The Minister of Planning and Investment explains the reasons why the 2% interest rate support package for businesses is "stuck".

Late in the afternoon of November 1st, Minister of Planning and Investment Nguyen Chi Dung gave an explanation after National Assembly deputies discussed in the plenary session the assessment of the results of the implementation of the socio-economic development plan for 2023 and the projected socio-economic development plan for 2024.

Clarifying the issue of growth, Minister Nguyen Chi Dung stated that the global situation is difficult, with many rapid, unpredictable, and unprecedented developments. The domestic economy has a high degree of openness, limited resilience and self-reliance, and is undergoing transformation, thus being highly susceptible to external impacts.

"The results haven't met the set targets, but they are still very commendable and positive, while other countries like Thailand are forecasting growth of 2.7%, Malaysia 4%, Indonesia 5%, and China 5%. These figures show that our results are also the product of a very high level of effort from the entire political system," Mr. Dung said.

Regarding the socio-economic recovery and development program, the Minister of Planning and Investment acknowledged that some policies of Resolution 43 on fiscal and monetary policies supporting the socio-economic recovery and development program, which provide direct support to businesses, people, and workers, have had a positive impact, contributing to the high results in the first nine months of this year.

"In addition to these support measures, we have also allocated more than 50% of the program's resources to socio-economic infrastructure investment. All of these are important, key strategic national projects that are currently being implemented very actively."

"For these projects, we have allocated 176,000 billion VND out of the total program's 337,000 billion VND for infrastructure investment, in addition to supporting businesses, people, and workers," the Minister of Planning and Investment added.

However, Mr. Dung also acknowledged that some policies have not achieved the desired results. Regarding the slow disbursement of the 2% interest rate support package, Mr. Dung stated there are two reasons.

Firstly, due to the difficult economic situation, many eligible businesses are not borrowing because of orders or production conditions, while some businesses that want to borrow are not eligible.

Secondly, due to the cautious design of the support program, which includes a provision regarding "recoverable projects," both borrowers and lenders are hesitant to understand what constitutes a recoverable business. Therefore, the program has not met its expectations.

"Currently, only 873 billion VND has been disbursed, nearly 2% of the plan," Mr. Dung said, adding , "The Government has submitted a proposal to the National Assembly to allow the program to continue until the end of 2023. If the target is not met, we will cancel the budget."

"This is an amount we haven't issued or raised yet, so it won't affect the budget deficit. Instead of this 2% interest rate subsidy policy, we will shift to requesting extensions and deferrals of value-added tax and other taxes in the coming period to support businesses."

Regarding the failure to achieve labor productivity targets, the Minister of Planning and Investment stated that the reasons include the lack of significant changes in the growth model, slow shifts in the economic and labor structure across sectors and fields; and the fact that science and technology innovation, digital transformation, and the quality of human resources have not yet met the required standards.

" Specifically in 2023, there was also the reason that economic growth was lower than the target. Industrial production, construction, and real estate faced difficulties. A portion of the workforce shifted to the service sector, mainly in informal industries with lower labor productivity. Another portion of the workforce moved to new jobs, so they also needed time for retraining and adaptation," Mr. Dung explained.

The Minister of Planning and Investment stated that the Prime Minister has assigned the Ministry of Science and Technology to develop a project to increase labor productivity based on science, technology, and innovation; and to develop a national program on increasing labor productivity to make labor productivity a crucial driving force for rapid and sustainable growth, taking advantage of the opportunities presented by the Fourth Industrial Revolution.

Cam Tu (vov.vn)

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