Vietnam must be more competitive: report

Deputy Prime Minister Vuong Dinh Hue asked members of the National Financial and Monetary Policy Advisory Council to closely monitor the financial situation throughout the world, during their third-quarter meeting in Hanoi on September 30.

The members agreed that it was necessary for Vietnam to create a stable business and investment climate, renew its growth model and expand labour productivity.

Vietnam has targeted its gross domestic product (GDP) to grow at 6.7%, along with exports to grow at 6-7%, next year.

Further, the consumer price index (CPI) is expected to rise by some 4%, with total social investments accounting for some 31.5% of GDP in 2017.

Deputy Minister of Planning and Investment Dao Quang Thu announced these figures after the country’s goal of reaching 6.7% economic growth this year has proven largely unfulfilled.

There is, however, a strong possibility that the GDP will grow by 6.3% and the CPI will rise by less than 5% in 2016, he said, adding that total social investments have reached more than VND1 quadrillion, or US$44.44 billion, during the first nine months of the year.

Thu said the slow recovery of the global economy is likely to impact on Vietnam’s export growth next year, while uncertain global oil prices and risks of inflation caused by adjustments in domestic healthcare and education services are resulting in macro-economic imbalances.

Meanwhile, Nguyen Thi Hong, Deputy Governor of the State Bank of Vietnam, said that inflation has “basically been stable”, although the central bank pumped a “relatively large” amount of money into the economy to support economic growth this year.

Hong added that the central bank has steadied treasury bill and government bond issuances with foreign exchange buys to assure appropriate monetary operations. State bond issuances alone have amounted to VND250 trillion this year, in line with national quotas.

She also said that a change in the central bank’s operations of exchange rates, with the reference rate now adjusted daily, has reduced foreign currency speculation and eased pressure that could cause interest rate hikes.

Overall, credit growth is likely to reach targeted levels of 18-20% this year, she said.

Members of the council recommended that the Ministry of Planning of Investment build a set of criteria to assess the efficiency of investments more precisely. This will assure authorities have a clearer look about how to assist enterprises and foster economic growth.

Economist Tran Dinh Thien said although start-ups are now encouraged in national development schemes, new firms should not be established too hastily, because inventories and bad debt remain major issues that the country has to deal with.