Vietnam economy in 2018: Achieve growth goals, how to do that?

(Vietnam Logistics Review) With the first quarter GDP growth of 7.38%, this is considered as both driving force and growth pressure for the remaining quarters of the year. So what will be the solution to achieve the goal set? This issue was discussed at the 5th session, the XIV National Assembly held from May 21 to June 15.

The challenges

According to government’s reports, the economy in the first quarter continued to achieve positive changes. Specifically, Gross Domestic Product (GDP) in the first quarter reached 7.38%, the highest in the past 10 years; Moreover, exports also continued to increase strongly with total turnover of $ 73.76 billion in the first four months; Business investment environment continues to improve; reform of administrative procedures has upgraded. By the end of March 2018, the bad debt ratio was drop to 2.18%...

However, in addition to these achievements, the government report also pointed out, that the growth strength based on a number of factors such as in 2017 will be difficult to repeat. Some of the problems insist of large countries have come back to adopt unpredictable protectionist policies and measures, imposing antidumping tariffs on pangasius, trade tensions between the United States and China, importing countries applying high standards on quality control and food safety...can greatly affect the commercial activities in Vietnam.

The National Assembly’s Economic Committee’s examination report also pointed out the remaining problems of the economy such as: manufacturing and processing industries tend to slow down, mainly in the lower segment of the value chain; mining economy had some difficulties. Restructuring the industry is not yet synchronous. Market forecasting is still limited; Many products are difficult to compete with imported goods, both in price and quality. Excess of vegetables, fruits, sugarcane... occurred in some localities. The development of value chain in agricultural products is limited, lack of some strong brands with high quality goods. Exports increasingly face more foreign defense measures. Business scale is still small, scattered and not growth with the economy; Enterprises are mainly small and medium, with quality of operation and competitiveness need more improvement. The level of technology application and management is weak; Low ability to participate in the regional and global value chain. Individual business, households still occupy a large proportion in the private sector. The reform of administrative procedures in some ministries, branches and localities has not seen positive changes.

This is also the problem that the Government should recognize, analyze to come up with solutions to overcome in the future.

What will be the solutions?

To achieve the growth target of 6.7%, Deputy Prime Minister Truong Hoa Binh said that with the spirit of “Discipline, integrity, action, creativity and efficiency”. The Government will continue to implement to perform drastically and synchronously the tasks and solutions set forth in the Resolutions of the Party, the National Assembly and the Government. The solutions are complicated, including guarantee not to be subjective in directing the management, actively monitoring closely and grasp the international and domestic situation in order to have appropriate and timely responses. Keep focus on solving new problems, overcome shortcomings, limitations, weaknesses, remove difficulties and problems; Take initiative in studying, having appropriate policies and solutions to boost our advantages to create the motive force for socio-economic development; Focus on improving the business investment environment, raising competitiveness; Making efforts to successfully implement the targets and tasks of the 2018 plan, creating momentum for sustainable development in the coming years, contributing to the successful implementation of the five-year plan of 2016 - 2020.

As one of the economic and commercial solutions, the Government will effectively implement solutions to promote exports, trade promotion and market expansion;

Simplification of administrative procedures, especially specialized examination procedures. Take initiative in implementing trade remedies and technical barriers in accordance with international commitments; Keep on enhance the management and control of import; to improve trade deficits with partners, high trade deficit; Strive to balance import and export sustainably. Strongly develop the domestic market; building a synchronous and efficient distribution system. Strengthening market management, pricing, prevention of trade fraud, smuggling.

In addition, ministries, branches and localities will effectively implement the Resolution No.19-2018, creating clear changes in the business environment and competitiveness of the economy. Moreover, there will be reduction and simplification of 50% on the list of goods, products, specialized inspection procedures and conditions for business investment. Promote reform of administrative procedures, sharply reduce time and costs for enterprises. Implement synchronously, drastic solutions for business development, promote innovation, start up new businesses. Attracting foreign investment using hi-tech and multinational corporations in association with the development of domestic enterprises and supporting industries. To effectively implement mechanisms and policies on business investment, support for small and medium enterprises, cooperatives and business households.

Commenting on the discussions at the meeting hall, within the group on socio-economic development in 2017 about the first quarter of 2018, National Assembly deputies pointed out the causes of these problems and put forth the ideas. The idea is to help the Government strengthen the management and promotion of development to achieve the set objectives.

Representative Hoang Quang Ham - Phu Tho suggested that the Government and Ministries should continue to support and create more favorable conditions for domestic enterprises, especially private companies, to continue reforming or remove their procedures to reduce Logistics costs and specialized inspection, because our price is too high compared to other countries in the region; Come up with new solutions to raise labor productivity; Improve the efficiency of using capital by allocating reasonable capital to sectors and regions for growth motivation; Restructure the budget substantially to increase capital for investment, control inflation and adopt appropriate fiscal policy.

Representative Luu Thanh Cong - Vinh Long suggested that we need to instruct specialized branches to study market forecasts; Review and inspect the planning, ensure the observance of law. The government should have a specific scenario if our main agricultural products cannot be exported, how to avoid the situation when exporting is sometimes stuck like recent days.

Minister of Industry and Trade Tran Tuan Anh also said that the target set in 2018 and the coming years is to strengthen the market development, especially those with trade preferences. The ministry will also work out policies to promptly remove new trade protection policies and other instabilities in external relations.

Minister Tran Tuan Anh also said that if the Vietnam-EU free trade agreement (EVFTA) was signed and approved at the end of 2018, trade growth will reach 4% - 6% in 2019. Therefore, the goal is that from this end to the end of the year to promote this signing, thereby creating an important foundation for the future.

Involving in strengthening the competitiveness of Vietnamese enterprises, which emphasizes the quality of products, Minister Tran Tuan Anh emphasized that the quality of products associated with the brand is vital, especially the higher requirements, especially the phytosanitary barriers and traceability. Without raising these factors, items like pangasius to shrimps will face limitations and cause great damage to our businesses and farmers. Therefore, the participation of ministries and localities is needed.

Meanwhile, delegate Tran Hoang Ngan – Ho Chi Minh City added: “In order to avoid external influences, the government should control the opening of the economy in the direction of enhancing internal market forces within the domestic market”. Attracting foreign investment still need to overcome more obstacles, such as environmental issues, transfer pricing, trade fraud, technology transfer, development of supporting industries. Therefore, in the coming time, we need to have an FDI-oriented strategy. We still need FDI, but we must orient and prioritize the criteria such as green, ie clean environment. This means that you have to make sure your business identity is free of tax evasion and fraud. Particularly, the investment sector must have high technology associated with the industrial revolution of 4.0; Facilitate the development of supporting industries.