

"ASEAN is a good choice for the strategy and it takes half of Japanese enterprises moving out Thailand and China. Viet Nam receives half Japanese enterprises that have moved to ASEAN," he said.

He pointed out five risks in doing businesses in Viet Nam, such as intransparent law system; high expenditure for human resource; cumbersome administrative procedures, complicated tax policy; and local authorities use laws in different ways.

Despite the fact that all five risks have been improved from 7.3 – 15.4 per cent in 2014 comparing 2013, it is not enough to attract enterprises who would like to have a very transparent and healthy business environment.

"Viet Nam will have a lot of work to do to take advantage of free trade agreements," he said. — VNS

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