Corporate income taxes are poised to be lowered, from 25 to 22 per cent in parallel with reducing lending interest rates at 10-13 per cent next year. This would facilitate businesses in expanding production.— VNA/VNS Photo Tran Viet

HA NOI (Biz Hub)— Advance estimates indicate that the financial climate next year will bring in winds of change. Viet Nam's gross domestic product (GDP) growth rate is forecast to reach 5.67 per cent next year, while its consumer price index (CPI) will be 7 per cent.

According to the National Centre for Socio – Economic Information and Forecast under the Ministry of Planning and Investment, the economy will see a lighter index of recovery, while inflation will be restrained at single digit figures in the next two years.

Mai Thi Thu, the centre's director, addressed a conference in Ha Noi yesterday on Viet Nam's economic outlook in 2014. She spoke about the effects of the Government's policies promulgated this year to stabilise the macro-economy, which would lead to positive effects on the economy.

Corporate income taxes are poised to be lowered, from 25 to 22 per cent in parallel with reducing lending interest rates at 10-13 per cent next year. This would facilitate businesses in expanding production.

"The biggest opportunity for Vietnamese enterprises lies in the country's stable macro-economy and gradual recovery of the world market," Thu said.

She said that the relatively low CPI, increasing exports and improved foreign reserves would be necessary conditions for recovery of companies. The forecast also indicated that FDI inflows would increase next year, thus bringing opportunities to domestic firms, she added.

In the same vein, Doan Hong Quang, economic specialist from the World Bank in Viet Nam, said that the country's economy would depend on the world's recovery.

The participants, however, pointed out the potential risks for the economy next year as it faced barriers of low demand, bad debts, low investment effectiveness and a slow restructuring process.

The centre's figures revealed that the total investment this year indicates a slow growth. By the end of the third quarter this year, the country's total investment rose only 6.1 per cent year-on-year.

In addition, capital scale was also narrowed as gross fixed investment as the percentage of GDP last year was less than 30 per cent, while the percentage was 40 per cent in the years before 2008.

Nguyen Huy Hoang, from the centre, said that the decreasing capital scale and low effectiveness in using capital would reduce the economy's competitiveness, thus bringing in a possible instability, when considered on a long term landscape.

Hoang said the trend of market expansion and participation in free trade agreements would also bring competition in international markets, lower production costs and selling prices for domestic businesses.

The Government should have policies to support enterprises in the days ahead, he said, adding that the policies could focus on improving investment environments, simplifying administrative procedures and improving the infrastructure.

Specifically, there should be policies to untie the inventory of VND100 trillion (US$4.7 billion) in the real estate sector. The Government would also need to promote the domestic market while preventing the inflow of smuggled and counterfeit goods.

"If the policies are effectively implemented next year, it will be a preparation for a step into a high quality, sustainable period," he said. — VNS