Vietnam seeks to ease dependence on foreign-invested firms

09:18 | 10/09/2019 Economy

(VEN) - The dependence of the Vietnamese economy on the foreign-invested sector is a matter of concern.

vietnam seeks to ease dependence on foreign invested firms

Associate Professor Nguyen Duc Trung, deputy rector of the Banking University, said Vietnam’s economy expanded 6.76 percent in the first half of 2019, lower than the 7.08 percent rate in the same period last year, but still higher than first-half figures during the 2011-2017 period.

The Vietnamese economy is facing the impact of the escalating US-China trade war. Aggregate demand decreases as an inevitable response when risk factors increase.

In the first seven months of the year, Vietnam’s exports reached an estimated US$145 billion, a year-on-year increase of 7.5 percent. The domestic economic sector accounted for US$44 billion, comprising 30.3 percent of total export turnover, while the foreign-invested sector (including crude oil) exported goods and services worth US$101 billion, accounting for 69.7 percent of Vietnam’s export turnover.

The results reflect the dependence of the Vietnamese economy on the foreign-invested sector. Although the export turnover of the domestic economic sector increased by 12.2 percent, that of the foreign-invested sector, which plays a crucial role in offsetting the trade deficit from the domestic economic sector, rose by only 5.6 percent in the reviewed period.

Nguyen Duc Trung said Vietnam must limit its dependence on the foreign-invested sector so that the domestic economic sector becomes a mainstay. Solutions to strengthen capacity and further improve the role of the domestic economic sector, especially the non-state economic sector, include a focus on restructuring investment, especially public investment, and developing key industries associated with support industries to enhance added value.

Dr. Pham Phu Quoc, deputy director of the Ho Chi Minh City Institute for Development Studies, said promoting administrative reform is also a way to improve the efficiency of investment and business performance. In addition, the government and state management agencies should also pay more attention to curbing overspending.

Thanh Thanh