The Government should develop Ha Noi and HCM City into financial centres as local businesses lack capital markets, National Assembly (NA) deputy Pham Phu Quoc said on Tuesday.

NA deputies also recommended further public investment for the two cities, as local firms were still dependent on loans from financial institutions, HCM City deputy Quoc said.

The establishment of the two financial hubs for Viet Nam is expected to help local businesses compete against foreign ones.

Deputy Tran Anh Tuan from HCM City said the Vietnamese economy depended too much on external forces, especially foreign direct investment (FDI) companies – whose exports account for 70 per cent of Viet Nam’s total – while links between FDI and domestic firms remained weak.

In recent months, the economy and local businesses have encountered difficulties in the form of rising raw material costs, protectionism, US-China trade tension and pressurised exchange and interest rates.

“In the remaining months of 2018 and in 2019, the US interest rates will increase and depreciate the Vietnamese dong against other currencies, especially the US dollar. This will be a big challenge for Viet Nam’s macroeconomic policies and pressurise the Government’s fiscal and monetary management,” Tuan said.

“If it’s not closely controlled, the inflation rate will rise beyond the expectation and diminish local firms’ competitiveness and production capacity.”

According to Tuan, stablising macroeconomic conditions is the key to the country’s economic development and the Government must keep exchange and lending rates stable to help local businesses control costs.

The State Bank of Viet Nam should monitor credit growth, which should stay below 16 per cent, and it should keep US$60 billion of foreign reserves to balance capital flow, he added.

Meanwhile, the efforts to improve the business environment had been below par due to the high number of companies filing for bankruptcy, at more than 50,000, Tuan said.

“Some costs have remained high for local firms, making their products uncompetitive in the market, not to mention their product quality and design haven’t improved.”

NA deputy Quoc of HCM City said the increasing number of dissolved and pending-for-dissolution companies required the Government to improve the business environment.

The strong industries of Viet Nam such as textile and garment were in the low-productivity stage, so the Government would need to transform the economy from luring investment to raising productivity and increasing technology use, Quoc said.

Other NA deputies also expressed concerns about improving infrastructure for Mekong Delta provinces.

Deputy Tran Hoang Ngan from HCM City urged the Government to focus on developing a north-south expressway so farmers, agriculture firms and the sector would be able to cut production costs. — VNS