The macroeconomic picture in the first quarter of 2023, both domestically and internationally, is gradually brightening, but it makes economic experts feel impatient. The recovery opportunity is clearer, requiring capacity to take advantage.
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| Production at Hoa Phat Steel Factory. Photo: Duc Thanh |
The highlight is not clear
“We feel impatient,” said Dr. Can Van Luc, BIDV Chief Economist and Director of BIDV Training and Research Institute. Mr. Luc is seeing more positive signs of supporting factors for investment and business activities in the first quarter of 2024, but businesses are still facing too many problems.
Although the world economy is forecast to grow more slowly than last year, inflation and interest rates have begun to decrease. The market outlook is more positive with the rapid recovery of major export markets for Vietnamese goods. Domestically, access to credit is easier, with the State Bank's commitment to maintain low operating interest rates; legal problems in many projects are being resolved. In particular, mechanisms and policies that lay the foundation and promote new growth drivers of the economy, associated with green development, digital transformation, etc., are gradually being perfected. Foreign investment capital is increasing strongly...
However, in this gradually brightening picture, Mr. Luc has not scored much with the domestic private enterprise sector.
“Domestic enterprises still face many legal difficulties, financial obligations and high input costs, slow order recovery…”, Dr. Can Van Luc dissected the health of the region that contributes about 50% to the GDP growth rate of the economy.
Even so, this region continues to record slow movements from within. The Corporate Governance Index of Vietnamese enterprises is still quite far behind that of enterprises in the region, at 42-43% compared to 60-62% of Thailand. The vision and strategy of most enterprises are still quite short-term, not to mention the situation of enterprises violating business ethics is still large...
Not only Dr. Luc is impatient. In his assessment of the economic situation in the first months of the year, Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, left the private investment section blank. Last year, private sector investment increased by only 2.7%, an unprecedented low in the past 10 years.
This year, the figures for the first quarter of 2024 will need to wait a few more days, but Dr. Thanh said that the feeling of a real recovery in this sector is not clear, especially when compared to the positive growth rate of disbursement of foreign direct investment (FDI) and public investment.
“This situation will affect the ability to take advantage of the recovery opportunities that are gradually emerging,” said Dr. Thanh.
Find private investment stimulus points
Sharing the problems of the domestic private enterprise sector, Dr. Luc said that the key to solving them is the business environment. Legal problems, especially those of real estate projects, were mentioned as evidence of the impact of this solution.
“Just by boosting business confidence, private investment will increase. The key lies in institutional reform and improving the investment and business environment,” Mr. Luc emphasized.
Just boost business confidence, private investment will increase. The key lies in institutional reform, improving the investment and business environment. 
Dr. Can Van Luc, Chief Economist of BIDV
However, it is worth mentioning that this is a difficult task, despite many efforts from the Government, the Prime Minister as well as ministries, branches and localities.
At a conference earlier this week by the Central Institute for Economic Management (CIEM) summarizing five years of implementing Decree No. 15/2018/ND-CP on food safety, the expectation of replicating good policy models by the business community is still facing many challenges.
It should be reiterated that the outstanding changes of Decree No. 15/2018/ND-CP, such as applying the principle of risk management based on the level of legal compliance of enterprises and the level of risk of goods; adding subjects exempted from inspection; decentralizing state management, overcoming the situation of overlapping, hierarchical, and duplicate management; creating flexibility and initiative for enterprises in implementing administrative procedures; switching from pre-inspection to post-inspection... have saved 8.5 million working days and 3,332.5 billion VND/year. The abolition of the time limit for the Self-declaration alone, compared to the 3-year time limit in the previous regulation, has reduced costs for enterprises by more than 310 million VND/year. This is the reason why this decree is included in Resolution 02/2024/NQ-CP on the main tasks and solutions to improve the business environment and enhance national competitiveness in 2024.
However, Mr. Dau Anh Tuan, Deputy General Secretary, Head of the Legal Department of the Vietnam Chamber of Commerce and Industry (VCCI), said that replicating the lessons of Decree No. 15/2018/ND-CP is not easy. “Some similar problems are appearing in the management of emulsion paint standards of the Ministry of Construction, the management of veterinary drugs and animal feed of the Ministry of Agriculture and Rural Development. We have used the mechanism applied in Decree No. 15/2018/ND-CP as an example, but it has not been approved. Enterprises are having to comply with regulations that make it difficult for enterprises, but are very formal, not bringing about effective state management,” Mr. Tuan analyzed.
Most recently, in a meeting with State leaders, Chairman of the Vietnam Young Entrepreneurs Association Dang Hong Anh also continued to send proposals to persistently and resolutely remove barriers to the investment and business environment, creating the most favorable investment and business environment for business development.
Specifically, the leaders of the Vietnam Young Entrepreneurs Association proposed to strictly implement regulations on issuing business conditions associated with the responsibility of heads of ministries and specialized management agencies, ensuring clarity, transparency, and a suitable roadmap, eliminating unreasonable sub-licenses that increase costs for businesses. In particular, businesses still have high expectations for the commitment to simplify pre-inspection, strongly shift to post-inspection associated with risk management, and assess the level of legal compliance of organizations and individuals in specialized inspections.
Clearly, the fulcrum for stimulating private investment has been identified.
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