Vietnam has achieved a GDP growth rate of 3.9 percent over the past six months, 2.6 percent lower than a year ago, but the figure is still impressive given the fact that the world has been struggling to weather the financial and economic storm and many economies have seen only negative growth. This is partly owing to the government’s efforts to put together a number of stimulus packages aimed at revamping major economic sectors. Total disbursed capital from these packages have so far amounted to VND370,000 billion.

It’s worth remembering that many people raised doubts about the negative growth of the construction sector in late 2008. However, under the rescue packages, the sector still secured a substantial growth rate of 9.8 percent in the first half of this year.

Similarly, the industrial sector also recovered from its negative growth in January to edge up by 4.8 percent, while the agricultural sector again reaped a bumper winter-spring crop with its total output higher than expected and farmers turning a good profit of between 30-40 percent.

The service sector saw some impressive growth, with total retail and service revenues rising by 20 percent, and the domestic market, driven by the soaring consumer price index, started to pick up following a sharp decline in exports.

The positive recovery of the economy has built up foreign investors’ trust, with around US$9 billion being poured into Vietnam and nearly half the amount already disbursed. Total disbursed ODA capital has also reached nearly US$1.3 billion. About 37,000 more businesses have been licensed and many more people have found steady jobs to raise their incomes.

However, Vietnam should not rest on its laurels as there remain a lot of challenges lying ahead. The export industry, which plays an important role in the economic restructuring, still finds it difficult to raise its growth rate of minus 10 percent to 3 percent for the whole year.

Now, with global market prices, especially oil and petrol, going up again, it is not easy to keep inflation in check. The disbursement of capital from stimulus packages will result in a large amount of money in circulation. In the first half of this year, the GDP based on calculations of real prices grew at 12.4 percent and the supply of monies increased by up to 16 percent. Normally, it is just equal to or lower than the growth of GDP to minimise the risk of inflation. The crux of the matter is how to achieve a GDP growth rate of 5 percent and at the same time keep inflation in check.

Many businesses are cash-strapped as they do not want to pay high interests on bank loans currently standing at 10.2 percent compared to the 10.5 percent ceiling rate fixed by the State Bank of Vietnam. Several financial experts have proposed that the government stop its 4-percent interest rate subsidy programme anytime as soon as possible and that businesses adjust their plans and targets to cope with the soaring prices of electricity at peak hours.

According to experts, any economic stimulus packages should pay off at a high level of efficiency to make up for those investment projects which are going at a snail’s pace. Whether the construction and industrial sectors will be able to maintain and increase their growth rates in the remaining six months of this year depends on their effective use of capital sources.

In order to fulfil yearly targets, the government has introduced many major solutions, considering administrative reform a focal point. The Ministry of Public Security, the Ministry of Planning and Investment and the Ministry of Finance are scheduled to make public their administrative procedures in early September, and other ministries and all provinces and cities will follow suit by the end of the same month. It’s highly hoped that a long-awaited change will help to push up socio-economic development in the country.