Vietnam looks ahead to production, trade recovery

Economic bright spots

With the national economy heavily affected by the Covid-19 pandemic, the Government has provided financial support packages for individuals and businesses in order to avoid deflation and reach three percent annual growth.

According to the assessment of experts at economic research organizations at home and abroad, Vietnam’s economy still has many bright spots and its macro-economy remains stable. Due to the effective application of monetary policies, Vietnam ranks 12th out of 66 emerging economies in terms of positive finances and is forecast to overcome the pandemic’s impacts.

The disbursement of public investment capital has also been significantly improved, with many localities committing to 100 percent disbursement this year.

Exports in the first eight months of 2020 reached US$174 billion, up 1.6 percent compared to the same period last year, and the trade surplus reached nearly US$12 billion.

The industry and trade sectors of localities have implemented a series of demand stimulus programs, helping enterprises stabilize production

The EU-Vietnam Free Trade Agreement (EVFTA), which took effect on August 1, is already providing an important basis for Vietnam to promote export activities and achieve faster growth. In August alone, monthly export growth reached the highest level since the beginning of the year and the annually adjusted trade surplus was the highest in the past four years despite serious declines in global trade. The domestic economic sector’s export turnover increased by 15.3 percent.

According to Le Dat Chi, Deputy Dean of the Faculty of Corporate Finance at the University of Economics in Ho Chi Minh City, promoting public investment disbursement and quickly implementing projects helps enterprises not only stimulate demand, but also consume raw materials and solve employment problems. Chi believes businesses should focus on key infrastructure projects with spillover effects, creating a foundation for sustainable growth and increasing economic competitiveness.

Tax policies and trade pacts

Government tax policies in the context of Covid-19 have helped many enterprises access credit and debt rescheduling. Lending rates have fallen to the lowest level in the past 10 years, with experts urging the banking sector to cut interest rates and cut financial expenses for businesses.

According to Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam branch in Ho Chi Minh City, commercial banks are also implementing appropriate credit options, increased credit flows into priority areas such as import-export loans. The total credit balance in the city until August 2020 reached VND2,371.09 trillion, up 9.09 percent over the same period last year. In which, credit balance of joint stock commercial banks reached VND1,268.95 trillion, accounting for 53.52 percent of total outstanding loans, up 11.46 percent over the same period last year.

The industry and trade sectors of localities have also implemented a series of programs to stimulate demand, increase purchasing power, and restore industrial production and service and trade activities to their pre-pandemic levels. In the context of implementing the various free trade agreements to which Vietnam is a signatory, especially the EVFTA, the Ministry of Industry and Trade is preparing a trade promotion plan for the period 2020-2025 to contribute to sustainable export development. The purpose is to review and select a number of potential commodity industries in the markets of Vietnam’s partner countries, enhancing trade promotion, and applying online tools to maintain these markets and relationships with partners.