In 2010 Vietnam’s GDP reached 6.78 percent, above the Government’s target for the last year of the 2006-2010 plan. The country’s growth was highest in ASEAN. Despite good signals for the national economy in 2011 and successes in 2010, Minister Phuc is still worried about some problems with managing, making and implementing policy.

VOV reporter interviewed Minister Vo Hong Phuc.

2010 was a successful year

VOV: After a challenging year, the country’s economy saw brighter prospects. What do you think of the economic management and achievements in 2010?

Minister Phuc: 2010 posed a number of challenges for the country as the global economic and financial crisis still affected our economy. In addition, the year witnessed worst natural disasters in the central region.

However, I think that 2010 was a successful year. The country achieved a high economic growth rate of 6.78 percent, higher than the target set by the National Assembly and Government.

Some issues need to be reviewed in order to help the Government better manage, including high inflation. According to the National Assembly’s resolution, inflation must be contained below 7 percent and the Government strived to control it under 8 percent. However, it reached 9.19 percent. This forced us to devise stricter measures to fulfill the macroeconomic stabilisation target.

VOV: Vietnam achieved significant economic results in 2010. However, there remain problems in macroeconomic management, especially high inflation rate which affects citizens’ lives. What do you think about the issue?

Minister Vo Hong Phuc

Minister Phuc: We did not attach great importance to the growth target. The Government’s target was around 6.5 percent and 6.78 percent is not as high as the expected 7 percent from the past. Management policies to fulfill the growth goal are adequate. The main problem is that we did not expect the predict price fluctuation on the world market.

In the remaining months of 2010, especially November and December, the world price index rose high, such as the prices of tools, raw materials, food and gold, which badly affected domestic prices. Chinese inflation rate also stood high due to the impacts of world prices.

The country, especially the agricultural sector, was also seriously affected by natural disasters. These pushed prices of food and foodstuff in the Central region and the consumer price index up. The Government devised measures to cope with the increases, but, they were slower than expected because the forecast was not timely. This destabilise the performance of the banking sector.

Controlling the exchange rates is a typical example. The exchange rate between US dollar and Vietnam dong in the remaining months saw strong fluctuations. The neighbouring countries kept their currencies stable although US dollar was devalued. On the contrary in Vietnam both US dollars and Vietnam dong were devaluated.

Lesson learnt: strict management

VOV: What lessons did we learn from 2010?

Minister Phuc: We must understand the situation, have timely forecasts and strictly deal with arising problems. Sometimes, in handling exchange rate problems we were hesitant to sell US dollars to stabilise prices.

VOV: In 2010, exports boomed and international donors pledged to provide US$7.9 billion to Vietnam. What do you think of Vietnam’s position and export achievements?

Minister Phuc: International donors and community praised Vietnam’s economic development ability. They acknowledged our achievements in the past and foresaw future prospects and directions. They agreed that our macro-policies, development strategies and economic development policies are proper despite their small weak points.

They trust Vietnam’s economic growth. They said that if Vietnam is more careful and its policies are more precise the country will fulfill the goals set for in the next five years.

Many challenges for 2011

VOV: 2010 had many big problems. What sign will affect Vietnam’s economy in 2011?

Minister Phuc: 2010 left some difficulties and advantages for the Vietnam’s economy. First of all, the growth pace. Economic growth in 2010 was higher than in 2009 and that of the fourth quarter in 2010 was also higher than in the second and the third quarters.

Vietnam has implemented some programmes effectively, creating a foundation for the future growth. The state-owned sector’s investment has brought high.

The biggest challenge facing Vietnam is macroeconomic stability returns and containing the high inflation rate. High inflation rate in 2010 will affect 2011. Other problems include foreign currency reserves, and investment capital and energy balance.

There will be an energy shortage in 2011 so we will apply a new growth model in the process of implementing the economic development strategy for the next five years. These difficulties will affect the country’s economy so we must make great efforts to overcome than people forecast that 2011 will see more difficulties than 2010.

VOV: Other difficulties that Vietnam has not dealt with yet include human resources, poor infrastructure and investment efficiency. How will these issues fare in 2011?

Minister Phuc: In 2011, we will continue to implement major measures and introduce three breakthrough solutions for the socio-economic development, including infrastructure development, human resources development and institutional development. If we carry out three breakthrough solutions we will fulfill the set goals.

 VOV: Thank you very much.