16:26 | 15/01/2017 Economy- Society
(VEN) - The Vietnam Development Forum (VDF) 2016 was successfully organized in Hanoi on December 9. At the event, Vietnam and its partners overviewed the Vietnamese economy in 2016 and identified new opportunities and challenges for the 2016-2020 period.
Opportunities and challenges
Addressing VDF 2016, Prime Minister (PM) Nguyen Xuan Phuc said despite numerous difficulties and challenges, Vietnam achieved satisfactory socioeconomic results in 2016. With GDP growth of about 6.3 percent, inflation under control, the country has maintained, in general, macroeconomic stability, which is essential for the attraction of foreign investment in the coming time. State budget revenue increased while interest rates decreased; the foreign currency and gold markets have been basically stable; foreign currency reserves reached about US$41 billion, the highest level so far.
Notably, Vietnamese exports are expected to grow eight percent to bring a trade surplus of US$2-3 billion despite a strong decline in regional and global trade. Total investment in development is estimated to account for 32.5 percent of Vietnam’s GDP. Social security has been ensured while Vietnam’s global position has improved. The establishment of more than 100,000 new businesses in 2016 showed considerable improvements of the business environment in Vietnam.
These satisfactory results are expected to lay the foundation for Vietnam to achieve its socioeconomic development targets for the entire 2016-2020 period. However, PM Phuc admitted that the Vietnamese economy still faces many problems that could hinder its rapid and sustainable growth in the 2016-2020 period.
According to Minister of Planning and Investment Nguyen Chi Dung, the Vietnamese economy has faced internal difficulties such as adverse impacts of climate change, industrial underdevelopment, and the middle income trap. Meanwhile, the regional and global situation in 2017 can hardly be predicted. The new cabinet of the US could have policies that affect the structure of the global economy, especially in trade and investment. Europe is forecasted to see many changes in the context of the Brexit process approaching a decisive stage and having big impacts on EU member countries. The Asian region is also expected to undergo hard-to-predict changes due to the growing influence of the Chinese economy and the yuan.
International organizations forecasted that Vietnam would continue to face difficulties and challenges in implementing the goals set in its Socioeconomic Development Strategy for the 2011-2020 period, especially in efforts to raise labor productivity, eradicate hunger, reduce poverty, and mobilize financial resources for the 2016-2020 agenda.
Improving business environment
In the opinion of international organizations, to achieve sustainable economic growth in the short and medium term, Vietnam needs to resolve a number of problems related to institutions of the market economy, creating impetus for economic growth and enhancing the competitiveness of the economy. To be exact, Vietnam needs to concentrate on improving the business climate to create a fair investment environment for all economic sectors.
According to International Monetary Fund Resident Representative for Vietnam Jonathan Dunn, to achieve rapid, sustainable growth in the 2016-2020 period, Vietnam should focus its macro reforms on modernizing the monetary policy framework to put in place a more flexible exchange rate regime accompanied by risk prevention tools. In addition, the clearance of bad debts will improve the credit system’s capability to support private businesses, helping enhance their competitiveness and promote their development.
International organizations also put emphasis on the role of the private sector in the market economy. In their opinion, greater attention to this sector would help Vietnam achieve higher economic growth and integrate more deeply into the regional and global economies.
Sharing this opinion, PM Phuc said the Vietnamese government is determined to build a unified national administrative system to effectively serve the people and businesses, considering this the most important task in the 2016-2020 period. The government will focus on improving the business environment to facilitate the development of the private sector. Specifically, further efforts will be made to promote institutional and policy improvements. The state administrative apparatus will be streamlined to become more efficient and professional. Necessary amendments and supplements will be made to existing policies and mechanisms so that the Vietnamese investment environment could reach the average level of ASEAN top 4 (Singapore, Thailand, Malaysia, and Indonesia). The equitization (partial privatization) of state-owned enterprises (SOEs) will be accelerated. Specialized entities will be established to represent state ownership in equitized SOEs. Action will be taken to improve the management capability and efficiency of SOEs. Solutions to SOEs operating at a loss and being unable to improve their financial situation could be M&A (mergers and acquisitions) or bankruptcy statement according to existing regulations.